When old media assimilates new media
That's the dream of all Old Media, isn't it? Use the Web and digital technology to enhance your business rather than let it destroy you, as newspapers and maybe magazines have?
The lines between Old and New Media crossed my mind as I listened to Jerre Stead, CEO of IHS Corp. at the April meeting of the Association For Corporate Growth. It was the best speech we've heard in two years. Stead is a classic CEO; leadership oozing from his pores.
He was chairman of what used to be known as Information Handling Systems since 2000 and took over as CEO when the company went public in 2006. His messages were to trust employees, sell information versus data and to convince the IRS to record employee training as a capitalized expense in building a company's overall value because people are the only sustainable investible asset.
IHS is one of the world's largest information gatherers and resellers. So is the New York Times but why is that company suffering and IHS seeing its revenue rise yearly? Last year they did nearly a billion dollars with net income of $135 million, thank you. This for a company that was in the $300 million revenue range just a decade ago.
Much of IHS's growth has come from acquisition, but their profitability comes from the business model. IHS gathers information about professional standards and other critical data in four main areas: energy, product lifecycle, security and environment. It deals in such areas as aerospace, defense, government, construction, electronics, chemicals, manufacturing and oil and gas. One of its latest products uses its oil and gas databases to predict how badly an oncoming hurricane will affect the energy markets if it hits a certain area. Another product helps offshore drillers rebuild their rigs with professional construction standards.
So if the digital media revolution has devastated traditional media, how come IHS is thriving, I asked Stead in the Q&A period after his presentation? His simple answer was that "90 percent of our information is subscriber-based. We look at the Internet as a way to distribute information and make it more available for our clients."
So there you have it. Why didn't the newspaper industry protect its product when the Internet came? Why didn't they put up pay subscriber walls as IHS did? It's because they were arrogant and lazy and thought the Internet was going to do their work for them. Newspapers sold their content for cheap to Yahoo and other distributors and the making news a commodity ended up maiming the newspaper industry.
For IHS, the Internet is simply a cool way to conveniently distribute its content to its customers. It's not a threat because IHS assimilated the technology to make it work within its business plan, and make it work in better ways than ever. Too bad traditional media missed the boat. A lot of good people got hurt for the arrogance of an industry that had been little challenged for a century.