Innovation and Stack (Independent Magazines)

In a fast-pasted media environment, organisations have to adopt or develop new business approaches in order to stay current, competitive and retain advertisers and consumers. The recent technology developments and change in the economic climate has caused consumer behaviour to transform and thus created a ripple effect in how advertisers are engaging with them. 

Figure 1. Stack business model

In the case of Stack, they have successfully created and implemented a new business model which eliminates the need for third party advertisers as well as meeting the needs of their target consumers. Through a two-sided business model they rely only on independent magazines who wish to attract a wider readership and consumers who wish to read a different publication each month. This model is cost effective and appealing to small independent publications as they are only have to produce the required number of magazines pre-paid for by Stack subscribers and do not need to consider marketing or distribution as this is also fulfilled by Stack.

The subscription method has been traditionally used by newspapers and magazines for decades. However, while other publications (who adopt the traditional business model) usually offer consumers the choice of single-sale or subscription, Stack only provides the latter. This means while Stack reap the advantages of the traditional model, including; a predictable and constant revenue stream, reduced uncertainty and also higher levels of brand loyalty, it also makes a more financially viable business model as publications are only sourced and purchased from independent publishers based on a predetermined quantity.

The traditional subscription service has also been replaced by in-direct subscriptions, where consumers subscribe to Stack rather than the publication itself. This is the main revenue for the company and also develops brand loyalty.

Stack magazine also have added ‘value’ and innovation to the product through applying expertise in sourcing independent publications as well as their own in-house marketing and distribution process. This process has created an emotive response as the publications change monthly, making it a surprise to readers. The publications are also described as thought provoking and engaging (Stack, 2012) providing the reader with new information and ideas.

References
Aris, A. and Bughin, J. (2009). Rebalancing the Media Value Chain. 2nd ed. Chichester: Wiley pp. 13-81
Blythe, J. (2009). Principles and Practice of Marketing. 2nd ed. South Western: Cengage Learning pp. 629-35
Kolter, P. (2008). Marketing Management: International Version. 13th ed. Pearson. pp. 63
Kolter, P. (2008). Principles of Marketing. 3rd ed.
Kung, L. (2008). Strategic Management in the Media: theory and practice. London: Stage pp. 47

Technology proving to be the PEST driving the publishing industry!

"...a huge opportunity for newcomers to rewrite the rules of the game."

The POLITICS of the industry are becoming harder to control. The current view of the industry sees established companies having to make drastic business model changes. Newcomers, driven by the power of changing technologies, are entering the publishing industry and they are altering the structure of industry processes. Internally there is a change in company politics, with staff reluctance to adapt to the changing working environment. With the market structure changing government and other external stakeholders in the industry are losing control of what is published and how. The shared experience of online publishing raises copyright issues. Legalities are becoming harder to control. Most frustrating for authors is the question of their rights of ownership and the value of their words.

‘We own it, but yet, don’t’

The ECONOMIC structure of the industry is changing. Profit margins are smaller and this is putting greater pressure on performance. In the current economic climate many companies are struggling to finance the necessary changes. Innovation requires a certain amount of investment. The economic concerns of the end-user are also changing. Whereas published content has become widely available at a lower price with the development of digital, the new format of books and magazines are increasingly demanding that readers have a digital device to read them on. 

"Information hungry audiences." 

SOCIALLY people’s needs are changing. With the rise of the digital generation consumers are becoming increasingly critical of the content available to them as well as how it is available to them. Audiences now have diverse needs, they find value in different areas than they used to. There is increasing value attached to customer relationships. Innovations focus needs to now consider the ESP as well as the USP. These industry demands are coming from the consumer, the market is becoming increasingly user-driven.

"Being able to replace products frequently with better versions is increasingly important."

TECHNOLOGY is currently the main influence on all areas of the publishing industry. The types of digital technology now available to the market is encouraging a multi-path model of business. The publishing industry can no longer survive on a linear model of business. Availability of interaction is now of huge value in the sector. Product life cycles and the diffusion curve are becoming shorter, suggesting that there is an increased need for innovation at a quicker rate than before. A problem for the industry is that digital products are hard to define in a static form. It is harder to market to the consumer without a tangible product that allows them to differentiate between competitors. Innovation in the industry has been disruptive. As well as product innovation we are also seeing process innovation with the way books and magazines are created and then distributed. The service of the publishing industry has in turn had to innovate, with the role of the book shop moving online. As a whole, the publishing industry has experienced a platform innovation; it is no longer the same industry it used to be and this is because of the technological developments it has had little choice to adopt.

Business models and disruption

This week we talked about business models and particularly how these are developed within an existing market. It’s important to question why you are developing or innovating in a certain direction. Sometimes people don’t want more, sometimes they want something different. You may exceed their expectations when actually if can disrupt the current market place with something new, the fact that it is different will make it ‘good enough’ to win you custom without it necessarily being ‘the best’. We also talked about how collaboration can be key in this disruption for example the open source models being used by companies such as Facebook to link with companies such as The Guardian Group. Our communication is evolving to be more social, with social networking, so it is perhaps natural that this becomes a viable business model too, or as Michael Skoler calls it: “Connection as a strategy.” (Skoler, 2011)

'Converting Ideas into Reality'

In Monday’s lectures we looked at the importance of the different forms of innovation within existing and emerging business models. Innovation comes in the form of the four Ps, but is innovation impressive without implementation? Innovation is needed in publishing to ensure that companies can ‘stay in the game’ and not be pushed out by competitors, or even new companies with new products or technologies. So which is more important, innovation or implementation? Actively seeing innovative ideas work emphasises innovation and/or invention but shows that it can last and is not just ‘an idea’ but is achievable. In the chapter supplied to us on Monday (‘Innovation – What it is and why it matters’, p.15) Thomas Edison is described as believing that it was not ‘coming up with ideas’ that made him successful, but ensuring his ideas were ‘working technically and commercially’. This suggests that business models should consider that innovation works best with successful implementation.