Sometime around 2001, after burning through several editor-in-chief jobs during bubble 1.0, I decided it might not be a bad idea to have an MBA. My editorial friends thought I had gone off the deep-end, and not for the first time. The first time was when I moved from print to online; second was when I began to use my biz head to shift from “editorial” (Time Warner, Disney, Ziff) to “consumer” brands (Bertelsmann, Samsung, Citibank); and now business school? Please. Until the MBA I’d been firmly planted on the editorial side of the Luceian wall keeping church from state, business from edit. But an MBA meant moving right over the wall, into enemy camp. And to do what? Everyone knows the business of the media business is advertising. No ads, no revenues, no profits, no jobs. No disrespect, but publishers are by and large glorified salespeople, not strategists. You don’t need no stinkin’ MBA for that.

I had a different idea. I’d been up close and personal on the biggest disasters of Web 1.0. The Titanic (the implosion of Time Warner’s Pathfinder.com). The Hindenberg (Disney On Line). Pearl Harbor (Thomas Middelhoff’s brilliant, insane campaign to buy or beat Amazon.com and Barnes & Noble.com with BOL.COM). And let’s not forget little skirmishes such as Ziff’s eShopper, a webshopping glossy piggybacking on the already sinking Yahoo! Internet Life franchise, just as bubble 1.0 was bursting. After eight years of this, I came to realize, as Bill Goldman once said of the movie business, that “No one knows anything.” (And that definitely included me.) I watched young MBAs and V/alley entrepreneurs (not usually MBAs but typically accompanied by one or two) make a cult of what they called Dot Com—how I hated that expression. I saw random people I knew mint millions. I saw good guys founder in desperate search of a “business model”—some meaningful, logical path to profits—while bad guys gulped more more and more marketing dollars for projects that everyone knew sucked and never worried about business models.

B school gets a C

B school was my attempt to grapple with media’s failure to reckon with digital innovation. The key, I believed—and still believe—is to bridge the church/state divide, the ignominous wall separating edit from business. And because it was futile to ask bizheads to innovate with editorial and digital media—but I could easily imagine innovating editorial with digital business models—an MBA seemed like a good place to get my feet wet. Boy was I wrong.

My cohorts—at least half my class—couldn’t give a rat’s ass about business innovation or for that matter business models. Newsflash: You go to b-school to make money. In fact, you can’t learn to build a business model at Stern; it simply wasn’t, probably still isn’t, taught. I had to take courses in the part-time Langone program to learn how to actually put together a marketing budget and do DCFs (discounted cash flows) on media companies. As one profesor put it to me, our [business schools'] job is to create dumptrucks full of bullshit and serve up thumblefuls of the tastiest morsels to you idiots. (He actually used that word.) Such is and was the defecatory triage of the MBA environment.

Despite appearances, this isn’t a rant about b-schools and MBAs (although that might be fun to do in another post). What’s interesting is growing discussion about the death of print and the growing disconnect (in just a few places) with innovation at the level of product creation. You can’t fix the business model if you don’t have a clue what kind of a product to create. The problem is the raw limits on innovation within media, the constraints of history and prejudices of touch and feel—and class and age—print conveys. Innovation, either in business models or product management, is stuck, can’t even get into first gear. (And if you’re pissed off about it, you’re a  whiner.) First hand experience tells me that b- schools have nothing to teach in this regard, that the focus on finance, slicing and dicing and arbing, reinforces selfish impulses; second-hand experience—for example, this wide ranging debate at HBR.com—confirms that most of the conversation is misguided, that innovation doesn’t even have a seat at the table! J-school seems like it’s in even worse shape; a similar debate is brewing there, but at a much lower temperature, perhaps because j-school is more or less a victim while b-school comes closer to being a cause.

Umair Haque says that business model innovation—digging into costs, revenue streams, efficiencies—is “exactly the wrong thing to focus on right now…Business model innovation amplifie[s] value destruction.” Of course, business model innovation—Securitization, the structured aggregation, bundling, and slicing of mortgages or any other underlying security—was supposed to be the big breakthrough for finance. Instead it’s brought us to our knees. For Haque the dirty word is Monetization: “It blinds us to value creation, at the expense of value capture. When we seek to monetize, we end up chasing the same old lame competitive advantage. I win, you (and you, and you) lose. Put another way: ‘monetizing’ toxic junk — from CDOs, to Hummers, to McMansions, to Big Macs—is how we got into this mess.”

In media terms, this is Zell territory, Zell Hell. But not just. When you’re trying to save your ass, all the innovation you can afford is tied up in value protection and efficiency: whether it’s the NY Times’s leaseback of its new building, saber rattling with unions, or what I think is the ruinous, lemming-like decision to shutter editorial brands because equityholders don’t have the patience to figure out a new business model.

Can’t anyone here play this game?

Of course, it’s not business models that are at fault. Even Haque, here again, from the same article, makes the distinction that some business models—those based on innovation—are more equal than other. “When we can make valuable stuff, there are a plethora of business models to choose from, some old, some new, some untested, some tried and true. When we can’t, no amount of business model innovation can save us from implosion.”

