November 2004 Archives
When I think of the glories of PC trade print publishing I cannot help but think about PC Magazine. When Ziff Davis was sold several times in the mid-1990s, the big horse for valuation was PC Magazine followed by PC Week.
PC Week became Eweek a few years ago and is a shadow of its former self. It was once a robust weekly tabloid. Now it is a 56-page magazine-style weekly that is struggling to survive.
PC Magazine has been published twice monthly since the mid-1980s. But like Eweek, PC Magazine is now a thin version compared to its glory days of the 1990s. And to add insult to injury, the guaranteed circulation of PC Magazine was recently reduced from approximately 1.2 million to about 700,000. A story on this drop has some interesting facts about the decline.
The Internet is killing PC Magazine and its competitor PC World (from IDG which is reducing its guaranteed circulation to 850,000 from well over 1 million) just as it has killed several other books over the previous few years. The information in these magazines is dated by the time it is published because of the speed of Internet publishing. Price guides and comparisons are nice to see in print, but this information is more readily updated and found on hundreds of Web sites that are changed daily.
I have long been predicting the further decline of trade and tech print magazines. This latest news from Ziff Davis only reconfirms what we have all been watching -- a very slow but steady decline and death of computer magazines.
I believe that the postive annual cash flow on PC Magazine was north of $50 million in 1995. I wonder how much of that incredible number still flows at Ziff Davis? I also wonder what the people who publish Red Herring as a "New" magazine were thinking about with this recent print launch. Magazines for tech coverage are like the horse and buggy manufacturers taking on Henry Ford, Alfred Sloan and Walter Chrysler and the auto industry in the early part of the twentieth century. Magazines in the tech field belong in museums.
Search Engine Strategies Chicago runs December 13-16 at McCormick Place. We were forced to run this event later in December than usual. However the later week is not hampering growth as the show has nearly twice the exhibit space of last year and registration could well double. Starting in 2005 we will have SES Chicago at the Hilton Chicago during the first week of December. Having it downtown should ensure even greater attendence.
I have written about Search and our SES shows quite a bit in this space. One cannot write enough about the powerful "Search-Tiger." Yesterday's New York Times (22 November) had an article about the number of pages indexed by Google, Yahoo, MSN and AskJeeves. Our own Danny Sullivan commented about this metric by stating that size alone may be meaningless at a certain level in that quality starts to suffer as indexed pages reach a certain level.
The bullish thing about Danny's comments is that vertical Search is the next trend --- this is specialized search engines devoted to vertical topics.
This theory means that Search is only going to be a bigger industry in the Internet space as new companies are created to go after the vertical Search opportunities. This bodes well for our SES shows. As I have mentioned frequently, trade shows can die quickly if the topic covered by them is not changing rapidly. A case in point would be Linux. While Linux is important, I doubt there will be a Linux trade show of size within two years. Why? Because Linux is no longer dynamic which translates into few paid attendees and very few exhibitors.
Saul Hansell has an article in The New York Times today about the apparent move by AOL to beef up and "push" aol.com as a portal play.
Obviously AOL has big traffic, but they have missed out on some of the search ad dollar boom by being mostly a "closed" or subscription site. By making aol.com a more interesting destination, the Time Warner folks hope to become a significant "free" portal player.
AOL will continue to work its basic subscription property which has some 26 million subscribers (but this number has been in decline). A combination of the subscription area and the portal area could be a winning parlay. Presumably aol.com would not have to get huge traffic in order for it to be modestly successful. But what if aol.com is very successful --- will such success induce an even greater number of of the paid part of AOL to leave for aol.com?
I come from the scholarly publishing industry. My first jobs were with scholarly publishers going back to 1969. I started my own company called Microform Review Inc. in 1971. This venture was based around a quarterly print journal called MICROFORM REVIEW which reviewed scholarly micropublications for the approximately 3,500 research libraries worldwide.
By the mid-1980s I had nearly 25 subscription journals and database directories. By this time it was becoming apparent that research libraries were being buried by the constant ratcheting up of subscription prices by not only my company, but particularly by the scientific and medical journal publishers. There were journals in those days that sold for over $10,000 per year --- and they were published only quarterly or annually. I understand that today these very same journals can cost as much as $30,000 per year!
Research libraries have needed some mechanism to fight this journal price escalation. The reason being that as journal prices rise, libraries are forced to cut back on purchasing books and other materials so that they can maintain a journal subscription that is needed by a certain department (which might have only a handful of readers per year). Journal prices rise much more rapidly than book prices. Therefore the percentage of a library budget going to research journals exapnds yearly to the detriment of the book budget.
I see the Google Scholar program announced today as an inexpensive means for scholars and scientists to make sure that their papers and articles are distributed inexpensively and throrougly. Efforts at electronic distribution have failed over the years because of the difficulty of making sure that these materials are easily findable and then readable.
