Oct
1
Who Wants To Be a Millionaire?
Filed Under B2B, Big Data, Blog, eBook, Financial services, Industry Analysis, internet, online advertising, Publishing, Search, semantic web, Uncategorized, Workflow | 1 Comment
As I read the headline my head filled with Frank Sinatra and Celeste Holm.”Who wants to ride behind a libre chevaux / Do I want? No, sir”. But the headline covered a story that every attendee at last week’s PPA (Periodical Publishers Association) Business Media Digital Publishing Conference in London should have been forced to read and repeat before taking a seat. It would have been the antidote to the head-nodding, comfort rag clutching, industry-at-prayer stuff that went on at the beginning. With an agenda stuffed with new business models, change agents, catalytic and galvanizing case studies, we had to approach the subject of digital publishing by bleating, in chorus, that we were safe from “migration” and its perils if we had “really good content” and that nothing bad would happen to us if this really good content was what our clients really, really wanted. And to this I can only say, in my normal and mild-mannered way: “Rubbish”!
So lets take a deep breath and go back a step. The article on earning a million was sent to me by my daughter as a follow-up to both of us quoting the performance of the web service www.teacherspayteachers.com. Here US teachers deposit their learning plans and receive royalties on their re-use. Deanna Jump, a kindergarten teacher from Georgia, has become the first teacher to earn a million dollars in royalties. The site has had 50 million page views in the last 30 days and teachers post over 800 resources a day. The site has a rival (not mentioned in the article) in the shape of the UK periodical Times Educational Supplement, which has adopted this business model and teamed up with the leading US teachers union in a jv, while exploiting a global market from London. As advertising retreats the TES has executed a wonderful transition: not migrating so much as re-inventing itself in close alignment to what its readers needed to be better teachers. Indeed, in some ways this is re-inventing the textbook as much as the magazine, but whatever it is the outcome is the same: understanding how users work and supplying (in this case user-generated) content in the right context and with the right interface is the new publishing.
So what got my goat? That morning I had flown in from a wonderful cultural and artistic exploration of Georgia and Armenia, landed at dawn and rushed straight to the conference centre to chair my session. Slightly light-headed with the joy of thinking about new things for a couple of weeks, and happy at being on time, I settled into my seat to listen to Duncan Painter, CEO at Top Right (aka EMAP), being interviewed. I have always understood him to be a shrewd and intelligent man, and if I was a critic of dividing EMAP horizontally into three so that events and publishing could be sold, that was purely because I thought that GMG and Apax could make more by selling the verticals. Here he skirted the fact that two thirds of the outfit was for sale, praised his publishers (no doubt deservedly), and launched into the old “as long as we have our great content we are safe” nostalgia of the last century.
Duncan gave a view of publishing that would have been a safe compliment to his hosts around 1991. Everything will be OK if you have quality content because people will always want that. For a dreadful moment I thought he would say “content is king” but he checked himself. Now I know that he was once at Experian, a superbly successful company who add value to what is becoming increasingly commoditized content – company information. So much so that a later speaker, Damian Kimmelman, at Duedil (the PPA’s Newcomer company of the year from the previous night’s awards ceremony!) values it so highly that he gives it away. He then adds value with his data connections, his contextualization of third party content – and will no doubt do so more effectively as semantic search intensifies the re-exploitation of this material in new contexts and through new connections.
Duncan’s theme was echoed in the next session by Rupert Turnbull, the Publisher at Wired UK. Again we had the classic Publisher stance – the world will beat a path to your door if the content is good enough. Ironically, here he fingers a critical problem of our times. “Good Enough” content very often supplants “the best”. The story of Google could be written in these terms. In Q&A I protested: I use Wired not because of its articles but because I can flick through and find new leads, using it like a check list of change and noting what trends are now seen as popular enough to get this sort of treatment. Do I value it as content? Not really: like the Economist and the Tatler it is consumer publishing created to support high price display advertising by parading what a certain social grouping all think they should know.
Then Chris Flook of ICIS spoke, quietly but to great effect, and I was at once back in the world of real understanding of how users behave and how solutions can be grafted together for them. In my own session Hilary Lambert of Thomson Reuters spoke convincingly about how you re-framed access for lawyers on mobile, and Sean Howe of IHS Janes pointed to a revolution in visualization – effectively summarizing and linking this content in a way that presented it more effectively within the user requirement. Greg Kilminster of Gambling Compliance demonstrated that the compliance environment wraps around gaming as effectively as financial services, and Jonathan Morris, fresh from the triumphs of DataExplorers, launched into a whole spate of interesting start-ups that I shall come to anon. In short, this was a really interesting conference, with some fine speakers and some really fresh ideas about business models and about understanding customers. It was summed up for me by Jan Reichelt, co-founder of Mendeley, who has built a brilliant business by helping scientists understand the content they have already, and learn what they need by understanding how their peers behave. In other words, his content is content about the performance of users in the science labs of the world – content created by the network which may be more valuable than the underlying content itself.
Once upon a time content in this industry was the reworked press releases that kept the advertising apart on the printed page. It was never valuable and it isn’t now. What is valuable is a deep understanding of what users need in order to better accomplish their work – and a determination to build technology and content into contexts that make improvements that people will pay for and where they will deposit their own content as well. So please, organizers, can we at last stop beginning conferences with the Hymn to Content? And ban the word “migration” Re-invention is what we need!
