Last week I heard about a research report filled with the sort of bad news I've come to expect about B2B media.
As I read about the report, something inside me seemed to give way. I realized it was time for me to say something I have hesitated to say:
The B2B industry as we know it is about to collapse.
Allow me to explain:
In the research, Outsell, a firm that markets itself with the slogan "must-have intelligence and advice for publishers and information providers," predicts B2B publishers may soon slash another 1,250 jobs. That would come on top of the 925 jobs already cut in the second half of 2008, according to Outsell's estimates. (The full report, which is available here for $295, was a few weeks old by the time I came across it, so we can assume that some of those predicted cuts have already been accounted for in the most recent layoffs in the industry.)
Outsell also predicts "additional print ad revenue losses of 4.5% in 2009 and 3.2% in 2010, adding further pressure for reducing print-only staff for the next two years."
More troubling is that Outsell says B2B publishers are having little luck in converting successful print-sales staffers into successful online-sales staffers: "Unfortunately, the success rates of converting print ad salespeople to online ad sales, for example, have been low, with sources directly involved in this citing 25% conversions."
My experiences meeting with B2B journalists in recent years are even less encouraging. I'd put the number of successful "conversions" at around 20%.
It's worse than it appears
Nothing about any of that should be surprising. The seeming inability of most print-based companies to make the transition to the Web is well-documented.
But equally troubling, and far less obvious, is that most Web-only publishers have a similar "conversion" problem.
These Web-native companies are finding themselves unable to assume the core journalistic functions needed by the B2B world. They have mastered content aggregation, commentary and search-engine optimization But only a small percentage of them seem able to move beyond those areas. Original reporting, in-depth analysis, price discovery, data creation, etc. all remain beyond their capabilities.
What the future holds
If you're a regular reader of this blog, you know of my love affair with the world of B2B journalism.
And regular readers also know I've grown quite distressed about the state of the industry.
It was a year ago this month that I said B2B was being pushed into a "a new era of preposterousness" with "revenue targets that seem delusional." I predicted that 2008 would be an"awful"year.
It seems I was correct.
A few months later I said "things were awful and getting worse."
I was right then too.
But even as things have gotten bad and the economy has deteriorated, I've been confident that the future of B2B media was in the right hands.
I'd believed that a new group of journalists -- most of them much younger than I -- was emerging to lead the industry forward. More importantly, I'd been hopeful that a new type of company was emerging -- native to the Web, free of the debt burdens of Wall Street and the cost burdens of print, privately held and without a single angry, that's-not-my-job type of editor anywhere in the enterprise.
But I've come to believe that my faith in these next-generation companies has been misplaced.
As far back as April 2007 I was expressing my concern that "even the newest, Web-based content companies are structured" in such a way that they cannot adjust to disruptive events (new technologies, economic crisis, declines in advertising, etc.) I said then that everywhere I looked, including Web-only start-ups, I was running into the "exact same attitudes, beliefs, work rules, chains of command and silos that I saw in the print-only companies that failed to respond to the Web."
Or, to put it another way, the problem I see at Web-only B2B journalism companies is the same problem I saw at print-based B2B companies in the early days of the Web: a fundamental misunderstanding of one's power in the market. There seems to be something about all of B2B that makes it impossible for people to see what should be obvious -- the formula that brought you success when things were easy will not necessarily work when times are tough.
The other guy is stupid
Here are some of the things I saw at the start of the Web era and their counterparts in today's era.
- Print publishers greatly overestimated the weight of their brands. They looked down their noses at upstarts without a history or a "recognized" brand. Print publishers assumed that their previous success would translate easily to the Web.
- Web-only publishers are overestimating the implications of their recent success. They look down their noses at the dinosaurs who failed to adjust to the Web. Web-only publishers assume that their early successes can be scaled.
- Print publishers put their faith in volume and expertise. They produced great amounts of "must-have" content at high costs, hired large editorial staffs, emphasized reporting over writing and dismissed the potential of one-man operations and bloggers. They assumed that "quality" was what the market wanted.
- Web publishers put their faith in brevity and insight. They aggregated content rather than produced it, using part-timers and contractors to keep costs low. They emphasized writing over reporting and dismissed the ability of large operations to keep up. They assumed that the market wanted "speed."
- Print folks underestimated the difficulty of working on the Web. They assumed that, if the time came, they could create blogs, aggregate content and run online communities as well as any Web native. But when the time came, they found they could not.
