Business To Business Publishing: Net Business - Many business to business publishers believe an online presence can enhance, rather than kill off, their print titles. It seems their biggest threat could come from cash-rich start-ups. Robert Gray reports

The internet is an emotive and vexed issue for business to business

publishers. Its rapid penetration has brought tremendous opportunities

but, at the same time, much to worry about. They have to decide which

print magazine brands to take online, or whether to create net-only

brands.

They have to look at the implications for existing print titles of

embracing the internet, and the ramifications for advertisers. Then

there’s the question of which business models to adopt for their

websites, as well as considering how much danger internet start-ups may

pose to their hegemony in the market.

Doing nothing will not do at all. Over the past few years, leading

business to business publishers have poured many millions of pounds into

developing product for the web, hopeful that investment in this new

channel will maintain their position as serious media owners.

Some will succeed but others are sure to fail, caught out by the

fast-changing nature of the flow in business information. There is a big

fight ahead, a struggle that some experts believe will reshape the

business media landscape and the way in which information is

delivered.

In his keynote presentation to the Periodical Publishers Association’s

Conference last May, Dennis Publishing’s founder, Felix Dennis, gave a

dire prognosis for traditional business to business publishers by

explaining why he had sold his controlled circulation IT titles to Reed.

’Owning my own interactive agency, staffed by 20 or 30 internet

professionals, for the past four years has led me to recent predictions

that are so gloomy I readily admit to having once considered selling

Dennis Publishing in its entirety,’ he said. ’Many observers questioned

Dennis Publishing’s disposal of our highly profitable controlled

circulation titles last year. Well, now you have your answer. Controlled

circulation magazines are even more vulnerable than consumer titles to

the growing power and ascendancy of the internet.’

However, many business to business publishers believe the net may

enhance, rather than kill off, titles they have nurtured for years.

Support for this theory comes, among others, from the investment bank,

Merrill Lynch, which last September published an interesting report

outlining ’golden triangles’, a media strategy for the online world. The

report argued that publishers should create online communities or buying

clubs to form one point of a golden triangle, with a trade magazine and

a trade exhibition comprising the other two points, thereby creating a

three-channel strategy for communicating with business audiences. ’Media

companies that embrace the golden triangle strategy have the greatest

chance of maximising their online potential,’ the report said.

Jim Muttram, Reed Business Information’s electronic media director,

says: ’The interesting thing is that no medium has replaced another one,

with the exception, perhaps, of the illuminated manuscript. TV didn’t

replace radio. There’s now more radio than ever, it’s just that it has

become different.’

Intriguingly, RBI, in common with a number of publishers, is employing a

range of business models on the net. It has created subscription

portals, usually based on existing magazine brands; it has created

recruitment advertising-driven sites, such as computerweekly.com; and

even developed a site that aggregates the recruitment advertising from

its other online properties, totaljobs.com.

There is also a ’hybrid’ model that not only generates advertising

revenue, but taps into the e-commerce stream by facilitating

transactions. A good example is the Farmers Weekly website, which mixes

advertising and editorial with an agricultural auction facility run with

the help of the online auctions specialist, QXL.

What has happened with Farmers Weekly typifies the great opportunities

offered by the net. Offline, the title can put buyers in touch with

sellers; online, it can help them execute the deal. Muttram says: ’It’s

not just publishing on the web. It’s about what you can do to help

people do their jobs.’

This altered way of thinking is exemplified by Emap’s announcement last

month that it is investing pounds 4.4 million in the launch and

development of a new web business, Construction Plus. Targeting

architects, civil engineers and construction contractors, this ’series

of community-focused web portals’ is intended not only as an information

source for the pounds 60 billion a year UK construction sector, but also

to form part of its supply chain.

’Construction Plus is different in that it is a series of

community-focused web portals, recognising that the construction

industry is not a single entity,’ Emap Digital’s chairman, David

Grigson, says. ’The construction industry is both large and highly

fragmented, offering good growth opportunities for this initiative.’

Emap’s portfolio includes Glenigan - the leading supplier of project

information to the construction industry; Interbuild exhibition, the

largest UK construction event, expected to attract 80,000 visitors this

year; and the industry weekly magazines, Architects Journal, New Civil

Engineer and Construction News which, Emap claims, have a combined

readership of 85 per cent of the construction market. These titles will

provide both considerable content and potential advertising sales

support for the new portals.

Initially, revenue will come in the main from brand, product and

recruitment advertising. Longer term, Emap plans to tap into other

revenue streams including pay-per-use and subscription services for

users, e-commerce deals with third parties and - most significantly -

commission revenue derived from enabling transactions such as plant and

building product sales, tenders and contracts.

The potential for matching buyers with sellers - and, where possible,

taking a chunk of the proceeds from any transaction - has persuaded many

publishers to create online properties that combine the content and

propositions of all the print titles they own in a broad sector. For

example, the IT publisher, Ziff-Davis, has brought together content from

print brands such as PC Magazine, PC Direct and IT Week, under the

online umbrella, ZDNet. Its sector rival, VNU, has adopted a similar

approach for its computer titles with vnunet, while Centaur

Communications has created a site based on its marketing and design

titles.

’What you don’t want is just one view necessarily, which is what would

happen if you put your print product online separately,’ ZDNet’s UK

managing director, Shobhan Gajjar, says. A better approach, he believes,

is to offer readers a variety of perspectives.

