Vulnerable to Digital Upstarts, Publishers Should Invest in Incubating New Ventures
There was a time, not so long ago, when the barrier to entry in the magazine industry was substantial. Media owners starting out would need much deeper pockets, assuming perhaps six issues worth of print, distribution and staff costs to be carried. Potentially the cost could easily amount to around $250K as a minimum in today’s terms, give or take, but substantial enough to reduce the number of newcomers. Of course there were magazine brands being shut down by larger publishers, only to be picked up by new players who, with greatly reduced overheads, could make these work on a smaller scale. So what’s changed?
The biggest change -- and now the biggest threat to established publishers -- is that digital media has created a market in which $50K can get you a seat at the table, particularly if your focus and target market is niche. Building a platform is now a relatively low-cost enterprise with the emergence of platforms like WordPress, revenue sharing apps, and digital newsstands. Starting out now mostly involves going digital first to test a market, then expanding into costlier print and events, if there’s an opportunity. Investors are waiting to jump at the first sign of rapid scaling and before we know it there’s a serious threat emerging within a very short period of time.
What this means for the bigger players in publishing is that competitors can spring up more quickly using fast-growth social media platforms to reach and expand their audience quickly. Content still remains the most important driver, but how we make use of these external social marketing platforms is what’s allowing these new arrivals to grow at speed and become highly credible threats, eating everyone’s lunch as we’re looking out the window. There’s no simple answer to this threat but the fear is tangible.
Acquisition vs. Innovation
Of course, with larger corporate financial strength there’s the option to acquire these emergent businesses as they spring up and grow. The difficulty is that often these new players may be supported by savvy venture capital, thus may not be easy or cost-effective acquisitions. The risk can be eye watering. Perhaps the answer would be to focus more attention on the potential sources of these emerging threats and play the game?
There’s a strong case for the small- and medium-sized media owners to consider their own incubation programs, even at a micro level. With a low barrier to entry it wouldn’t be unfeasible, with some careful thought and strategy, even under a separate corporate umbrella. The key to success may be to take a step away from the traditional perceived thinking and look at how these newer digital players have evolved. We see common traits with these high-growth media and social media businesses, and I deliberately include social media businesses, as these are increasingly a first stop news source for many.
Our new competitors have initially focused on a quality audience over quantity, thus nurturing the most powerful marketing tool -- user referral. User retention is also valued far more highly than user acquisition.
They build and release a product before it’s perfect, then iterate at speed. This is a concept many media owners struggle with as the perceived wisdom is to launch only when the product is 100% ready rather than follow Lean Startup principles. Forgetting about potential problems that may arise 12 months down the line and deal with it when it happens may seem like a dangerous tactic, but it works. It seems absurd and risky, but overthinking can be dangerous as it causes a glacial pace of progress.
It’s a great time to be openly sharing information and there’s a lot to be discussed and learned about our industry during its latest evolutionary transition. I’d be interested to hear what the publishing community is doing to compete and innovate, particularly in the heartland of publishing, the small and medium sized businesses. (Send me an email at email@example.com or tweet @RobertGrainger.)
Robert Grainger had 15 years experience in magazines in the UK before co-founding Stonewash, building apps for publishers, in 2009. He served as the CEO of Stonewash until its sale in 2015 and has served on the board of SiiA (Europe), as well as being a regular speaker and commentator on the subject of digital media.