Aug
5
In Search of Enduring Value
Filed Under B2B, Big Data, Blog, data protection, Financial services, healthcare, Industry Analysis, internet, online advertising, privacy, Reed Elsevier, Thomson, Uncategorized, Workflow | Leave a Comment
Yes, I remember Dun and Bradstreet. In the old UK headquarters in High Wycombe, the “white elephant” building that was intended to become the global data centre (in the days when you concentrated data instead of distributing it) had a waxwork figure in the foyer depicting a frock-coated Mr Dun (or was it Mr Bradstreet , or Lewis Tappan , the real founder?) collecting together the vital credit rating clues of the 1840s, as well as a discreet reminder that Abraham Lincoln had acted as as a data collector in Illinois in the 1850s. But the company I knew was a large and prosperous portfolio player, the very demonstrator for the theory that markets never go all bad at once, and that change in one can be nurtured from sustained growth in others. Under the portfolio, if I recall correctly, there nestled Nielsen in market research , IMS Health in medical market research, Donnelley in directories and market-leading marketing services, Cognizant in technology, Moodys in global rating services and Hoovers in company profiling. Never, you might say, was there a better example of a company with a portfolio of related interests who could interconnect these data collections to create fresh value in wider marketplaces – and take it all global as D&B itself was already going global. What a huge opportunity that now seems to create value through connecting hitherto unconnected data values and effect the type of transformation that Thomson Reuters are now attempting.
But the voices that D&B listened to were not the voices that said things like this. They were the siren voices of the market, who said that short term values could be increased by selling off all these allied companies, organizing the buyback of shares on a major scale and creating a greater value in the parent than would have been possible if it had remained in the group. So all of these companies went, and mostly to private equity buyers. But this was still not enough in terms of value creation, so the majority of the overseas subsidiaries were franchised to local operators , with valuable operations like China, Russia, Australia, and Germany having their data leased out to previously competing market players, who would then pay fees and royalties and contribute to the global data holding (now around 200 million companies and 53 m details of directors) in return for local re-use.
Markets and managements change, and over time D&B have bought back Hoovers ( revamped and without its research services ), and bought out their local franchise holders in places like China (where they now face a local data privacy infringement case) and Australia. No one adds the loss of value from these buybacks to the long term calculation, but presumably at some point the company became aware that by paring itself to the operational bone in search of value, it was actually losing opportunity. Now we gather (Wall Street Journal, 31 July 2012) that the company has been seeking a buyer for the past year, and has now appointed financial advisors to “explore opportunities” that may or may not lead to a sale.
D&B know all about creating value. In 1963 they created the DUNS number , forcing consistency and their own metadata on a market they meant to dominate globally. In just the same way IMS Health created its proprietory BRICS system for measuring medical activity in a community. Here were the forefathers of dominant metadata systems, whose value creation (think of the recent Thomson Reuters argument with the European Union over its RICS metadata nomenclature) is the bedrock of value add in data driven systems. Given its birthright, D&B might have been the dominant player today in value-added workflow services and systems offering solutions in areas like procurement and customer profiling. Question: has it been competitively outflanked by Experian (compare performances in Brazil, for example, where D&B have been since 1933) and lost touch with a value growth plan beyond buying back the franchises it once leased out?
It seems to me sometimes as if value in the sense that markets use the word is in fact a bell curve. It is clear how the asset sales drove D&B’s valuation up one side of this and how it has peaked through an inability to add fresh value in the narrow front on which it now operates, without the advantages of platform integration and Big Data-style development. It is possible that in places where these factors have come together (insurance risk in the US would be an example, where Lexis Risk use these elements to dominate in a related but consumer-orientated marketplace) it may be very difficult, without very extensive strategic partnerships and joint venturing, for D&B to prevent itself from losing ground.
So does this mean sale at a discount to a private equity player, or are there trade buyers who would offer a premium. Before Sanford Bernstein suggest again that Reed Elsevier should sell Lexis Law and buy this, let me just say that, in my view, the only real potential fit is with Thomson Reuters, and they probably have enough on their plates without trying to absorb a $1.7 bn revenue player, or Bloomberg. Competitors would all face anti-trust issues, but enterprize software and systems players might be interested – and D&B already has good links with Oracle.
A friend reading the last two pieces on this blog – a sort of odd trilogy on valuations – kindly asked how the UBM announcement that it “might” sell its “data services” fitted into all of this. Surely, as with D&B, we do not sell data at the moment: instead we try the alchemy of value add. So I have looked at this too, and am now even more confused than when I started. For example, by “data services” UBM appear to mean the databases from which they once sourced their print directory products. Apparently they have found that advertising online earns such diminished CPMs that it is very difficult to sustain the services. Similarly with Tech Insights, which they acquired and seems to suffer from the same problem. Is this surprizing? Not at all, since unless that data can be recombined with other internal or third party content there is no real hope of getting a subscription value from it. Advertising online is always going to be dodgy territory and at best a subsidiary income source.
And what does all this demonstrate ? Is the portfolio model broken for good and cannot ever be mended ? Or maybe D&B were right fifteen years ago , as Thomson Reuters are now : you can build portfolio if the players you buy are data-related and if you have platform and distributed search going for you . When D&B lost faith in their original model they did not have the technologies to do the job . So they followed the equity market view of value , and the chronic short term thinking that results from that has brought them to this . Now comes a more interesting question : what is credit rating and how do you reconstruct the service future of this marketplace ?
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