Google's reach might be the beginnings of a new vertical industry within the Google empire (and for that matter within other powerful search engines such as those from Yahoo and MSN). Google and the others will make their money by selling targeted ads page by page.
What I see is a cottage industry developing (both for profits and non-profits) who can use Google's reach to rapidly and efficiently find wide circulation.
There are lots of currents running through this post and it might be confusing to some readers. But mark my words. As someone who has seen it all in the content publishing industry, Google Scholar is the start of something very big. It is yet another example of how the Internet can turn a traditional industry on its head in a flash.
I have seen many changes in Internet advertising since the launch of internet.com in 1994. Our first banner ad was sold to MCI in early 1994. The sale was for a few thousand dollars for a banner on the internet.com homepage for a period of one month.
By late 1999 and into early 2000 banners started to fade. Opt-in email offerings and email newsletters appeared to be the future of online advertising. These two areas were growing rapidly for our company and I was sure that these two ad platforms were the killer applications of Internet advertising.
Fast forward to the present and we all know that opt-ins and email newsletters are also-rans and Search is the king of Internet advertising. However for Web sites that are not search-focused, the good old banner is still king. This is particularly true for companies like Jupitermedia that serves IT professionals.
Banner ad sales have been reasonably strong since the middle of 2003. But a curious thing happened to us starting with the acquisition of DevX in the summer of 2003.
DevX had blazed a trail and had become expert in selling ad campaigns that were built around intellectual creative versus normal traditional in-your-face banner ads. In other words the banner offered some benefit beyond "just getting product information."
By the end of 2003, Jupitermedia realized that the DevX model might well be "our" future best bet for selling online ads. Using the crackerjack team that came over with the DevX deal, we melded a plan to offer "DevX-like" campaigns for all of our sites and networks. The program is called GEMS (Guaranteed Effective Marketing Solutions), which was announced in a press release today.
As we complete 2004, we see a significant shift on the part of our mainstay advertisers to GEMS. Our ad revenues are up significantly for the year and our fourth quarter is extremely strong. Several companies have signed on for ad campaigns built around GEMS that heretofore had not wanted to advertise with Jupitermedia. While I cannot guarantee what will happen with ad revenues or GEMS in future years, I am fairly certain that this type of advertising is the future of banner advertising in the Tech space.
I believe a host of companies will attempt to copy our model. GEMS appears to be easy to emulate, but there are dozens of nuances associated with the concept that the DevX team mastered over five years of experimentation. Overall it is the editorial aspect of GEMS combined with significant readership that differentiates it from typical banner advertising campaigns.
What we had postulated happened. Dow Jones, the owner of The
Wall Street Journal and wsj.com has purchased marketwatch.com for about $500 million (interestingly both The New York Times and The Wall Street Journal had articles on this deal in their respective editions today and reported purchase prices ranging from $478 million to north of $500 million). Regardless, what I had been predicting for several years has happened --- Dow Jones has come to realize that the pure subscription model was a failure. Now it has cost them over $500 million to obtain what they could have had for free if they had not embarked on the paid model in 1999.
Even with this acquisition, Dow Jones is still way behind Yahoo finance and some other financial Web sites in terms of market share and Web readers. And to think, Dow Jones could have owned the number one position quite readily if they had kept an open site at the turn of the century.
Now it will be interesting to watch how marketwatch and wsj.com are integrated. I see many ways to capitalize on this opportunity.
Will Dow Jones figure out the winning formula the second time around? It might be difficult for a company that has a "paid-subscription" culture to come up with a winning formula with an "open" site. This culture that lurks behind every decision at Dow Jones torpedoed them on the first go around. Will it torpedo them again?
The big day was yesterday. Microsoft rolled out its Search initiative. Search is the center of computing and it is the epicenter of all things advertising. Local search is coming and promises to add billions to Search companies' coffers. If one aims to be a player in computing, then one had better be strong in Search.
I was thinking the other day that one no longer hears much about Linux. Linux has its place, but it probably has run its course in terms of being a hot tech-computing media topic. Even the well known Slashdot community has started to cover politics --- a sure sign that Linux may have run its course excitement-wise.
Search on the other hand is hotter than ever. Microsoft's announcement yesterday was front page material for The Wall Street Journal and had large coverage in The New York Times. Search might well be only in its adolescence!
Fortunately Jupitermedia happens to be the center of the Search editorial world. Searchenginewatch.com is The Wall Street Journal of Search and our SearchEngineStrategies (SES) trade shows are the central meeting places for the Search industry.
