Industry in denial
I got a few emails today asking to confirm the possibility that Reed is hiring a replacement to Mike Santarini. At the basis of this rumor is the belief that Santarini was let go because he pissed off too many mucky mucks in EDA and Reed, in an act of contrition, fired the journalist.
If that was true, then why let go of Maury Wright, Alan Robinson and Barbara Couchois?
Here's the scoop: Print advertising revenues are dropping, even though readership is climbing. Readers don't pay for the magazine. Advertising does. Even though online revenues are climbing, they are still only a fraction of the whole. You remember the writers' strike? Guess what is the cash cow for Reed? Variety magazine, which gets a whole bunch of money from advertising for the Golden Globes, Peoples Choice and Oscar awards season. That didn't happen this year because of the writers' strike. Add to that the declining revenue in tech advertising and you have a perfect financial storm.
Right now, Reed is in a hiring freeze right now as they court potential buyers for the RBI division, of which EDN is a part. No one is being hired to do anything. If Mike's primary beat -- Electronic Design Automation (EDA) -- is going to get coverage, it will be in the spare time of the remaining EDN staff.
The people spreading this rumor are in the EDA industry, which is trying to figure out why no one in the media likes them anymore. Rather than take responsibility for killing their own media by not supporting it, they are trying to lay the blame on the messengers.
EDA companies say they want the media to perform the same kind of analysis and insight they had 10 years ago, but they don't want to pay the cost of having qualified journalists perform the service. They say they are tired of seeing regurgitated press releases on websites, but they don't even pay for qualified communicators to craft those releases.
They're cheap. They've lost the ability to create anything truly innovative. They've lost the only way to really find out what the market wants. They crow about a 2 percent growth potential in the next year, that's going to have to be cut because their customers are cutting their estimates.
Time to wake up an smell the coffee. Get it straight, folks. Your media is dying because you are no longer supporting it. You've created an unholy mess by demanding something for nothing and now you are getting exactly what you deserve.
Lou,
ReplyDeleteI think the issue is more complicated than "EDA companies didn't buy print ads." (Though Mentor was one of the last big sponsors of print)
First, we can all now target designers much more directly, so marketing dollars are getting re-allocated to other marketing methods. Advertising in all media is going down. As a media lover, that bothers me, but the business logic is hard to refute.
Second, and I won't name names, Mentor spent hugely on print in some of the trade media only to find that the editors want to write article after article after article on start-ups. The big three EDA companies are about 75% of the industry... but you wouldn't know that reading some of the publications.
Big EDA companies aren't charities with the purpose of creating marketing opportunities for small companies. We have a responsibility to our shareholders to try to make best use of the dollars we have.
I continue to believe that media in our industry will evolve along the line of Richard Goering's new pub and several of the web/email based more vertically oriented publications. These can deliver specific audiences to companies in focused areas they can measure. Pubs that can't or won't get responsive to the needs of the people who pay them are going to die. Failing to serve your customer has always been fatal to a business. It still is.
Ry, you're right about the problem not being specific to EDA, or even the electronics/IT industry, or even B-to-B trade press for that matter. The way in which daily journalism and its advertising base is fundamentally broken bears a lot of similarities to the electronics trade, and EDA. News can no longer be paid for with advertising dollars, it never was conceivable to be a subscription-underwritten function, and a new underwriting model has yet to emerge. But in the meantime, Goering's newsletter and EDA/FPGA blogs play a useful role, but can never replace a broader-based web site -- but only if that web site or print adjunct provides some detailed value-add, which I think is very borderline for EE Times and its competitors right now. Similarly, a million bloggers can tell us about the election or the status of the war, but they can never replace a reporter on the ground in Iraq or Somalia - and who pays for that writer if all traditional funding mechanisms are broken? Mentor Graphics should not be a charity operation, true, but there may have to be some new near-charity efforts coming from the venture community or elsewhere to keep underwritten journalism of all types - daily press, B-to-B - alive. I am not anti-blog or anti-newsletter, but these formats cannot fill the bill on their own. In the meantime, even if Chris Anderson tells us we should expect free on the cover of Wired magazine, no company should expect to receive free coverage if they do nothing to support the media.
