Jul
30
Good Bank, Bad Bank, Big Bank, Sad Bank
Filed Under B2B, Big Data, Blog, eBook, Education, eLearning, Financial services, healthcare, Industry Analysis, internet, news media, online advertising, Pearson, Publishing, Search, semantic web, STM, Uncategorized, Workflow | Leave a Comment
From Olympic Exile on the splendid South Shore of Nova Scotia, I can observe that the banking crisis continues apace, and that the original Swedish solution – put all the smelly bits into a special container called a Bad Bank and cut it free from the Mother Ship – still holds great appeal. I can also see that the financial market analyst demand to cut media companies up into “high growth, strong margins” companies and “low growth, declining margin” companies also has great appeal. We have seen it with McGraw-Hill and now with News International. The equity market analyst’s view (and media markets are almost always at their most dangerous when those who lead companies feel forced to follow the views of those ultimate exemplars of power without responsibility – or experience) seems to be at the moment that the assets which have responded least well to the digital revolution, or have been slowest to react, should be cordoned off and cut free. Very strange: I thought the whole idea of “portfolio” in media ownership was that assets developed at different speeds, and the fast growth ones thus gave “cover” – time and capital – to allow low growth assets to become fast growth again – perhaps with the help of judicious bolt – on acquisition on the way.
And then there is the question of cycles. Some of us apparently work in mini-cycles – the turn of markets within an 18 month period according to an analyst friend – while others are “macro-cycle minded”, which is where I am apparently involved. So if I thought that the reason for McGrawHill to hold onto its Education division was that education, alongside Healthcare, is the most enduring long term growth market we have, and that the portfolio duty of Standard and Poor’s was to enable McGraw’s education unit to get back on its feet, challenge Pearson’s leadership and buy the right catalytic add-on, then I was clearly wrong. Yet it seems to me clear that the future of rating agencies is quite as murky, from both a regulatory as well as a digital standpoint, as any other market. And is McGraw’s B2B, despite some distinguished work, really in the forefront of digital services and solutions in its verticals? Yet these are Good Bank assets, and Education is Bad Bank.
I could write the same about News Corp, television and newspapers. I am certain that no broadcast media have really absorbed the meaning of a networked society, and this is as true of the world of TV stations and cable companies as it is true of newspapers. Of course, one way around the problem is to sell while the going is good, as DMGT so signally failed to do in 2008 when they refused an offer of £1 billion for Northcliffe (regional press), an asset worth around £250m today. Sentiment forbade such a move as it once did at News Corp, so are players like DMGT destined to split to please investors? Apart from my respect for the bravery and ability to change involved in creating new B2B orientated DMGT out of old newspaper DMGT. who is to say that here no digital local manifestation can be created which will not replace traditional local newspapers? And how valuable, since they have them, would those local brands and franchises become in the new local? Especially at helping bits of B2B2C in markets like property reach ultimate consumers.
And where does the splitting end? The arguments that apply here apply equally to the Guardian Media Group, and are complicated by the fact that one investment made to give cover for the newspapers, EMAP, has faded faster than the newspapers themselves. Hopefully selling its half share of this and Autotrader will adjust the losses, and digital revenues (now up to £14.7 m and growing by 26% this year) will do the rest. But here we hit another problem: digital businesses may be more profitable, but they are also smaller. Digital newspaper ad revenue (Mail Online now stands at a forecast of £327m, with a target of £45 m in 2013) models are small, as are paywall models (Times Online now reaches £27m pa after a price hike) And the story of digital books is “less revenue, more margin, cannibalising customers to create a slightly smaller, slightly more profitable company”. What happens when we finish that short cycle?
Maybe the answer to the scale problem is that scale is becoming less important anyway. In a digital world if you have 50% of the workflow and solutions business in agriculture, why should you be in the same group as a content provider to the oil industry? Certainly our current ideas of scale came directly from the print world – you needed to be big enough to finance print runs that took, a day, a week or a year to sell. The cash flow model demanded scale. This is not so today, though I can well imagine a world where deploying common (and very expensive) technologies and having sufficient internal know-how to do so becomes a scale argument. Few B2B players “re-platforming” these days can be doing so, at quite a modest scale, at less than $1.5 m, even if their content is already in good XML order. Larger players face bigger bills, and these will be ongoing as we all go semantic web and Big Data. Then again you may need to be big to finance this as well as investing in collaboration with third parties – content-sharing, delivery mechanism-sharing, solution-sharing. And you may need to be big and diversified to fight off the next round of investors in this sector – the enterprize software vendors who will want to add your B2B solutions to their architecture (or maybe you will need to be big enough to attract them: it can be hard to tell).
So settle back for summer and await the next wave of splits rumours. Back to splitting up Informa? EMAP is already, like Gaul, divided into three parts and ready for resale. Pearson should certainly, in the analysts view, sell Penguin and the FT (despite the fact that they are appreciating nicely now, and they will only be needed as a votive offering to the markets when their sale can finance the next big education push/acquisition). Surely Wolters Kluwer should be subject to this one too – financial analysts sought the sale of its education and its academic publishing assets, and, having succeeded, still hunger for the news that Health is being sold away from law and tax.