The coming SES show in Chicago in December looks to be the largest SES show we have had to date. We run SES in the USA in New York, San Jose and Chicago. This is only our second year in Chicago and the show could well be more than double the size of the 2003 edition. One of the highlights for the Chicago show is that Microsoft will be exhibiting for the first time at an SES event (we also run SES in Germany, England, Canada, Sweden, Japan and soon in China and India). In fact I believe that this will be the first time that Microsoft has exhibited its Search service.
Jupitermedia is a public company. Most readers know that as part of the Enron, MCI and other corporate scandals our "hardworking" politicians like Messrs. Sarbanes and Oxley have created the grotesque legislation known as Sarbanes Oxley.
The SOX rules and regulations are strangling public companies in a web of arcane, obtuse and absolutely ridiculous regulations. For example, our payroll manager can no longer hand me my paycheck --- it must now be hand delivered to my by our Chief Financial Officer.
More ridiculous is that our offices have been populated by five full time "professional" SOX consultants to advise us and ready us for the varieties of tests that we must undergo by our outside auditors to make sure we are SOX ready. These five people cost a ton of money. And the outside auditor too will have large charges for running the above mentioned complance tests.
Clearly Sarbanes Oxley was created as an over reaction to some serious scandals. I doubt that this legislation will prevent any misdirected cheat from stealing in the future. In the meantime the costs to corporate America are going through the stratosphere. The beneficiaries of SOX are auditing firms and and out of work accountants who are creating consulting businesses to help companies become SOX compliant.
My prediction is that within five years Sarbanes Oxley will be dumped as having proved to be cumbersome and not helpful in policing American public companies. The waste in manpower and dollars is criminal.
I know that my posts are supposed to be about the Internet, but as a CEO I must use any forum possible to protest the idiocy of Sarbanes Oxley.
Wsj.com is free this week. Try it out. I am sure this is the beginning of several experiments over time by Dow Jones to increase readership at wsj.com. The totally paid model has run its course. It does not make money -- which is actually quite amazing if in fact the paid circulation is over 700,000. If a company cannot make money on 700,000 paid circulation than something is radically wrong with the management.
A quasi-open site will make money -- with the right management policies. It will be interesting to watch what Dow Jones does in this space. And for that matter, The New York Times online should shortly be opening larger parts of this edition.
Both of these companies have really missed out on bigger revenue and business opportunities with their semi-restrictive to very restrictive policies. Millions of dollars have been left on the table.
Check out megapixel.net. Jupitermedia bought this site a few weeks ago and major changes are in the works. None of the changes will take away from what makes this site great --- its terrific digital camera reviews and community forums for both chat and photos. And all of this is made possible because of the talented creator, Denys Bouton and his assistant editor Olivier.
These two gentlemen illustrate how the Web still allows a small businessman to reap great success on a shoestring. Denys and Olivier built megapixel.net by "word of net" and superb content. Good content breeds readership and breeds being discovered by search engines. Megapixel scores high on Google and other search engines. Yet the founders have never spent a penny on promotion.
Another attribute is that the site is translated into French daily. In fact megapixel.net is the number one digital camera review site in the French language and has high search engine rankings in France and Switzerland, not too mention French-reading Canada.
Things to watch for: The site is built on frames and will shortly be redesigned to allow for greater ad presence. This will allow us to not only offer more paid ad opportunities, but also to offer our various JupiterImages offerings.
Needless to say I am really excited about working with Denys and Olivier. The potential for such a site in our JupiterWeb and JupiterImages networks is unlimited. I will keep readers up to date on developments.
We had a nice bit of publicity today from Investors Business Daily. (One cannot read this paper without registering so I have not included the URL; however, I have pasted the story via Yahoo Finance at the bottom of this post.)
The focus of the story is on our analysts at Jupiter Research who blog quite frequently. Michael Gartenberg, David Card and Niki Scevak are mentioned in the story. This program has blossomed and brought great exposure to our talented analysts. Yours truly, and obviously my blog, are also mentioned in the article.
This is really about community -- something that separates Jupitermedia from most of our competitors in research, media, trade shows and images. We really blazed this blog and community trail and others are trying their hands at the game. But what we have at Jupitermedia is passion from top to bottom -- a factor that is missing at competitive companies.
Enjoy the IBD story:
Investor's Business Daily
Blogs Bring A Boost To Jupiter Research
Tuesday November 2, 7:00 pm ET
There's an emerging form of media out there, beamed from Jupiter and called a blog.
This Jupiter isn't a planet. It's JupiterMedia, a seller of Internet research and related services. And blogs, short for Web logs, aren't alien e-mails. They're personal online journals where writers comment on just about anything.
JupiterMedia's found a way to use blogs to boost its business.
Over a dozen Jupiter analysts post blogs on the jupiterresearch.com Web site.
