Happy IDG story no salve for dying media companies

(Updated 5/7) There’s a happy-dappy profile of tech publishing and conference giant International Data Group in today’s New York Times. The story notes how IDG’s publishing arm got 86% of its revenue from print and 14% from the web five years ago but now its getting slightly over half its revenue from the web. Wow. Indeed, this is seen as some kind of important and hopeful sign for the publishing and media business at large, with a comparison to the decision by The Capital Times newspaper to abandon its print edition and a closing quote from venture capitalist Stewart Alsop that “what’s happening at I.D.G. is a fairly accurate map for every other publishing organization.”

I hate to be the bearer of bad news, especially for my own industry, but using what happened at IDG as a map for the rest of the publishing industry would be like using Christopher Columbus’s charts to fly to the moon. There’s a publishing pink elephant in the room that nobody in the NYT’s story seems to notice. Most of IDG’s publications are what’s known as controlled circulation. Readers paid nothing but were selected to receive titles like Infoworld gratis based on their attraction to certain advertisers. There is no subscription revenue to the publisher and the publisher still bears all the costs of printing and mailing. So when IDG shifts a publication to the web and stops printing, it can cut costs to the bone and shift advertisers to its web site.

But most publishers charge for subscriptions — in fact they charge a lot. The New York Times collected $227 million from subscribers in the first quarter, for example, along with $458 million in ad revenue. For mainstream publishers, that’s a much bigger potential loss from the seemingly obvious and simple shift online depicted in the IDG story.

The article also raises questions about advertiser behavior. A tech-industry trade publication’s advertisers come from a narrow slice of the entire ad market, a slice that’s likely more comfortable going online and more likely to be selling directly online than other segments. But when you look at the whole ecosystem of advertisers, especially the big players in mainstream publications, you find a rather different attitude. It’s a lot easier to imagine Cisco Systems and Salesforce.com shifting ads to a web-based version of Infoworld than it is to see Tiffanys or Bulgari moving from the New York Times Sunday Magazine to the web. Research I’ve cited in the past examining the revenue shift for mainstream publishers concluded that its an almost insurmountable mountain.

Finally, I’m also a little wary of stories about private companies that don’t disclose all their financial information the way public companies do. We know that publishing is only one part of IDG’s business but not how big a part. We know the publishing division got a higher percentage of revenue from the web in 2007 than in 2002 but not anything about the dollar amounts involved. I emailed a PR rep at IDG to see if they’d disclose more info but haven’t heard back. In the meantime, there’s less than meets the eye for the rest of the publishing industry from IDG’s transformation.

UPDATE: Some good commentary around the web further parsing the IDG story…web designer and former newspaper industry guy Mark Cahill emphasizes the differences between IDG and more mainstream media outlets:

Of course, numbers can be made to lie, and the statements they don’t make leave an awfully big whole in the story.

Has overall media revenue increased, decreased, remained the same? What’s the comparision of Ebita for the past few years? What’s the net affect on employment - more or less jobs (I’m guessing less…)? In short, is I.D.G. really doing better now than they were in say 2002? I don’t mean to sound snarky - I am really and truly hoping this is working as well as the NYT would have us believe. Yet, it doesn’t offer a complete roadmap for newspapers, as I.D.G. is really in the tech news sector, and let’s face it, none of us are willing to wait over 30 days for a full print cycle to get our tech news. We want to get it now, and that’s why they’ve got to deliver online.

Former Wall Street analyst Lauren Rich Fine does a nice job explaining why it’s so much harder to make the same money off an online reader as a print reader:

Certainly newspapers have garnered solid traffic online and seem to be doing a pretty good job of monetizing that traffic. But with better measurement of this traffic relative to the print version, coupled with the likelihood that an online newspaper reader will spend less time online than with the print paper, newspapers are going to have tremendous difficulty regaining lost print ad revenue ground with online. Newspapers still need to generate other revenue sources, and quickly.

And finally former journalist, now Lenovo guy Dave Churbuck has a quick optimistic take (be sure to read his replies in the comments):

I joined IDG for a brief period in 2005 to help with that transition, ultimately leaving at the end of the year to come to Lenovo. What I saw was a company in the throes of a difficult transition from decades of print excellence to the more ephemeral but pressing world of online news. Print and online dichotomies were tough, but in the end it was the red ink that pushed the print legacy to one side (InfoWorld went online only) and broke down the old artificial barriers between print and online editorial staffs.

FULL DISCLOSURE: I worked at an IDG magazine called The Industry Standard for a few years that was shut down by the company.

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