Or maybe we should say that it is customer markets that change the size and scale of assets, not investment analysts who have a key interest in the outcomes that they recommend. Maybe we would get richer listening to our customers than listening to these back seat drivers?
Jun
29
Learning from Ourselves
Filed Under Blog, eBook, Education, eLearning, Financial services, Industry Analysis, internet, mobile content, Pearson, Publishing, social media, Uncategorized, Workflow | Leave a Comment
It was a week. In the corridors of power, media tycoons planned post-imperial escape routes. And we who were content to play in a corner with, in the Yeatsian line, a looking glass and some beads, found revealed wonders in the very simplest of things. So Rupert Murdoch did a McGrawHill and divided his imperium into Good bank/Bad bank, and the latter got all the stricken print, from the Times to Harper Collins. The image which stuck with me, with the hacking debacle somewhat in mind, was the US exit from Saigon. I tweeted that I could hear the helicopter’s whirling rotors above the embassy roof. The tycoon’s change of heart displayed just that sense of panic – “…OK , lets burn the papers and go …!” – leaving in the air the question of who can be persuaded to invest in the Bad bank, and at what price?
Back down at street level, two very encouraging developments took place in educational activities that I have been tracking for a very long time. While Mr Murdoch bundled Joel Klein’s educational division into the Bad bank category, I think we are pulling back round towards a very clear and obvious progressional framework for new service development. At the beginning of the month, in “After the Textbook is over” I tried to track the way in which narrative, especially in video base format, will change our approach – or, rather, allow it to revert to the ways in which learners have always learnt. And I looked at buy and build strategies aimed at creating real weight in the serious educational gaming markets. So now, at the end of the month, let me add two more elements to the mix. The platforms on which the new learning will be presented will be mobile, tablet and post-tablet, and their mobility will need support for teachers as narrative creators, learning journey planners, learning games implementors. The resources and assessments are even now being developed. And it will be critical to the success of all of this that teachers at all levels support each other, that successful learning journies can be adopted, amended and replicated, and that the behavioural tracking which we can do so much more effectively in these digital contexts is re-applied all the time to help get these environments grow responsively. (It remains an interesting question: why do we aspire so strongly to apply behavioural feedback to target advertising, yet use it so relatively sparingly to improve interfaces, online interactions, and, above all, the learning experience!).
Three news stories this week illustrate these matters for me. In the first instance I was very taken by the news (and it has been a long wait) that Global Grid for Learning (www.ggflondemand.com) is now an accredited part of the Microsoft Education Suite. Global Grid for Learning was developed by Cambridge University Press as the neutral storehouse and trusted broker for copyright-cleared information, allowing a teacher-facing aggregation of learning objects with good metadata connectivity to act as a quarry for lesson planning and narrative assembly. The service is now owned by EduTone in California, though why on earth Cambridge sold it last year when it was so close to success still beats me. The fact that it is now the supply point in the Microsoft Education Suite in the very week when Microsoft announced its entry into the tablet market via its Surface strategy speaks volumes for the importance of this type of work (and also perhaps says something sad about the inability of some ancient University presses to change gear – Cambridge has now effectively left its domestic education market and removed its bridge to global markets).
But not all teachers will plan lessons or make journies or write narratives. Many or even most will borrow, imitate or adapt. This means that good practise has to be available and exposed, and that teachers have to respond to it. So it was hugely encouraging this week to read the announcement from the American Federation of Teachers that their Share my Lesson site will become available in August. This is as a result of their collaboration with the UK’s TSL Education (the owner of the Times Educational Supplement, another Rupert Murdoch company dumped on the road to the Bad bank, but doing very well in private equity hands). TSL Education created TES Connect in 2008 as a way of creating a sharing environment for British teachers. The service currently has some 2 million members in 197 countries and they download about 2.5 million lessons per month (http://www.tsleducation.com/). So gradually a global architecture moves into place to fuel the resource provision requirements of an education world which now has the other infrastructure environments it needs (networks, VLEs and LMS technology for storing, serving, collating results and communicating with parents, employers etc.). It is often said, and I have sometimes said it, that the system is now dominated by assessment: in truth, we are moving not just towards continuous assessment, but to the point where every learner knows when they have learnt something, and so does the systems around them. In order to make that vision sustainable we have to up the quality of the game in terms of the learning journey itself, and no one is doing more for that than TLS Education. The US is currently, in the bundle of 34 measured countries taking part in the Program for International Student Assessment (Associated Press 19 June 2012), 14th in reading, 17th in Science, and 25th in Mathematics. Whatever this means, it also means that teething pains in re-engineering the teaching workforce should not be a deterrent when there is so much opportunity for improvement.
And the last story? It has nothing formally to do with educational, but it certainly demonstrates the feedback loop I was talking about earlier. Thomson Reuters launched its MarketPsych Indices (TRMIs) last week “in order to give real time psychological analysis of news and social media”. Here we are trying to “model the impact of investor psychology” and eventually develop “under the radar investment hypotheses”. In The whole field of learning more about what we know through analysis of how we talk about it, we are still in the nursery. Apply this in education and our learning journies may emerge in an interesting new light!
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