In 1994, New York publishing giant Simon & Schuster was racing headlong into the digital future when it discovered a major technology gap. Clearly, books would continue to be the mainstay of the business. But Chairman Jonathan Newcomb had set an ambitious goal: to generate half of Simon & Schuster's revenues from electronic publishing--via CD-ROMs, videodisks, and the World Wide Web--by 2000, vs. 25% today. Plus, he saw big opportunities in custom publishing--quickly creating textbook-CD-ROM packages customized for one professor's course, say.
But how to cope with this digital deluge? There would be thousands upon thousands of graphics, video clips, and audio files to manage as well as millions of pages of text. Each year, the $2.2 billion company's Higher Education Div. alone uses 85,000 photos and illustrations in textbooks and CD-ROMs. To hit the CEO's target, the company would have to be a lot better at locating, acquiring, recombining, editing, preparing, and accounting for those and other "intellectual properties." But if the company could improve these processes, it would produce not only growth but greater profitability. As Chunka Mui, partner at Chicago consulting firm Diamond Technology Partners Inc., puts it, "if you can customize new publications without raising your costs, the new revenue drops directly to the bottom line."
So Newcomb ordered a reengineering of Simon & Schuster's editing, production, and even certain accounting processes. It's all built around a powerful new Corporate Digital Archive (CDA) designed by SRA International Inc., a supplier of information systems for government agencies and corporations. The $750,000 computer system, says Newcomb, "will become the centerpiece of how we develop and produce everything as we move forward. It will give us the ability to reuse information over and over again."
Indeed, such digital archives are fast becoming a must for publishers and other media companies as they careen down the Information Superhighway. These "content providers" won't be able to compete effectively if they continue to spend the time and money to handle information stored on paper and film. With a digital archive, it's possible to organize everything in databases, recall material as needed, and combine it instantly in new ways--pulling biographical data to help promote a movie on a Web site, say.
Simon & Schuster's isn't the only digital archive under construction. Time Warner Inc. is digitizing its magazines' photo collection, and Conde Nast Publications Inc. is doing the same with 350,000 fashion shots. Corporations such as General Motors, Amway, and John Deere have set up digital archives of their promotional materials, to help in-house and outside designers. The McGraw-Hill Companies, Simon & Schuster's main rival in textbooks (and BUSINESS WEEK's publisher), is setting up specialized archives in each of its business units, too. On paper, at least, Simon & Schuster's plans are the most ambitious yet, with one archive to serve all 30 of its business units.
"FOUNDATION." Consider what it's already doing for the $400 million Higher Education Div., the first unit online. Researchers there used to spend weeks finding photos for a new textbook, sifting through disjointed files and searching stock-photo agencies. Then, photos would be sent out to be separated and proofed at a cost of $75 each. The separations were sized for a specific book, usually making them unusable for other publications. "We always had to start from scratch," says Henry Hirschberg, the unit's president.
All that has changed. Now, there's one place to start looking for photos--the CDA, which has 40,000 of S&S's photos and will soon include more than 40,000 diagrams, charts, and other line art. And the company is working with stock agencies such as Photo Researchers Inc. and Tom Stack & Associates to get tens of thousands of their photos stored there, too--an easy way to win more of Simon & Schuster's business, says George F. Werner, executive vice-president.
Crucial to any archive's effectiveness is its ability to locate any item. Cataloging images and other nontextual items presents a huge software challenge (box). Simon & Schuster turned to SRA International Inc. for technology it developed for intelligence agencies. SRA's PhotoFile software accepts natural language queries, not rigid computer codes, so it can even understand captions written years ago. "We're capturing the past and building the foundation for our future," says Richard Walkus, an assistant vice-president who runs the archive.
But that's just the beginning. Once a photo has been chosen, the archive tells another set of in-house systems to create a print-ready copy in just the right size and image resolution--high for books, low for the Web, for instance. And the cost is now just $6 or $7 per item, which will produce savings of $3 million this year, says Werner. Plus, the system automatically routes images and related electronic business forms--rights contracts, for instance--from desk to desk. And it tracks each use of an image, automatically calculates royalties, and adds invisible "digital watermarks" that can identify illegal electronic copies taken from a CD-ROM or Web page.
Simon & Schuster is now scrambling to expand its archive--and open it to more people. It's indexing reams of text and, starting next year, videotape and audiotape. And on Dec. 15, the system will become accessible for browsing by editors anywhere on the company's intranet. Now, Newcomb has his I-way vehicle.