"Building new revenue streams is the biggest challenge facing smaller publishers today," said Humphrey Tyler, president of National Trade Publications. "A lot of the advertising pages that disappeared in the last three years will never come back or, if they do, the next time they disappear they're gone for good."
In response to dwindling pages, Dick Ryan, now the CEO of Zweig White Information Services, announced a bold move in September to reduce his company's reliance on ad revenues. His grand experiment is merging the b-to-b publisher he used to run, Mercor Media, with construction industry consulting firm ZweigWhite.
The new company is an unusual hybrid. On the one hand are Mercor Media's publications aimed at the construction market-such as CE News and Bridge Builder. On the other hand is the ZweigWhite consulting service for the same industry.
The deal enables the combined company to reach readers through the magazines' ad pages. More important, what appealed to Ryan about ZweigWhite is the firm didn't sell its services to Mercor's advertisers but to its readers. "We have to figure out how to sell stuff to our readers," Ryan said. "We have to figure out how to make our business multidimensional as opposed to selling stuff to advertisers."
In pursuing this path, Ryan is attempting to prove that what works for larger publishers will also work for smaller publishers. The idea is to emulate, on a smaller scale, the strategies being followed by McGraw-Hill Cos., VNU and Thomson Corp.
These giant, publicly traded companies have gradually limited their reliance on advertising-based revenues and instead generate the bulk of their revenue from subscription-based business. McGraw-Hill has Standard & Poor's. VNU has Nielsen Media Research. And Thomson just sold Thomson Media but kept West Law and First Call.
Other smaller publishers, many of which are beginning to pursue their own subscription-based or rich data initiatives, are watching to gauge the success of the Mercor-ZweigWhite deal. "When he pulled it off, it got me thinking," acknowledged National Trade Publications' Tyler.
Ryan is certainly excited by the potential. "The next five or 10 years in this business is going to be a lot of fun," he said.