Thursday, January 10, 2008

Fighting Hole Tactics: Part Two -- Finding Allies

(Editor's note: This is the third in a series on building a "B2B fighting hole." I'm expecting difficult financial times in trade journalism in 2008. In this series I offer some suggestions on building a defensive position where editors and publishers can ride out the coming onslaught. You can read the post that started the series here. You can read Tactic One here.)

In the history of warfare, there are two groups that have fallen from favor: mercenaries and privateers. But if, as I believe, B2B journalism is about to begin a tough financial period, I think we need our own versions of both.
In simplest terms, a mercenary fights for a paycheck and a privateer fights for a share of booty. But both share some significant traits. First, they fight by choice. It's even possible to argue that they like to fight. There's no need to worry about morale or motivation. Second, they are best used as a supplement to an existing fighting force. No one wants to be entirely dependent on for-hire fighters. But many nations have found advantage in employing them to take on some military tasks.

Magazine Mercenaries and Publishing Privateers
When revenue declines, publishers have few ways to keep their products afloat (and their staff employed.) The first choice is nearly always to freeze hiring. But not only does that tend to stretch the existing staff too thin, it also always makes it nearly impossible to launch new products that can generate revenue.
When the hiring freeze fails to help, many publishers turn to layoffs. But layoffs have the exact same negative results: the staff burns out and product development comes to a halt.
I suggest that the way for publishers to escape this downward spiral is by giving up some control and having mercenaries and privateers launch new products.
In particular, I think it's time for B2B companies to do two things:
1. hire offshore companies to do print layout and design work -- especially for new products and custom publications.
2. let freelancers and outside contractors run online products for a cut of the revenue -- particularly Web-only products and newsletters.

In the first scenario (call it the mercenary method), publishers can launch new print products at lower costs. And at least one department -- design -- doesn't have to take on additional duties. It is, of course, also possible to offshore other parts of the magazine process. Heck, at least in theory, even reporting and copy editing can be done by outside contractors in Asia. But I suspect that most B2B editors, publishers and executives aren't comfortable with that idea...at least to start. And I can't imagine a time when I'd ever feel comfortable offshoring reporting functions.
So I think it's a wiser move to begin by offshoring layout and design for new products and custom pubs. If things work out well, layout and design of other print products can also be offshored.

In the second scenario (call it the privateer play), publishers can launch new online products at no cost. By offering a revenue split to outside contractors, publishers can create limitless numbers of small, hyper-niche products. This is the business model of New York Times Digital's About.com (Disclosure: About is a client of mine.) About's network of sites are run by independent contractors who work for a share of revenue (with a base payment as a site ramps up.) The privateer play is also similar to the system used by Associated Content and some of the blogging networks.
I suspect that many editors are already working with freelancers who would consider such a deal. The key, of course, is to sell the privateer on the upside potential -- the more you work, the more inventory we have to sell, and the more both of us make.

(Disclosure: I feel so strongly that there are opportunities for both mercenaries and privateers in B2B that I've taken steps to position myself appropriately.
One of my newest clients is Mindworks Global Media, the India-based outsourcing company run by Tony Joseph, the former editor of India's largest business magazine. Tony's company does work for publishers around the world and recently won a contract with McClatchy's Miami Herald newspaper.
Furthermore, Paul Conley Consulting is now available to run editorial for Web sites, online newsletters and other electronic products on a contract or revenue-share basis. I'll be announcing some new deals here soon.
If you'd like to talk about how your company can benefit from mercenaries and privateers, drop me an email at inquire (at) paulconley (dot) com)

(Addendum: 1/15/08. Editor and Publisher is reporting that the Miami Herald has backed out of part of its deal with Mindworks. The Herald will continue to outsource "the production of some advertising sections and monitoring of website comments," according to E&P. )

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9 comments:

Ed said...

