Changing Revenue Model...#3: Margins & New Income Streams

On to the third item from my earlier post about the changing revenue model in publishing: Time to talk about new income streams and the potentially less favorable margins they may represent.

If ever there was a great example of The Innovator's Dilemma in action (or should that be "inaction"?!), this is it.  It's so easy to look at your core business and think, "yeah, I've got it all figured out...I know there are people out there experimenting with "new technologies" and ways to "steal my business", but look at the money they're spending today and the low margins they're forced to live with!"  If that sounds familiar, it's gut check time because you're in denial.

The truth is someone will eventually create a better mousetrap than yours.  It may not be this year and it may not be next year, but it will happen at some point.  Experiment a little.  No, experiment a lot! (In fact, that was point #2.)  Accept the fact that the margins on many of these experiments will be lower than what you're accustomed to.  Deal with it.  They might improve with volume, or they might just be lower forever.  How long can you not experiment and cling to a business with acceptable margins but a shrinking customer/revenue base?  The newspaper industry is "Exhibit A".  Let's all try to learn as much as we can from their mistakes.