Digital Migration: Getting Everyone All Shook Up

Posted on | October 20, 2006 | Comments Off on Digital Migration: Getting Everyone All Shook Up

Those of us tied to health tend to think our world is shaking faster and harder than everyone else’s. But the truth is that the forces of aging, consumer empowerment, societal complexity, the Internet and globalization have everyone “all shook up.” In fact, it’s hard to find a Fortune 500 company that isn’t “fundamentally rethinking its value proposition.” Why? Because the world is changing.

Case in point, The Boston Globe, featured in The Wall Street Journal this week. This quintessential New England publication was purchased by The New York Times Co. in 1993 for $1.1 billion. Seemed a bargain then when they looked at the level of education and affluence in the Globe’s customer base. But it’s this same level of education and affluence of customers that’s coming back to bite them as we progress into this digital information age. Today, 76% of all Boston area households have high speed Internet connections (Boston ranks third in the nation for this) – and fewer and fewer Bostonians are picking up a hard copy of the Globe.

Obviously, this has impacted the Globe’s earnings and therefore those of the Times, whose stock price is down 13% this year. Take Sunday’s Globe circulation. It’s down 25%. Consider as well the general loss of advertisers to the Web. Or the loss of premier ad buyer Filene’s after its sale to Federated Department Stores. With the loss of that single advertiser, nearly 6% of ad revenues went down the drain.

Now, it’s not that the Globe hasn’t been trying. Its web site drew 3.1 million visitors in September, compared to the New York Times site, which drew 3.9 million. But compare that to the likes of Yahoo News, which scored 31 million visitors in July.

So what can we in health learn from cases like this? Number 1, assets today may be liabilities tomorrow. The Boston demographics made them active news consumers, but also early digital adapters. Number 2, strategic planning must be sufficiently forward looking in times of great change to get ahead of the curve. The Times was looking at print ads when they should have been considering web ads. And number 3, when stuck between a rock and a hard place, look for wiggle room. The Times needs to significantly cut costs to preserve, in the short term, their old value proposition while simultaneously investing significant assets in the build out of a new value proposition. And most of the rest of us need to do the same thing.