ReplyDeleteRy, your comments might be justified if they had some basis in reality. The EDA customer base is shrinking because there is no way for the base to understand what is really going on in the industry. All they have is regurgitated press releases and canned marketing material. There is no real reporting on the industry.
ReplyDeleteWithout that valuable reporting, that you had 10 years ago before the industry stopped advertising, there best bet is to make their own tools, which is the trend Gary Smith has been reporting for, oh, 10 years.
The short term plan from the major EDA companies to kill the media is working. You are taking market share from small, innovative companies, driving down their valuations and gobbling up whatever competition you might have in fire sales. But the long term effect is killing your market.
I've heard every marketing executive say the same thing: "There are only 5-10 companies that make up our market, and we know who they are. So why do we need to advertise or do PR." But those 5-10 companies have become 3-5 companies in the past year as they consolidate, and you have missed the opportunities with 300-500 startups that could use what you have ... if they knew you had what they needed.
The EDA marketing strategy is short-sighted at best, and suicidal from my position.
Loring is right, though, it isn't an EDA phenomenon. It's also happening in Fabless, Embedded and Chip Equipment. They are saving money in the immediate and killing their business for the future.
Oh, and as far as the press giving startups more coverage, Internet searches kill that conventional wisdom quite nicely. Synopsys, Mentor and Cadence garner 95 percent of the coverage for the simple reason that what press is left doesn't have time to go after all the players on any one issue. You've done your job and swamped the market with self-serving hype.
Lou,
ReplyDeleteFrom my position and from the market data I see, the market isn't shrinking. We have more customers every year. Design is healthy and growing, and smart designers are getting the info they need to get their jobs done.
Pointing fingers may make you feel righteous, but I don't believe anybody has a "plan to kill the media". That's the sort of over-the-top statement that just destroys useful dialogue.
But since you want to call for the lynch mob, I'll exit here.
Mike,
ReplyDeleteI was referring to the publishers, not the editors in responding to advertiser needs. Details would drift into the areas of proprietary marketing plans, so I'll leave it at that.
And thank you Mike, Mentor has done a lot to support print.
In defense of my peers at other publications, as well as of myself, it’s incumbent upon B2B editors to report on the activities of startups. We can quibble about how much of a publication's coverage should lean in that direction, but everyone has to start somewhere.
ReplyDeleteI have a poster on my humble cubicle wall that Mentor Graphics produced for its 25th anniversary in 2006. One of the earliest items in the company’s timeline was its appearance on the cover of Electronic Design's issue of May 27, 1982. In that issue, the magazine covered Mentor's maiden product, the IDEA 1000 workstation, in advance of its showing at that year's first-ever commercial DAC. The fact that Mentor chose to commemorate that cover on its anniversary poster tells me that it was a landmark event. In effect, Electronic Design put Mentor Graphics on the map.
My point is that Mentor Graphics was a startup once too, and certainly benefited from the largesse of a magazine which, at that time, was fat and filthy rich. The coverage launched a relationship between Electronic Design and Mentor Graphics that endures to this day. It's how *all* magazines nurture relationships with prospective advertisers. That's not something that any publisher would want to back away from, not as long as there is any hope of building business.
The problem is that while the print magazines and websites of today continue to cover those startups to the extent that they can, the state of the EDA industry is such that I don't see the rise of another Mentor (or Cadence, or Synopsys) happening anytime soon. After the Big Three in EDA, media spending is practically non-existent.
It's no more fair for Mentor, Cadence, and Synopsys to carry DAC and whatever number of media outlets are to survive than it is for the media outlets to carry those vendors who, for whatever reasons, have decided that marketing should be free. If my publication and its audience is valuable enough for marketers to want to suck up my time for phone interviews and meetings at conferences, it should be valuable enough to support with marketing budgets.
As Lou rightly points out, the decline of print media can't be laid solely at the doorstep of the EDA industry. It's a much broader phenomenon than that.
Well said, David. I'll take it a step further. Any company that has received coverage from any publication, print or on line is in a position of obligation to that that publication. If they do not support the publication, then they have stolen the time of the editor and the resources of the publication. Everyone who benefits from a system has an obligation to put something back into that system.
ReplyDelete