Offshoreing design dutues or any components of publishing a publication is so wrong on so many levels.
1) Unethical -- Its bad enough that every pair of shoes I have to buy is made in a sweatshop in Asia. Now my magazine is going to be made the same way?
2) It is counter productive. You're promoting bad economic conditions and at the same time promoting sending even more dollars overseas? How is that going to help the industry you cover re-cover?
3)You campaign against the unethical practices of B2B publishers who include paid links in online stories, yet you're in cahoots with an outfit aimed at taking jobs away from qualified U.S. citizens? Or is it okay because you dislosed it? (The last statment might sound sarcastic; it is not).

Overall, I find your suggestion to go offshore very alarming. Any publisher who has to go offshore to pay substandard wages in order to stay alive does not have a viable publication to begin with.

Please do not take this as a personal attack because it is not: The U.S economy cannot afford "consultants" of your kind.

Paul Conley said...

Ed,
I'm quite sure that you and I disagree on this issue. I don't intend to try to persuade you.
However, let me try to make a few points for any other readers.
1. It's not unethical to have a product made in Asia. Just as it's not unethical to have a product made in, say, Nebraska, although I live in New York. There are reasons why I buy some products from China, some from Nebraska and some from New York. Those reasons involve cost and efficiency. That's simple economics. As a New Yorker, I have to buy food, for example, that is produced elsewhere. I also buy dozens of other goods every week that are made elsewhere in the U.S. by people who are paid a "substandard" wage by New York standards. New York doesn't set the wages for the rest of America. Nor does America set wages for the rest of the world. Also, you don't have to buy shoes made in Asia. There are still shoe makers in the U.S. (although not many.) If doing business in the U.S. is that important to you, then shop around and do some research.
2. Doing business overseas isn't counterproductive. The key to a viable business -- any viable business -- is ensuring that costs don't exceed revenue. More importantly, sending "more dollars overseas" doesn't mean there is less money here. That's simple economics too. What we're talking about is growth (and by extension, money supply.) Just because I make more money in 2008, it does not follow that someone, somewhere is making less money. The mayor of New York has more money now than everyone in the U.S. combined a century ago. That doesn't mean that we're all broke. It means that the economy, the nation and the money supply has grown. The same holds true on a global level. When a starving man in Africa makes enough money to feed his family it doesn't mean that someone else must starve (or take a pay cut.)
3. You are confusing morals and ethics. Inserting paid links in stories is unethical. That's clear, but not because I say so. It's clear because the ethical standards of our industry say so. There is nothing in the ethics guidelines of ABM, ASBPE or anyone else about offshoring or outsourcing work. I understand that you believe it is immoral to do business with someone who is not American. But I disagree. Just as I would disagree with a Frenchman who said it was immoral to sell wine to an Italian, just as I would disagree with a white man who said it was immoral to sell his home to a black man. I would argue that it is not a moral stance you're taking. At best it's a jingoistic stance. At worst, it's a racist stance. I doubt seriously that you could muster a true "moral" argument based on natural law, religious teachings, or any other construct.
4. None of the companies I do business with pay their workers at a "substandard" rate. In fact, every single one of them pays at the same "true" rate. Whether they are in Kansas or New York or San Francisco or India, the salaries for mid-level editorial staffers tend to be roughly equal to the salaries of local school teachers. In other words, they pay enough to provide college-educated people enough to live a middle-class lifestyle in their community.

Ed said...

So I raise some very legitimate questions and the best you can do is resort to calling me a racist. Thanks for your professionalism.

Paul Conley said...

Ed,
You didn’t raise any “very legitimate questions.” You asked a series of absurd questions that demonstrated a lack of understanding of the rules of economics, spelling and grammar.
Nonetheless, I did my best to answer them.
There are “very legitimate questions” that can be asked about offshoring. There are coherent arguments that can be made against it. I can make a business case against offshoring. I can make an economic case against it too (although not a very convincing one.) I cannot make a moral or ethical case against offshoring. There are no such cases to be made.

JS said...

In theory, I see your point, especially for "technical" items like Web design.
My big fear with this is lack of control. We sub some of our Web production out to a California firm and the three-hour time difference makes it difficult to get things done. I shudder at the thought of what would happen with someone 12 hours away.