The at-times offbeat journals are stirring sales leads from clients who otherwise might not have contacted Jupiter, says David Schatsky, chief of research at JupiterMedia's Jupiter Research unit.
"One example is tech vendors whose marketers are checking to see if Jupiter mentions their products and what we say about them," Schatsky said.
The company can't say just how much business the blogs have generated. But Schatsky says scores of potential clients have contacted Jupiter because of the blogs.
Monday through Friday, Jupiter says its analyst blogs get close to 50,000 page views per day. That's still just a fraction of the 12 million daily page views Jupiter's Web site gets overall, but the company says its blog traffic is rising steadily.Jupiter shows that blogs, once the domain of tech geeks with persona l interests or peeves to air, are becoming useful tools for business, marketing and news. Microsoft Chairman Bill Gates, for instance, told a meeting of chief executives in May that blogs are a great way for firms to tell customers and workers what a company's doing.
Jock Gill, a former adviser on Internet media to President Clinton, says blogs work for Jupiter because they create trust and build connections with readers. "You do business with people you trust, and blogs help create that trust," Gill said.
Jupiter is doing well. IBD gives the company, which sells digital images, manages tech events and has an ad-supported Web site, an EPS rank of 80. That means its per-share earnings growth over the last two quarters and last three to five years are in the top 20% of publicly traded companies. On Wednesday, analysts expect it to post third-quarter per-share earnings of 12 cents, up from 2 cents in the year-ago quarter. Sales are seen rising 41% to $1! 8.8 million.
Schatsky says the big advantage of blogs is the freedom of expression they provide. Jupiter analysts can be whimsical and cutting edge in giving their views on a variety of topics. The company doesn't edit the blogs.
You've Got Personality
Items include spill-your-guts judgments of new tech products and the latest trade show. The postings differ from conventional analyst reports, which tend to be formulaic and, well, staid.
The blogs show ... personality.
In a recent posting, analyst David Card dares to disagree with boss Alan Meckler, in an item he titles "Career Limiting Move Part XXVII." In an item, analyst Niki Scevak posts a "Happy Birthday" for the 10th anniversary of the often-derided Web site banner ad.
Most of the blog postings aim to provide insight.
"The blogs show that (Jupiter) has strong and substantiated opinions. They illustrate the value of a relationship with us in more conventional channels," Schatsky said.
Commenting recently! on this summer's exit of Sony (NYSE:SNE - News), SharpSHCAY.PK and others from the U.S. handheld PDA market, Jupiter analyst Michael Gartenberg wrote in his blog:
"No real surprises here. The Linux-based Sharp stuff had zero mass appeal. It was a mobile geek gadget that had mediocre core functionality. ... Sony had so many issues trying to define and refine their role in the market and just what device functionality they wanted to offer, they had to leave and rethink it all."
Gartenberg says he likes being able to speak candidly.
"Much of our research is data-driven. A blog offers the opportunity to provide some opinion," he said.
Schatsky says blogs also let analysts offer comments as events happen. "We view blogs as an opportunity to comment quickly," he said.
Still, it's not exactly anything goes in these blogs. The analysts know the blog is part of their job. Jupiter "asks" analysts to not give away too much of their original resear! ch.
One of Jupiter's most avid bloggers is its chief executive, Meckler. He says blogs are a way to turn the personalities of Jupiter's individual analysts into marketing tools. "Readers can start bonding with a certain kind of analyst long before they start using their research," he said.
There is a flip side. As any blog reveals the writer's thoughts and personality, it's always possible that potential clients won't particularly care for those thoughts and personality. Some believe blogs can be intentionally provocative so as to cajole people to contact you, giving the blogger a sales opportunity.
That's not the case at Jupiter, says Meckler. "If we were accused of that, I'd be the first to hear of it."
In the meantime, the blogs attract readers. Said Meckler, "Somebody actually wrote to me yesterday that he couldn't wait to hear my (blog) comments about a trade show I'm going to this afternoon."
Doubleclick has a nice business, reasonable financials, good cash position and solid history of being a survivor of the Internet stock crash of a few years ago. However in its quest to evolve it lost its charm. The original business was serving ads for one and all. Over time it added different business units that while related to marketing and ads are not really all that connected. And of course the rise of "Paid Search" further hurt Doubleclick. Paid Search meant that Doubleclick could no longer be in the absolute center of the Internet Ad arena.
I have long been a believer that one business unit must sell another. We do not have that in the case of Doubleclick. Thus it is a nice overall business, but not strongly connected --- it lacks true economies of scale.
One could similarly make this criticism about Jupitermedia. But in our case most of the divisions do in fact sell each other. The moral of this history is that it is great to add on business units, but make sure that all of the them can economically sell each other. This is not the case with Doubleclick.