Publishing Industry Changes

 

This blog normally concentrates on publishing content but today (26/11/20) it is about the business side of publishing. So today the business section in The Times newspaper has been inundated with changes within the publishing industry. It should be noted that my view of publishing is it is everything that you have communicated to you. So what are these many business changes?

The first change is really a consolidation of the content owners. The owner of Penguin Random House, Bertelsmann the German media group, is set to buy Simon & Schuster to consolidate its position as the world’s largest book publisher. Bertelsmann will own about a third of the American book market with Harper Collins being No 2.

Penguin Random House owns 325 imprints that publish 70,000 digital and 15,000 print titles a year. Imprints include Penguin Classics, DK, Writer’s Digest Books and Putman. The publisher was formed in 2013 by the merger of Penguin Group, which was owned by Pearson and Random House owned by Bertelsmann. The German company brought Pearson’s stake in penguin Random House in 2018.

The second change is a magazine content owner looking to branch into artificial intelligence (AI). It is the Future group owner of the Practical Caravan magazine and the Techradar website looking to buy the Go Compare (Goco) price comparison site. Looking to move from publishing pure content to adopting individual transactional processing through auto-switching processing, branded Look After My Bills and Weflip, automatically moving users to cheaper energy tariffs. Lead by Zillah Byng-Thorne, who was Chief Financial Officer of Auto Trader, you who have someone moving a traditional publisher to becoming a digital aggregator looking to go real time transactional. With Sir Peter Wood, co-founder of Direct Line and later Esure, one of the big background shareholders you can see how creative thinkers can drive a business to impact the marketplace.

The third change is Codemasters the computer game developer under a takeover by Take-Two Interactive, the Nasdaq listed goliath that owns the game Grand Theft Auto. This is more about the Board of Codemasters making some very large financial gains whilst the independence of another British entrepreneurial business is drawn into a conglomerate.

The fourth change is Netflix boosting its UK production spend by 50% to £750 million. Netflix is having to up its gain to complete with Apple, Disney and Amazon. The battle of the streamers.

Finally the fifth change. Slack, founded in 2013, develops software that has become popular as an alternative to email allowing groups of employees to chat, collaborate and share documents. Now Salesforce, the owner of the popular cloud based customer relationship management (CRM), is looking to take them over. The purchase is to head off a growing challenge from Microsoft Teams which has become the increasingly popular workplace collaboration software Microsoft has its own CRM software under its Dynamics range of business products. Salesforce had already brought into their business two little known workplace collaboration tools, Chatter and Quip, but these were obviously not strong enough to counter the threat of Microsoft Teams.

 

So here we have a number of digitally based industries all dependent on their own patterns of bits in the cloud looking to gain market share. They are looking to grow their cloud based real estates and thereby the flow of income from them. Significantly although advertising income will be an income source they are all dependant on subscription based incomes based upon the content they offer. The spectrum of static content to dynamic content is one of the key differentiators. The more their customers are locked into transactional dependencies, the so called “sticky” solutions usually involving some data dependency or just being the preferred advertised “go to” brand, the more they can grow their businesses. But with the availability of powerful cloud based solutions that can be used by the upstarts and then easily scaled means all businesses need to keep looking over their shoulder for their new competitors.

So if you summarised the business objectives of the above changes you could arrive at these conclusions.

Bertelsmann growing content.

Future Group adding different functionality

Take Two Interactive growing content.

Netflix growing content

Salesforce adding different functionality