Jul
27
For “Never” read “When”…
Filed Under Big Data, Blog, Education, eLearning, Financial services, Industry Analysis, internet, mobile content, news media, Pearson, Publishing, Uncategorized, Workflow | Leave a Comment
Long years as an observer of information and media marketplaces have underlined one critical finding: whenever you hear someone say they will never sell an asset, you should be thinking about the circumstances under which they will sell it. I have long applied this thinking to Pearson, or at least since the early days of Marjorie Scardino, since she was so evidently pursuing the meatstore strategy for portfolio decomposition. Under this strategy you first detect the core strategy, in this case the pursuit of education markets globally, and then subordinate the other holdings to that strategy, only investing in non-core where you wanted to ensure that asset values were maintained. Then, every time you needed to make a strategic acquisition, you reached into the meatstore and sold a non-core unit, allowing strategic expansion without heavy debt and encumbrance.
This strategy has moved Pearson from being a collection of brands inherited by Scardino from the family of Lord Cowdray into the largest global force in education markets. It has brilliantly funded strategic purchases like Wall Street English. It has enabled the move from education content to services and now to solutions. It will yet see Pearson emerge as a major global force in online schools and institutions as well as accreditation and content: in a networked world it will be possible to be both a solution, and a supplier to competitor solutions, and a traditional service supplier as markets mature at different speeds and distance or location become less important than measurable quality in educational outputs.
Yet, for all its size, Pearson is still a small player in a large marketplace. And the market is still not fully networked or global, but slow, conservative and locally prone to government spending reduction or cultural differentiation. The downturn in the US disrupted Pearson’s banker market at a time when investment in rest of world markets was the key focus, and slow recovery at a time when governments are getting wise to how to leverage outsourcing, especially in testing and assessment markets, has affected growth and reduced margins. For the first time it may be possible to say that Pearson is shedding non-core assets not to buy strategic positioning but to buy time to allow growth strategies to unfold. This is a new take on the meatstore strategy.
In one real sense the sale of the Financial Times to Nikkei and the currently projected sale of the Economist Group must be good news for all involved. While the Economist had always been managerially independent, the FT had the potential to be a distraction, both in terms of investment needs and managerial time. And the FT, one of the few newspaper groups in the world worth buying, like the Economist, is in part a truly consumer-facing venture. As Pearson has found as it moves into consumer end-user educational markets, the business of selling to consumers is different from institutions. And managing operations that do both is difficult. And indeed structuring the management reporting lines of global consumer/institutional sales and marketing alongside the need for both vertical and global IT strategies is a taxing one. Clearly the two major information corporations who drew on Deloittes in recent years to create global matrix management schema are only in the very earliest stages of getting this right. Increasingly managing process and change is becoming as great a disruptor as technology or markets.
And it could be argued as well that under Pearson’s management the Financial Times has accomplished the huge transition that was required of it, and emerged as a digitally-led business. OK, it’s not a very big nor a very profitable business, but the world must get used to digital information businesses being smaller, and taking time to build margins. Dropping costly print would help, of course. And in the age of automated journalism it may be over-manned, but in that case it has gone to the right home in privately-held, hugely over-manned Nikkei, who will have the patience to see the job through while respecting the tradition. As a bid to move Nikkei off its domestic Japanese base into global markets the move carries less conviction since this is a trick which few Japanese information businesses have managed, but it may be that this is an opportunity for FT management to continue their global brand building in a market where Dow Jones seems to offer less competition than it did in pre-Murdoch days.
Back at Pearsons too, the ball is clearly at management’s feet, since they cannot plead lack of resources once they have completed the disposal of the FT and the Economist, and only have their minority position in Random House Penguin left in the meatstore (though arguably that deal could not have been done without the retention of that stake, so this may not be an active asset for the time being). Can they find an answer to ongoing tests market issues in the now hugely competitive US market (note the sale of the service side of California Test Bureau by McGraw-Hill Education this month). Can they sort the growth prospects in Latin America and make sense of those difficult trading economies? Can they re-align western Europe and exploit the private education potential there? Can they still grow rapidly in China while getting into smartphone dominated markets in India and elsewhere in the region? And all this at speed, using English language learning as a spearhead but not as the sole destination? Well, they have the management talent, though they may not yet have the configuration to make it gel. And they have the technology, though they need to be able to concentrate it on uniform platforms that allow rapid new product iteration. And now, sans FT, they have removed the distractions. The next year is thus critical.
Apr
2
Righting Copyright’s Wrongs?
