Jan

4

Ten Things That Won’t Happen In 2010

Filed Under B2B, Blog, eBook, Education, Industry Analysis, internet, news media, online advertising, Publishing, STM | 5 Comments

Are you now as fed up with information industry predictions as I am?  Down here at the bottom of the garden we see things inside out and upside down, so here are 10 things you can confidently ignore in 2010:

  1. All forecasts of a return of advertising levels, regardless of media or format, to “normal”, “pre-recession levels” or equivalent values.  It is not going to happen.
  2. All pronouncements, political or commercial, that suggest that a law, technology or even divine intervention will solve the crisis of intellectual property management or control in the network.  We are in Eden and have eaten the Apple.  Live with it.
  3. Any press release that suggests that eBook, its standards or the technology of access is a finished process ready to be slotted into normal life on Earth.  It takes five steps to download to my Sony eReader – this is an abnormal process and only afficionados would begin to attempt it.
  4. Any pronouncement, even from Mr Murdoch himself, that says that paywalls work OK, people love them and are more than happy to contribute to the funds of hard-pressed News Corp.  Water still flows around a dam, given half a chance.
  5. Anyone who says that the advocates of Open Access in science publishing are winning, losing or changing anything with this argument.  The real issue is defining the future of scholarly communication in the network, and seeing where the commercial entrepreneurial input is needed.  Those who get detained in false arguments with fakirs and fake prophets will be engulfed and lost in the morass of inter-academic argument.
  6. All those who proclaim the eTextbook and say that a format switch will ensure that educational publishers will  live happily ever after.  Education is the Frontline, and is now changing rapidly.  2010 will be the year of critical transformation in many parts of the world except where state control is absolute (e.g. France) or the system is too poor to cope (the UK).
  7. All claims that commoditisation of content will  ease because some content players have re-enacted the parable of King Canute (or Cnut, or Knut – when you have Danish kings you have to live with constant variation).  Google, at a stroke, is now a provider of primary law globally.  If law publishers have any idea of where the value chain is they need to be climbing it to safety with the speed of Canute’s courtiers saving him from the incoming tide.
  8. Any continuing claims that you can move the brand of a trade magazine to the network without fundamentally altering its role or its customer relationships, and that brand values will enable it to survive.  The network is a service zone, not a product promotion space.  We have spent a decade learning this and surely we do not have to go through it all again in 2010?
  9. Anyone who says that customer-created content does not work.  Now that our financial services operators fully recognize their role as value re-cyclers and aggregators, there is no excuse for the rest of the class.
  10. Anyone who proclaims the arrival of a new age and names it web 3.0 , 4.2 or X marks the spot.  We are working within a new continuum, every technology we will use in the next 15 years has already been invented and patented, and what remains to be seen is only the way in which consumers react to which combinations of hardware/software/content to solve which problems in what contexts. And nothing is lost by experimentation.

If we are all unfazed by the the tendency of the market to create smoke and erect mirrors, then we can get on with the real game.  As in every year from 2000 to 2010, clever and knowing players, whatever they call themselves, will make real money in information markets.  I hope you are one.  Happy New Year from the bottom of the Garden!

Dec

14

When to Consolidate

Filed Under B2B, Blog, Industry Analysis, Publishing, STM | Leave a Comment

Last week’s acquisition news appeared to catch the markets in two minds about when strategic players move to consolidate in recovering markets, and when another stage of private equity or other investment is needed to mop up the debt and sanitize the subject prior to flotation or trade sale.

One saga concerns the sale, after a very lengthy process, of Springer Science+Business.  Well, not much business any longer, since the guts of the small B2B operation that went into the mix when Bertelsmann went out had already been sold to offset debt.  In an earlier blog post (Springer’s Dance to the Music of Time) I looked at the potential of this deal to help consolidate the STM market, and concluded that while Informa was unlikely to do the trick (and so it proved) , putting Springer alongside Thomson Reuter’s remaining science interests did make sense.  Well, if that was an opportunity it went begging, since according to the Financial Times (10 December 2009) a deal has been struck with the Swedish private equity house, EQT, backed by the Wallenberg Family.  The reason the strategics kept their hands in their pockets was undoubtedly the debt issue: in the final analysis it looks as if Springer was sold for around €100 million, plus €2.2 billion in debt.

So this means that EQT will put in some fresh capital (€450 million says the FT), renegotiate the debt package at a new level of €1.6 billion, and then presumably refinance to take its profit out of Springer prior to a flotation in happier times when the public markets will be invited to take on these debts.  While the initial private equity intervention gave a strong new management team under Derk Haank scope to regenerate Springer, create efficiencies, make economies, restore margins etc – all of which they did in style – what does this new deal do?  Does it invest something in the company that it does not have already?  Does it improve its current industry-level profitability through creating scope for new investments in technology, or major acquisitions?  No, one sadly suspects it does not…in fact, it may just allow a wealthy Swedish family to eat at the same table where formerly the British Coal Board pensioners ate.  Not in itself an unworthy cause, but hardly a very progressive one for the industry.

Then again, look at what strategic buyers are doing.  Last week mighty Bloomberg bought the fledgling New Energy Finance.  Yes, Bloomberg.  After years of looking at everything and then emulating what it wanted, the very private Bloomberg has suddenly become an active purchaser.  The reason has to be speed.  Clearly, as markets move out of recession, comparisons between the major players in the financial services markets will become more acute. Bloomberg is the expensive one, yet Thomson Reuters is thought by many to more than match it in content.  This has to be a move about service levels and online commentary: energy is a vital market and New Energy Finance, the brainchild of Michael Liebrich, a man just as energetic as his subject matter, had grown a reputation for good commentary in a key sector.  Yet this was a start-up still in the initial growth spurt, so part of this decision has to be about the sort of growth that Michael and his team can do with Bloomberg support, as well as what this content adds to the Bloomberg offering.  Why this, why now?  The latter half of that question seems to be about speed to market – it is cheaper and faster to buy someone half way there than to start from scatch and try to overtake him, especially if you need what he can give right now.  And the energy information market is indeed contracting, as is the market for good financial commentary (Breaking Views would be the analogous case study there).

I should point out here that this blog has now reached 20 entries and while unformed and immature (i’ts the writers, I’m afraid) is very certainly available, and can be taken in a consolidation move while debt levels are as modest as its readership.  Offers please.

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