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Publishers ask: Is it time for a new business model?

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BY SEAN CALLAHAN

At media investment bank DeSilva & Phillips’ recent M&A Conference, held Jan. 31-Feb. 1 in New York, Apprise Media CEO Charles McCurdy, said that for consumer and b-to-b publishers alike, the media business has changed. "Ancillary," McCurdy said, "is now central."

That was his answer to the question that served as the theme of the conference: Is it time for a new business model?" Whether making ancillary revenues central qualifies as a new business model is unclear. What was clear was that most of the presenters at the conference agreed that while the Internet is an essential new medium, the business of b-to-b media remains, at its core, about providing information that connects buyers and sellers.

Jeffrey Klein, CEO of 101communications, 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, which publishes Federal Computer Week, 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.

Royce Yudkoff, chairman of Penton Media and president of investment firm ABRY Partners, discussed the efforts to revamp Penton’s culture and ramp up the focus on electronic revenues. He said a new business model for 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 in June 2004 as CEO, has bounced back by fostering an entrepreneurial culture and focusing on developing 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 of e-media, Eric Shanfelt.

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 in 2003.

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 deep databases to its customers, most of which are in the insurance and financial industries. He said 50% of Highline Media’s revenue come from electronic sources. "We’re not a b-to-b publisher," Goodenough said. "We’re an information company.

Nancy McKinstry, chairman of the executive board at Wolters Kluwer, told the conference that 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."

To put information in the work flow, Wolters Kluwer makes its medical content available on PDAs, to allow doctors to access it while they’re on rounds. To accomplish this, Wolters Kluwer focuses as much on creating software as it does on creating editorial.

"We have as many programmers as we do editors," McKinstry said.

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