CMP Aftermath: Are Techies the Canary in the Coal Mine?
As revenue streams change, other markets may soon be facing similar choices as CMP, IDG and Ziff-Davis
Where do a double-digit year-over-year revenue increase and a 200-person layoff at the same company go hand-in-hand? In the newly online-centric publishing world. If the tech publishers are the tip of the spear (the first to endure the fallout of Web 1.0’s false start, and among the first to see non-print revenue exceed print revenue in Web 2.0), their current strategic shifts may soon be emulated by publishers in other markets.
CMP announced yesterday that it will fold three magazines and lay off 200 employees as part of its online focus, and that it now sees non-print revenue exceeding print. IDG, previously derided for not embracing online sooner, now touts online as its biggest revenue stream and recently took flagship magazine InfoWorld online-only. Ziff-Davis sees 50 percent of revenue from digital and the majority of its earnings come from digital and events, according to CEO Robert Callahan, who advises separation of online and print. "It needs a separate mission, separate development, separate development, separate content, and separate sales. You need a dedicated Web team," he said.
The CMP move has yielded surprisingly little blog chatter compared to IDG’s recasting of InfoWorld as online only back in March, perhaps signifying that these types of moves are quickly becoming old hat. While acknowledging the pain of the lay-offs, blogger Paul Conley hails CMP’s move. "No matter how we look at the changes in media, it’s clear that part of what is happening must be described as loss; but something is gained, too; a trail to follow, and vindication for the trailblazers," he says.
Here It Comes
While the impact on non-tech publishers might not quite as dramatic, they are starting to see the revenue tipping point tilt toward non-print as well. e.Republic, a Folsom, CA-based publisher covering the government and education markets, gets the majority of its revenue from events, followed by print, then data and business intelligence. However, data accounts for 20 percent of its overall revenue and is its fastest growing and highest margin operation, according to CEO Dennis McKenna.
Other publishers anticipate online actually equaling, if not surpassing print, as a revenue stream in the near future. "My expectation is that the ratio will continue to move closer to a 50/50 ratio over the next three years," says Ascend Media CEO Cam Bishop. "In the case of Ascend, we’re already closer to a 50/50 mix right now."
Mature, non-tech markets are experiencing the shift as well. "We serve mature, low-growth markets and without a doubt, e-media is our fastest growing revenue stream. We feel that these trends will be sustained at least the next three years," says Stacy Bearse, CEO of Blood-Horse Publications.
Print Has a Role, Albeit Changed
Still, print isn’t quite at the point of extinction. MPA is loudly promoting recent data that says magazines have more than held their own against other mass media as an advertising vehicle. The association also cites 107 magazine launches in the first quarter of 2007, up 4 percent over the same period last year. A recent New York Times article highlighted the success of print "tween" magazines, even as Time Inc. and Hachette Filipacchi have shuttered TeepPeople and ElleGirl in favor of online-only versions.
On the b-to-b side, Hanley Wood is touting Architect as the biggest b-to-b magazine launch of the year (as well as itself as a company that still respects and makes investments in print, and the Web), while a recent InfoCommerce blog cited online companies such as Global Source launching print magazines (however, while the blog cites TechTarget’s three-magazine stable as another example, in its S1 filing earlier this year TechTarget states, "We do not expect print revenue as a percentage of total revenue [about 11 percent] to increase in the foreseeable future."
A Growing Disconnect Between Larger And Smaller Publishers
While larger publishers such as Hachette (which recently bought an online vertical advertising network in Jumpstart Automotive Media and expects online to account for 20 percent of revenue in the future) are aggresively pursuing online, a recent Folio: survey of b-to-b CEOs found a growing disconnect between large and small organizations when it comes to capitalizing online.
While 85 percent of publishers generating more than $5 million in annual revenue expected increased revenue from online in 2007, just 61 percent of publishers with under $5 million in revenue expect more online contribution. However, 67 percent of those small publishers expect increased revenue from new print advertisers, compared to 63 percent of larger companies.