In a lively two-hour discussion, it was clear that no two bureaux shared exactly the same outlook on any particular issue, but I discerned some clear trends and a general direction of travel for the sector as a whole.
A changing market
The fortunes of the bureau are, unsurprisingly, inextricably linked to the wider publishing industry, and that, as we all know, is experiencing a roller coaster ride of a time. On the consumer side, print subscriptions are down 3-4% over the last four years and the trend away from print is undeniable. The mass market has been particularly badly hit, with weeklies blown apart and subs falling off a cliff. There are some pockets of joy around specialist titles and export is also holding up.
On the B2B side, there has been a 60% shift to digital; the B2B print product is now, officially, an endangered species.
The market is fragmenting, not just in terms of delivery platform, but also in the size and structure of the publishing companies themselves. Many larger publishers are offloading what they see as non-core titles to smaller enterprises, often small entrepreneurial start-ups with loads of get up and go, but little in the way of in-house marketing expertise.
Publishers are pouring resource into digital at the expense of traditional print subs marketing, and the best brains in publishing are similarly migrating to ‘digital’. A few years’ back, a vacancy for a ‘Subs Marketing Manager’ would have drawn lots of applicants. Now, unless you include the word ‘Digital’ somewhere in the title, you’ll struggle to fill the position.
So, digital is where the marketing resource and expertise is now being focused (thereby accelerating an existing trend away from print), yet digital activity is not bringing in anything like the same revenue, despite the impressive sounding download numbers being bandied about by some publishers.
A changing business model
Until about ten years’ ago, there was essentially a single business model underpinning publishing activity, with the odd variation here and there. You had a single product, a magazine; you made your money from advertising and circulation, which split between subs and newsstand. End of story.
It was this simplicity that allowed the bureaux to build standardised services to meet the common needs of a largely homogeneous publishing sector.
Now, there is no single business model; the whole industry is in a state of flux, seeing revenues from their traditional model steadily decline and frantically thrashing around for viable new revenue streams.
One business model is morphing into hundreds.
Traditionally, bureaux charge on a per subscriber basis, so large subscriber files underpinned the business model. Certainly for the big bureau, large multi-title publishers, with large subscriber files, served by a central marketing team were the ideal clients.
Now, shrinking subscriber files are hitting their main source of revenue and forcing them to redefine how they charge for their services. Furthermore, they might be servicing the same number of titles, but those titles are now owned by a larger number of companies, so putting more pressure on the account management function.
And the proliferation of digital platforms and outlets means that the bureau is having to beef up its IT function to create and manage the digital interface for a rapidly expanding (and ever mutating) range of online stores. This is costly activity and, remember, the revenues from digital to pay for it all, are just not there at the moment.
In the frenetic publishing world of today, where publishers are experimenting wildly and business models are evolving rapidly, there is a huge opportunity for the bureau to become the repository of digital knowledge and expertise, and, by all accounts, they are rising to the challenge. (One ruefully noted a new trend of their account managers being poached by publishers.)
Bureaux have wrestled with APIs, sought to collate and make sense of the tsunami of digital data, been at the customer service sharp end when the latest not-fully-tested publisher app crashed and burned, helped create digital subscription interfaces, and advised on all the intricacies of digital marketing. Their learning curve has been steep. They have seen firsthand what works and what doesn’t; where the common pitfalls are; what is best practice. This is astonishingly valuable expertise, and the bureaux know that consultancy and software development services are where their future lies; where the margin is.
There is little margin in the traditional fulfilment and customer service functions, because these are becoming increasingly commoditised, and everyone seemed well aware of the dangers of falling into this trap.
One thing that hasn’t changed is the need for bureaux to find common requirements across multiple publishing clients and to service them in a scalable way. If every publisher adopts a unique business model, then the bureaux will cease to exist. Publishers might as well handle it all in-house.
Bureaux need to impose some order on the digital chaos and try to control the variables. It means having to be ahead of the curve and to anticipate publisher needs.
Don’t create a unique API for every publisher’s interface with iTunes, for instance, create one and then present all your publisher clients with a single solution. Decide which operating systems and programming languages you need to offer expertise in, and offer those, and only those to publishers. Build flexibility and customisation tools at the client side, but bureaux need to keep tight control of the core code base. The need to find economies of scale is no less applicable now that it ever was. Control your variables!
Expanded IT and account management departments don’t come cheap and there is a funding challenge to confront. Traditionally, bureaux have been seen as low cost centres. There is a legacy expectation that bureaux will offer cheap services, and also that everything comes included in a fixed price.
It was noted that bureaux would be laughed out of the room if they were to quote the same prices as some of the smarter digital agencies for their services, even though the services are increasingly comparable. There was general agreement that bureaux needed to work harder to prove their worth.
Part of the solution is a gradual move away from the fixed price all-inclusive approach towards the “three foot invoice”, where each service is itemised and charged for separately.
Fixed price charging has always been popular with publisher finance directors, because it made budgeting and forecasting more straightforward and, with the old straightforward publishing model, it was something many bureaux could offer. However, with the vastly increased range of services bureaux now offer, it is becoming increasingly untenable.
Breaking out the figures also helps shine a light on the true cost of providing services and will start to allow bureaux to start charging more realistic prices for their new digital services.
Just as most publishers are at various stages on a journey towards a predominantly digital future, with some further down the road than others, so too are bureaux on a similar journey; from providers of traditional fulfilment services with a bit of IT expertise thrown in, to providers of software solutions and consultancy services, with fulfilment services thrown in.
Most have greatly expanded IT services, with some also operating off-shore programming centres for the more straightforward, template driven work.
They are steadily moving towards a modular approach, away from the full service, we-do-it-all-or-we-do-nothing approach, increasingly prepared to provide whichever services a publisher requires.
Some are also realising that their core skill sets are applicable to non-publishers too and they are diversifying their customer base. Publishing is still, and will probably remain, their core market, but non-publishing business is a growth area for some of the bureaux.
New sense of partnership
Bureaux have always been close to their publishing clients; some of the bigger ones have, after all, typically been owned by publishers, yet the relationship has not always been harmonious, with bureaux often being the whipping boys when things went wrong, and being criticised, often unfairly, for not being prepared to jump through absolutely every conceivable hoop publishers placed before them.
Yet the bureaux MDs round the table had detected a new sense of partnership emerging, an improved understanding and appreciation on the part of publishers for the work the bureaux do and their growing digital expertise.
One MD recounted the incredulous looks on publishers’ faces as he played back recordings of some typical customer service calls his team had taken after the release of a new publisher app on iTunes. This clear demonstration of the astonishing levels of ignorance which the bureau customer service reps had to contend with (“how do I find my iTunes password?” being just one of many examples) marked a sea-change in that particular bureau / publisher relationship.
Publishers that treated their bureaux as partners, rather than just ‘suppliers’, tended to get the best service.
Who knows what the successful publishing company of a few years’ time will look like? Probably very different from today. The successful bureaux will likewise look very different and they will have got there by sticking close to their publishing clients, anticipating their needs and developing high end services and solutions for them. Sensible publishers will reciprocate and get closer to their bureau. The closer the two work together, the better tend to be the results.
And, finally, despite the myriad challenges and the sheer unknowability of the future, the mood around the table was very upbeat. Exciting times!
The iSUBSCRiBE Round Table took place on 30 July at their King’s Road offices in London. The discussion was chaired by iSUBSCRiBE’s Don Brown.