I’m flying out to Chicago this afternoon to sit on a panel moderated by Folio:’s Tony Silber at the Connex Live conference. The title: Big Ideas and New Opportunities for 2010 and Beyond.
The title has a positive bent, although all of us sitting on the panel have businesses with deep foundations in the print publishing world.
Tony has asked us to think about 10 key questions to prepare for the panel. Here they are:
- When will the industry see some recovery?
- What will that recovery look like?
- Will we see the robust health of 2005-2006?
- How will the business be different?
- Are media companies being disintermediated on the reader side through
social media and blogs?
- Are media companies being disintermediated on the marketing side by
social media and lead-gen and automated marketing software?
- What are the most important things media companies can do now? Org
structure? Approach to content creation? Layoffs? Debt reduction?
- When we say companies need to “reset” to face new realities, does that
mean massive losses of revenue and personnel?
- What will the media company of 2012 look like?
- What is the most important lesson of the 2007-2009 recession? How do you
personally implement it at your company?
Those are critical questions without easy answers. For #1 and #2, the answer will be driven by the economy. When people buy things, people will make things, and people aren’t going to start buying things at a significantly increased pace until they feel confident that they will have a job making things. Gross simplification, but you can’t have a consumer economy without consumer income.
When will we see the robust health of 2005-2006 and how will the business be different are foundational questions: I don’t know and I wish that I did.
The answers to questions 5 through 9 are all loosely connected. The answer to one influences your answer to all the others. For a web-focused conversation about #5, see this summary of a dialogue on Fred Wilson’s blog. (Wilson gets about 12,000 unique visits a month to his blog.)
Media companies are in an environment where consumer have disparate tools to create and consume content. Traditional formats continue to be part of the media consumption mix, but the hegemony of format and audience, which has been eroded during the 14-year evolution of Internet-based media companies, feels like it has been permanently disrupted. The economic contraction is a catalyst, but the widespread adoption of social media tools, which require minimal technical expertise to implement and consumer, is a more basic change to the foundation of our businesses.
This change requires companies to answer very basic questions:
- What is my market? What are the ways that I can take product to market, build audience and, in the case of marketing-based businesses, leverage the audience for the benefit of my clients?
- What, if anything, can I charge for each aspect of my market strategy, including new and traditional channels?
- How much revenue can I create from this business mix?
- In order to generate 15% to 25% cash flow, after operating expenses, from this business, how much can I spend in expense?
- What level of debt can this new business model sustain?
Once you have a realistic set of answers to these questions, then you can shape the answers to questions #7 and #8. And the outcome of those answers gives you a picture of what your traditional media company might look like in 2012. (Of course, it doesn’t capture the picture of the emergent media company of 2012….)
The last question was thought-provoking. I’ve learned a lot over the past few years. The most powerful thing I have witnessed is the practical desire in most people to do the right thing, to arrive at a logical conclusion. I’ve seen people struggling to find answers, bewildered by the whirlwind of change they have experienced, but intensely focused on finding ways to adapt themselves and their business strategies to the realities. As the pace of change slows, and people are able to organize themselves around more stable markets, I’m willing to bet on their ability to find new, effective ways to build their businesses.
As the three of us kicked the topic around, it was clear that Tony was looking for a basic blueprint for how publishers can really change their organizations to leverage the digital marketplace. He was appropriately forceful with us: Don’t talk about change around the margin, talk about real changes that can help the business.
