The question has been percolating for several years in b-to-b media: "Is it time for a new business model?" That query was the theme of media investment bank DeSilva & Phillips' M&A Conference 2005, which took place Jan. 31-Feb. 1 in New York.
Several speakers at the conference, most of them media and private equity executives, addressed the question and how it related to creating a high-valuation company. They disagreed on whether changes in the industry-namely the Internet's rise-demand a new business model, but the discrepancy seemed more a matter of semantics than any real difference in philosophy.
Indeed, it would have been difficult to find among the conference's more than 300 attendees anyone who disagreed with the statement that the Internet was an essential new medium but that the business of b-to-b media remained, at its core, about providing information that connected buyers and sellers.
Jeffrey Klein, CEO of 101communications, who spoke at the conference, summarized the change in the industry: "Print is not going anywhere, but it's not as important as it once was. It's just one of many options."
At 101communications print revenue declined from 45% of the company's total revenue in 2001 to 42% in 2004. In the same time frame, electronic revenue increased from 6% to 14% of total revenue.
Klein said advertisers in the tech industry are focused on using e-products to generate leads. In response, 101communications has developed a host of e-products for advertisers, including Web sites, search, webcasts, e-newsletters and e-books. "The `e' changes all the time," Klein said.
Royce Yudkoff, chairman of Penton Media and president of investment company ABRY Partners, discussed the efforts to revamp Penton's culture. He said that creating a new business model at the company was absolutely necessary.
In 2002, ABRY Partners made a combined $50 million mezzanine investment in Penton. Yudkoff said his company was ultimately shocked at how bad off financially Penton was. "It's what my partner and I describe as a near-death experience," he said.
But Penton, with David Nussbaum installed as CEO last June, has bounced back with a focus on creating an entrepreneurial culture and electronic products. The company has established a discretionary seven-figure fund to develop new products, and it has assigned 50 staffers to work exclusively on e-media, including a VP-e-media. The early returns are encouraging, Yudkoff said, noting that Penton's e-media revenue grew 41% in the first three quarters of 2004 compared with the same period last year.
Some companies are going even further in transforming themselves and, perhaps, the b-to-b media model. Andrew Goodenough, CEO of venture capital-backed Highline Media, said his company saw value in rich media, offering databases to its customers in the insurance and financial industries. He said 50% of Highline Media's revenue stems from electronic sources. "We're not a b-to-b publisher," he said, "we're an information company."
Nancy McKinstry, chairman of Wolters Kluwer's executive board, said her company's goal is not simply for professionals to read the information in the company's products but to "embed our content in what our customers do."
For example, Wolters Kluwer makes its medical content available on PDAs, to allow doctors to access information while they're on rounds. The company devotes as much effort to creating software as it does to creating editorial."We have as many programmers as we do editors," McKinstry said. M