Thursday, June 16, 2011

Many publishing companies are managing their business the way the government is managing the economy, by attempting to avoid addressing the big problems

Sometimes in order to see the tree you have to look at the forest. That is what I thought when I read several posts on the economics website naked capitalism today. Two provocative posts talked about the current, depressing state of world economics and how many policy makers are avoiding making the big, tough decisions necessary to set America's economic engine straight. (awkward sentence, I will admit)

But as I read the posts in question (this one and this one), and read the resulting conversation in the comments area, my mind would return often to the situation facing the media business.

In so many ways, what is being done with the economy, failing to solve underlying problems due to a lack of political will, reminded me so much of what is happening in both the newspaper and magazine publishing business: measures are being taken that are really just ways of avoiding addressing the big issues. The more the talk centered on world affairs, the more I thought of the problems facing smaller publishing companies.

Each month I get a stack of magazines delivered to me, and without fail each month I shake my head and say "how the heck do they stay in business?" It is a rhetorical question, of course, because I know exactly what many of these publishers are doing: dropping their BPAs, cutting their circulation and telemarketing costs by not "qualifying" their readership, laying off staff, combining jobs, eliminating middle manager positions like publisher, ad director or marketing manager, cutting frequency, outsourcing work.

None of these measures in anyway address the fundamental problems these publications are facing: loss of advertising, higher production and distribution costs, reader disinterest. Instead a bunch of half measures are usually introduced that have zero chance of changing the game, but can be discussed at industry association meetings: creating marketing arms, virtual trade shows, flipbooks, and the like.

Just as some commentators claim America is becoming a "zombie nation" for failing to tackle its deep-seated economic problems, or others talk about the "zombie banks" and how they should be forced to either fail or restructure, there is such a thing, I would argue, as "zombie" media companies – companies that fail to see that that the actions they are taking today do not address the fundamental problems they are facing. Instead, they are becoming "zombie" companies because they are requiring more and more funding to keep them going, or else they are becoming "vampire" companies, because in order to survive they are forced to devour their own employees, their customers or the their vendors.

But, sadly, I see few signs that the executives at these companies are facing their problems any more than those in Washington or Wall Street are facing theirs.