Everything Old Is New Again – Legal Publishing in the Spring of 2010
Publishing trends are not working in favour of the major legal publishers and their recent financial performance confirms this to be the case – revenue is down and staff cuts and outsourcing have replaced publishing as the primary means of maintaining profit margins.
The end of growth
It is a fact that legal and regulatory information is no longer seen as an area of growth and expansion for the multinationals. All three major legal publishers have reported lower publishing revenues while still holding out the prospect of a return to growth in future years. Is it a realistic expectation? Do the legal publishers really believe it? Not likely.
For more than a decade, the objective of the major legal publishers has been to extract more and more revenue from the same customers. Just as the number of lawyers is fixed, so too is the amount of money that a lawyer can be expected to spend on legal information. Industry insiders and customers both know that the legal research market is already saturated with online legal information from the major legal publishers, without taking into consideration new sources of competition from free services. Online legal publishing has become a maintenance game.
Rather than admit that an era has come to an end, the major legal publishers have developed strategies to increase their revenue by acquiring software businesses with products directed at the legal profession. These so-called “solutions” have been found wanting as the entrepreneurs essential to the successful development of new software products moved on, without leaving behind the talent necessary for the major legal publishers to grow their newly acquired businesses.
The emergence of real competition
It is not only a matter of the end of growth for the major legal publishers. They are actually facing declining revenues resulting from the emergence of real competition, with each other as well as with new players in the market. The silence from the major legal publishers regarding the tough new competitive environment they are facing is deafening.
In their official pronouncements, there is virtually no mention by the major legal publishers of the emergence of free services in every market of commercial significance. Does denial help? The product offerings of Canlii, Austlii and all of the other Lii are effectively competing with the core offerings of products based on recycled public documents that have been the primary sources of revenue and profit of the major legal publishers.
Also missing from their pronouncements is any reference to the aggressive pricing for online services among the majors that has resulted from the battle to hold on to customers who are opting to chose one product over another based on the lowest price. Any gains to be made are from each other and at the cost of further lowering the perceived value of the content to the customer.
Everything old is new again
At the outset of my publishing career, the industry was characterized by a large number of relatively small legal publishing companies. These companies were led by innovative publishers with real knowledge of the market who could see the opportunities that existed and were prepared to take advantage of them. Most of them were subsequently acquired by the large multinationals who believed that they could transform many small print publishers into money minting global online services. That option is playing itself out and not in the way that was planned.
Where are the opportunities for growth in what appears to be a declining market? The major legal publishers have reported an overall decline in print publishing revenue. This contrasts with the experience of some smaller publishers and some markets where print sales of new titles are on the upswing.
The most successful legal publisher of the last five years is a U.K. company called Tottel which was created when Butterworths sold six hundred or so “under-performing” titles to several out-placed editorial staff in order to save money and improve profitability. With a focus on secondary content, the former Butterworths staff quickly transformed the company into a publishing dynamo that soon was effectively competing with Butterworths itself. While the share price of the major legal publishers was falling dramatically, Tottel was sold to Bloomsbury at the peak of the recent recession for four times the original purchase price.
Opportunities clearly still exist for legal publishing in the new era of kindles, ipads and kobos, but not necessarily for the major legal publishers. If Tottel means anything at all, it may be that we are about to see a return to an industry characterized by a large number of relatively small players led by innovative publishers with real knowledge of the market who can see the opportunities that exist and are prepared to take advantage of them.
Everything old really is new again.
Could the situation amongst the multinationals be a partial result of too much dependence on competitive and/or business intelligence? It seems that the more information they collect and analyze the less room there is for creativity and imagination — qualities that can ultimately lead to innovation.
With all the information that I’m sure these corporations are collecting apparently they’re either being misled by the sources or the initial meaning of the information collected is getting lost in translation. The result of all the intelligence and information gathering appears to lead to a focus not on quality, and again, innovation but instead to building more and more bureaucracy.
Everything has been changing for a while. Having worked at both Thomson/Reuters and Butterworths/Lexis and observed all of what Gary outlines here, my view is that there is so much content out there that part of the problem is signposting where it all is. A magazines and directory model aimed at the same marketplace has found some success in the form of easily accessible articles intelligently categorised which then link out to the detailed content (and the provider is irrelevant – it is the content that matters) in the right context.
Advertising in the form of paid entries and display has held up remarkably well given the state of the markets.
And don’t lets forget that the law firms themselves have got rather good at informative newsletters, papers and free content. If we are not very careful they might not need publishers anymore.
It’a about relationships and intuitive portals.