So the question l want to ask here—and will be asking over the next few posts—is: Can’t anyone here play this game? Why does it seem nearly every editorial brand is packing its bags and going home—just when there is more opportunity than ever to slice, dice, curate and aggregate the content surrounding these brands? Granted, some media brands may be playing in “red oceans” of rivals that are just too infested with competition to be worth pursuing. Blender, for example. One can make the argument—one of my b-school professors did —that there’s just no sense fishing in markets that small, that saturated. Marketing just won’t do any good here, he said. It’s missionary work. To which I raised my hand and said, No that’s the missionary position—right where most of media is right now, getting fucked (excuse my French) without any real love for winning new customers or satisfying as yet undefined customer needs (what I later learned—after b-school—are so-called “blue oceans.”) Instead it’s all blow cards and blow jobs (okay, PR.) What about the mass of niches under each of those supposedly saturated markets? Were they untouchable? Was there no way to reach them either? Mr. Marketer’s reply was that there might be, but you’d have to prove your point to management that they were worth reaching. In other words, you’d have to show a path to net return-on-investment after spending all those marketing dollars.

Blender cover

Of course I have no way of knowing what kinds of shenanigans were behind Blender’s shuttering. (And what a tangled web of intrigue it seems to be with ex-Rolling Stone publisher Kent Brownridge convincing Steve Rattner and his p.e. firm Quandrangle to pony up $250 million—$190 of which were borrowed—to buy the titles in the first place.) But leverage ain’t everything. You have to wonder, like the good, grim reaper of the magazine death pool does nearly every day now—why titles that were once print innovators or at very least well-established brands couldn’t (can’t) be bothered to think through their digital strategies until it’s too late. Why is it easier to shut down and forfeit a brand than find a new play online, than to find the nexus of journalistic narrative and the broad path of tagged knowledge, inside and outside the boundary of a title’s digital assets? Perhaps “missionary position” is right: when you’re up against everyone from MOG to Hypem, not to mention rollingstone.com or even spin.com, staring at half-naked chicks on your cover is a lot more fun than thinking through the issues of value creation and customer service—yes, customer service, even for media brands! What a thought!

These are questions of innovation that, to my knowledge, just aren’t being considered even now. What would customer service via digital innovation, first at the level of editorial technology and then at the level of business model, look like for Blender, or for that matter, Hallmark or Domino or BestLife, or half a dozen other print titles that you know are in trouble?  When these magazines fail are their publishers saying that the value of circ plus shrinking CPMs (not to mention the scant revs from their retardataire web strategies [sic]) just ain’t worth it, that it’s just not enough net IRR (internal rate or return) to sustain the investment? Or are they saying the brand is worthless, that even a sale of the assets (brand, lists, archive, talent, website) amounts to a pile of beans in a firesale, and so ought to be walked away from—like a foreclosed house in some oversold condoglut Las Vegas zombieland? My guess, sadly, is that the private equity guys believe it’s the latter. They just don’t know how to fix it, said one of my buddies, although it turns out Blender is going to be kept alive as a website.

Editors don’t get it either

And they may have a point: because, sad to say, outside the Times (which is doing an admirable job of throwing up one innovative idea after another to see what sticks), the editorial teams don’t know how to fix it either. They don’t understand that the toolkit isn’t just a better mix of articles, or more “service” —in journalistic terms, that’s usually listicles—but rather a broad and everchanging mix of social media/community, content strategy (taxonomical and SEO-driven information architecture), curation and aggregation, user generated content, ecommerce, etc—all combined with and told through great storytelling, big hairy audacious narratives. And that’s what’s finally doing a job on media innovation. The editors are fumbling with lawn chairs on the Titanic, cutting staff, making efficiencies, and playing with Twitter and blogs—i.e., more content creation—while the business side is out selling. Meanwhile, no one’s watching the store.

There’s no attempt to rethink the enterprise or the brand, in competitive terms and through the customer base of actual customer needs, of user personas, of learning to add value to people’s lives. No attempt to rethink the idea of service by (at very least) getting a grip on what users actually want in digital terms and how that distinguishes a brand from its rivals journalistically. No attempt to think through web-based innovation instead of  business model games. No attempt to play in what Jarvis calls “the mass of niches”; it’s still all about the generalized reader, the mass and print’s equivalent of gross rating points, distilled via CPM and CPC. It is it any wonder what we get from this are flashy, flimsy brands with a few blogs (which of course are disconnected from published work) and (if we’re lucky) some author-side metatags—if we’re lucky: most media companies still don’t publish in end-to-end XML and XHTML so that’s not a whole lot of good. (Wordpress is still far more sophisticated than most magazine’s CMS today.) It’s still brand by editor-in-chief, not brand by customers-in-charge.

And so the number of magazines and newspapers continues to dwindle. The other day, it was announced that there are now fewer magazines than ever before: just 17,000 mags to go before they turn off the lights. Now I’m not saying every every media brand (notice I do not say magazine title) is worth saving: we didn’t really need Trader or  Genre or King or Financial Week, and there are lots more out there that are going to fail simply because they think that web-based media is inferior to legacy edtiorial. On the other hand, the value of these brands is real and quantifiable (upon sale), and can represent real audiences that have real forward value. The question is: Are you ready to save them? Are you ready to tap into the community that already exists for your brand, to bring it to life using these tools? Are you ready to listen? Call this social media if you like: servicing your community through the tools that already exist out there, Twitter, Facebook, Myspace, even Plaxo. I call it customer service. (Forget Nordstrom and Disney, think Google.) Haque calls it the “I win, you win” question—as opposed to the revenue driven  “I win, you lose.” And of course there’s Jarvis: What Would Google Do [with your brand]?

These are the innovation questions beyond the missionary position. Over the next few posts—and probably over the course of whatever I write here—my theme will be media innovation: how and why it works, has failed, can transform media brands through design and technology into lovebrands consumers truly take to heart and companies truly profit from: a kama sutra of media innovation.

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