Paradoxically, putting so much content on the web appears not to have

cannibalised the print product - for the moment at least. Publishers

report that circulations of some key titles have risen since they

established a web presence, because this has allowed them to promote

their print brands to new readers. To keep this pattern going will

require real savvy from the media owners. Vnunet carries brief product

reviews called Snapshot Tests. But to create a point of difference

between the print and online offerings, visitors are referred to the

print title, PCW, for comparative reviews.

The instant dissemination of business news made possible by the net has

led to a shift in emphasis in business to business print titles away

from blanket news coverage to a greater focus on in-depth analysis and

industry personalities.

The more the online universe grows, the more apparent this shift will

become.

’A weekly newspaper can’t compete against a daily online news service

for breaking news,’ VNU Business Online’s managing director, John

Barnes, concedes. ’But you can make the paper more authoritative. A

5,000-word analysis is probably easier to take in when reading a paper

while you have a coffee.’

Barnes sees a healthy future for print, although he expects to see a

rekindling of the ’is print dying?’ argument as the net becomes more

’dynamic and like TV’ - as bandwidth and other technology issues are

resolved. At present, the fact that the amount spent on online

advertising is only a small proportion of the print equivalent - and

that online is planned and bought by a different set of people, often at

net advertising specialists, such as VNU Business Online’s retained

agency, media21 - means print titles remain financially secure for

now.

But what will happen as more readers and advertisers migrate on to the

web? Will there come a point for many print titles where a lack of

income and, consequently, investment, turns them into pale shadows of

their former selves?

Muttram points to the rise in circulation of RBI’s Estates Gazette from

26,000 to 29,000 since the launch of its interactive counterpart. The

feared cannibalisation of readership has not happened, but Muttram

wonders ’whether that’s sustainable over time is another question’.

There is no doubt that traditional business to business publishers have

much to fret about. There is the golden triangle scenario. But

sustaining such precious geometry will need increasing amounts of skill.

Moreover, countless dotcom start-ups want to carve a niche for

themselves in the world of business to business e-commerce, some with

business models that involve editorial content which are sure to

encroach on the territory publishers had assumed was theirs alone.

Muttram says: ’It’s not that start-ups have better ideas, but that their

funding base is different. Venture capital is quite easy to acquire,

which makes them quite well off. Also they tend to keep reinventing

their business models so they can have multiple cracks at it.’

NEW COMPETITION FROM INTERNET START-UPS

Network Multimedia Television is the name behind Silicon.com, an IT

website that has editorial content and online advertising at its ’heart

and soul’. After raising seed capital of pounds 4.5 million and second

round funding of pounds 11 million last October from a range of big name

backers, NMTV is well positioned to develop and market its site. Plans

to expand coverage across Europe are under way, with staff sought for

offices in Germany and France.

’When we launched in July 1998, there were very few people who really

understood what the internet is all about,’ NMTV’s marketing director,

Anna Russell, says. ’Some people laughed at us, but now they can see we

are a massive threat to traditional publishers. Some publishers can’t

get their heads around the transition from the offline world to online

and how to make both work effectively.’

The rationale behind Silicon.com is to position itself as the leading

online TV news and recruitment service for IT professionals across

Europe.

The TV part is important as NMTV has a strong belief that video/audio

interviews have a strong appeal to its audience. Overall, the vision for

Silicon.com is to build a ’next-generation media business that delivers

internet-based business news and information products to supersede

traditional controlled circulation business to business magazines’.

Silicon.com has been praised by the independent auditor, ABC ELECTRONIC,

for the quality of its information on users and prides itself on being

able to offer highly accountable online advertising. Unusually,

advertising is not sold on the widespread cost per thousand model.

Instead it offers exclusive sponsorships and what it terms ’response

banners’, whereby minimum response rates are guaranteed to

advertisers.

The idea is that advertisers can use Silicon.com to raise brand

awareness among a tightly defined target audience, while also generating

qualified sales leads. An online advertising campaign for Microsoft is

understood to have generated about 3,000 sales leads over three months.

Silicon.com also claims it is among the top ten UK websites in terms of

revenue based purely on advertising and sponsorship.

Since the relaunch of its daily news section as a TV-style feature last

March, Silicon.com has been offering TV-style advertising. This enables

advertisers to reuse existing creative designed for broadcast TV by

delivering it to a targeted audience on the internet. Contract

e-publishing services are also on offer, including the creation of

internet TV programmes or promotional microsites for advertisers and

sponsors of the Silicon.com site. Recent customers include Microsoft,

Nortel and Kyocera.

The danger to traditional publishers is plain. And, given the mania for

investment in dotcom start-ups, many more newcomers are sure to

follow.

One set to launch in the coming months is bEurope, formed by the

erstwhile head of new media at Guardian Newspapers, Justin Walters, and

Emma Lewis, who has business to business publishing experience. Details

of their model are still under wraps, but it is sure to compete for

revenue with publisher-backed sites, even without a strong editorial

focus.

’We’re a new generation business to business company and our objective

is to build a portfolio of business to business sites,’ Walters

says.

’Information is no longer just flowing around the place. Transactions

are flowing as well, so the value of connecting up buyers and sellers

increases by an order of magnitude. The VNUs and Reed Elseviers are

threatened because they are slow moving and have internal politics to

deal with.’

This article was first published on Campaign