Filed Under B2B, Blog, eBook, Education, eLearning, Industry Analysis, internet, mobile content, Publishing, Uncategorized | Leave a Comment
They are at it again, you know. I have warned about this before. It seems that you cannot stop legislators making laws. They seem to think it is what they are for, while we older people know that the only way to preserve a reputation as a wise law-giver is to give nothing away. Nobody is happy with a patched road or a mended fence. Most Western legal systems are full of patched legal garments, most legislators are patching the patches, many of us know that only revolutions will allow a complete remake. The Sumerian agricultural revolution and the laws of Hammurabi. The Byzantine revolution and the laws of Justinian. The French Revolution and the Napoleonic code. The Digital Revolution and the redefinition of networked trading and ownership rights…?
Well, you certainly need a broad historical canvas if you are going to start a conversation in this area at all. One man of vision over many years in this field is the British media lawyer, Laurie Kaye, whose latest blog (http://laurencekaye.typepad.com/laurence_kayes_blog/) on 29 March sets out the battleground for the digital media marketplace arguments for 2015. And I share his respect for the enthusiasm of Commissioner Oettinger of the European Union, while adding a touch of personal despair at how long we Europeans have been about this Single Market business. Who amongst us is not frustrated by the limitations of the world we have now moved into? The librarians and researchers launched their London Manifesto yesterday to try to encourage the Commissioner in the right direction. (http://www.cilip.org.uk/sites/default/files/documents/The_London_Manifesto.pdf). Well they would do that, wouldn’t they? Yet more and more their impatience is just an echo of common place resistance and outright defiance in the market place.
And its not just copyright as ownership, its the whole content trading system of which copyright is the centre piece. As a good Brit I pay my BBC annual licence fee, but the rule of territoriality in a global networked society means I cannot view the videos I can see in London while I am in New York. Each of the media has a different rulebook, yet we live in a world of multiple and multi media developments. Above all, the interests of the players in the cycle of content creation and distribution are beginning to diverge, and great gaps, more significant than ever before, appear between what authors want and need, and the way in which publishers, ever protective of their business model, require for survival. The increasing dissonance that I hear as I listen to the strident voices protecting the copyright regime of the last century (representing a business model where publishers held the whip hand), and the equally strident voices demanding the freedom in the network to control for themselves the way authorial output is distributed is becoming distressing. Please, Officer Oettinger, what is a man to do?
In some ways this started in the academic world. When we write the history, Open Access will be seen not just as a way of allowing all citizens to discover the content of state-funded research. It will also be seen as authors wanting to use the network, with its ability to create huge access and impact for global populations, as a way of building reputation in the communities they target. The communities where they earn their bread and seek preferment. And is this so very different from the science fiction author who spoke to me recently about his publishing as a way to create an income stream – in his case from lecturing fees, public appearances, film scripts derived from the content, and commissioned writing for on and offline magazines. The book made the reputation, just as the scholarly research article does, and the key issue is not its royalty yield, but the breadth of readership and brand recognition that it creates. All too often the defence of copyright is the defence of the publishing business model, without a realisation alongside it that the role and value of the intermediary which is in question here. Networks, we always used to say, disintermediate intermediaries. In a world where it is so relatively easy to create your online eBook, and publishers are deserting the scrutiny of unsolicited manuscripts in favour of bringing successful self -publishers into contract as authors, publishers must – and can – demonstrate the value of their editorial preparation (something few now indulge in for cost reasons), their ability to discover talent and their excellence as reputation formers and mass marketeers. These are not all areas of strength for everyone, but they are becoming survival skills. Recall for a moment how proactive agents have been diminishing the rights granted to publishers in order to increase the flexibility of their clients. Recall for a moment how often now (Quebec City this week, Montreal airport last year and the Italian railways just before that) you can download an eBook from a library in order to read while travelling.
So when we want to debate the small print of copyright licensing rules we have to bear in mind that the revolution coming will have such violence that it will completely transform the way that longform text is created, marketed and distributed. No industry can be kept on life-support by virtue of making a concession on library lending while winning a point on fair dealing. We now need to resolve, as a matter of prime concern, whether territoriality in terms of making agreements about content is of any continuing use. We need to address issues that affect market receptivity, like net neutrality. We have made huge strides, thanks to the efforts of Lawrence Lessing, in writing into licensing a real recognition of origin and authorship while freeing up a good deal of re-use, and we need to look at ways in which the Creative Commons movement give pointers to future treatment in a licenced – and implied licence – network world. But above all we must urgently clear our minds and begin to redefine “ownership” of intangible intellectual property. For anyone under 17 this is a meaningless blog , and no one could explain it to them. Living in a world where the network sorts out licences and rewards on an M2M basis – machine to machine – this will never be an issue. Until then, different rules will govern downloading from those that govern streaming, and the lawyerly debate on whether that was a product or this was a service will create fresh intellectual property from the argument itself.
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