- Web-only folks underestimate the difficulty of creating content. They assumed that, if the time came, they could do original reporting, create data and run trade shows as well as any old-time B2B executive. Now the time is here, and they are finding they cannot.
- Print guys think Web guys are lazy (aggregating content rather than creating it), unprofessional (prone to snarky writing) and stupid. Print guys are breathtakingly arrogant -- and they are most arrogant about their superiority to Web guys.
- Web guys think print guys are lazy (unwilling to work in the 24/7 world of the Web), unprofessional (prone to hiding bias behind "objectivity") and stupid. Web guys are breathtakingly arrogant -- and they are most arrogant about their superiority to print guys.
The End Game
Both sides of the print vs. Web debate in B2B are wrong. But neither side can see that. And because of this, the B2B journalism world as we know it is about to collapse.
I don't mean that print is going away.
I don't mean the Web is going away.
I don't meant that the print brands that went Web-only are going back to print or vice versa.
I mean this:
1. The B2B publishing industry -- which is now dominated by giant print companies and smaller Web-only companies -- is about to collapse.
2. When the dust settles, B2B journalism will still be here -- but many of the companies that make up the industry will be gone.
3. The dominant business models of both the past and present will fail.
Some of this should be painfully obvious.
Print-based B2B is dominated by companies that are choking on debt. Most of those companies won't make it into 2010. It seems that every company in B2B publishing is for sale, but there are few buyers. There's no credit available for troubled holdings. I expect the bankruptcies to begin any day.
The Web-only companies won't fare much better. Online advertising is in trouble. And I don't see Web companies handling that revenue decline any better than the print companies have handled the fall in print revenue.
The valuations of Web-only companies have fallen, just as the valuations of their print counterparts have. The Wall Street folks I know have grown decidedly uninterested in Web-only publishers ... particularly content aggregators and blog networks. The two most compelling B2B brands of the Web-only world -- FierceMarkets and ContentNext -- were sold earlier this year. But an expected surge in Web deals never materialized. Other Web-only properties are gathering dust on the merger and acquisitions shelf.
Another new era
When the economy recovers we'll see a new landscape in which many of the established players of the print and early Web eras are gone.
B2B journalism will be dominated by the following five types of companies, all of which exist today, but as much smaller players in the industry:
1. Content marketers -- corporations and others with no history in publishing and with no need to monetize content. This has to be the most exciting part of the B2B world today. And I expect much more from it. Content marketers won't just create journalism products, they'll start buying them. Look for sophisticated corporations to purchase established B2B journalism brands and use them as the basis of their content-marketing efforts. (For more on content marketers, see this earlier post.)
2. Data and technology companies -- companies that revolve around a tech tool, database or application. They'll offer journalism products as a value-add to the core product and/or as a brand builder. This is the Bloomberg model. And Bloomberg, which emerged prior to the Web, remains the most successful electronic journalism venture on earth. (For more on Bloomberg, see this earlier post. To follow developments in this field, follow Russell Perkin's work at InfoCommerce.)
3. Small, privately held print publishers -- that handful of traditional B2B players who avoided the lure of Wall Street's leverage. Without the debt burdens of their larger rivals, these smaller companies will be able to acquire troubled brands, hire key people and operate profitably on smaller margins. They may also be able to leap past the Web era and seize market share in some post-Web/mobile/AI/whatever era. It's also likely that they can offer content-creation services to the other types of players.
4. Price-benchmark publishers -- those companies that determine commodity prices in a market. Without these companies, entire industries would need to reconstruct their core pricing and distribution functions. That won't happen. So the benchmark publishers will continue on. (Among the better players in this space is Platts. You can read about the president of that company, who will be honored by ABM next month, here.)
5. Networks for entrepreneurs -- alternatives to publishing companies. We've already seen the rise of ad networks for bloggers that have allowed journalists to strike out on their own with something more than Google text ads to support them. I expect that industry to morph and grow. Eventually I expect to see "matching services" that unite standalone journalists with standalone publishers, as well as a surge in B2B-only, revenue-share publishing networks for entrepreneurial journalists (the biggest of these so far is BNET Industries. Look for more in the next few months.)
That's what I see on the other side of 2009.
What do you see?
tags: journalism, b2b, media, trade press, magazines, newsletters, business media