On the other hand, I can't imagine offshoring our coverage of our industry. Maybe it would work in some fields, but the relationships we have with our readers are what makes it possible for us to deliver the editorial we do. I can't imagine our editorial wouldn't suffer if our writers were no longer attending local and national association meetings and trade shows.

Those from other countries simply wouldn't understand our industry and our readers to the point we do. This is not a racial comment ... I wouldn't expect somebody to hire me to cover small businesses in India because I don't know them.

Paul Conley said...

Hi JS,
Thanks for the comment.
I too have a hard time imagining a situation where I'd want to offshore reporting duties. That's a giant leap...and the risks probably outweigh the rewards by quite a margin (one exception -- advertorials.)
However, I like the idea of offshoring other, non-technical duties. I'd rather have in-house Web designers and offshore print designers. I wouldn't want to invest in staff for that part of the business -- printing on paper -- that is shrinking. As important, the long deadline cycles of print (weekly or monthly in most cases) makes it easier to handle the time differences of working with offshore contractors.

Anonymous said...

Hi Paul,

Interesting ideas. Re offshoring, even in the U.S. I feel like I get paid the same amount of money now that someone in India gets.

However, this training thing concerns me. It's similar to age-old questions:
--Do you hire a journalist and train that person in the industry they are about to cover? OR
--Do you find experts in the industry and train them to be journalists? OR
--Do you have both journalists and experts on staff and/or have an editorial advisory board?

Somewhere along the line the journalist must learn the technical skills and the industry they cover rather quickly. ASBPE exists to help editors learn more editing, management, and technical skills.

Otherwise, if you hire a person who is already an online journalist, how great is that? But how many are out there to match the needs the companies have now and will need down the road?

How many are there with the savviness necessary to think about how to increase company revenues via new editorial products, print or digital?

How many are out there with 5 years of B2B experience? Enough to go around?

If colleges are teaching B2B online journalism, (BIG IF), how many people are they turning out that are worth hiring? One has to wait for them to get up to speed in several areas.

I maintain that at some point a company has to train their existing employees, whether at their company site or elsewhere.

Geez, among the most glaring failures of some publishing companies is not training an editor how to be a manager, a leader, when they move that person to an editorial director position, for example. What do they know about managing people. They know their journalism, but not how to manage people unless they are lucky enough to have it in them. These people need training.

You know, like the Peter Principle, promoting people to their level of incompetence.

Both the company and the employee have an equal responsibility toward training.

By the way, as a former corporate editorial director for a large business magazine publishing company with more than 50 titles, I firmly believe that publishing companies need to bring back the corporate editorial director to provide editorial, editorial management, and general publishing management training, publication critiques, editorial and ethical standards, development of new products, etc.

Hope I spelled everything correctly.

Robin Sherman
Associate Director, Newsletter Editor
American Society of Business Publication Editors


The ONLY professional association strictly for B2B editors and writers

info@asbpe.org
asbpe@bellsouth.net
http://www.asbpe.org

Robin Sherman
Editorial & Design Services


For Books, Journals, Magazines, Manuals, Newsletters, Internet

— Information Architecture, Content Development, Organization, Improvement
— Developmental, Substantive, Copy Editing
— Publication Critiques
— Publication Design
— Typesetting, Typography, Layout
— Speaker, Seminars, Workshops

Small Publisher and Non-Profit Specialist

http://www.forumfolios.org/Robin_Sherman
robinsherman@bellsouth.net

LN said...

Paul,
If publishers really want to save some money, perhaps they could go offshore for consultants.

LN

Paul Conley said...

LN,
I'm sure you meant your comment in jest, but there's some wisdom in your suggestion.
There are some offshore consultants that publishers should consider. At the top of that list I'd place my client, Mindworks Global, and my friends Paul Woodward (http://bsgasia.blogspot.com/) and Hugo Martin (http://hemartin.blogspot.com/)
I also know some folks at Thomson India and Innodata Isogen who work with U.S. publishers. I don't think any of those folks are less expensive than I am, but it can't hurt to contact them and ask about pricing.
If you know of any other offshore consultants, and if you're capable of offering something other than childish and anonymous comments, please feel free to do so.