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May 19, 2016

Encyclopaedia Britannica: How a print company embraced disruptive innovation in publishing

C-level briefing: Michael Ross, author of 'Dealing with Disruption' and senior executive at Encyclopaedia Britannica says companies need to "find their value proposition".

By Alexander Sword

The publishing industry is often cited as one of those disrupted most jarringly by the arrival of the internet, but some companies are viewing it as a huge opportunity to shift their business towards what they are good at.

It was easy to see Encyclopaedia Britannica’s decision in 2012 to abandon its printing operation as another major casualty of the digital era. The Encyclopaedia had been in continuous print since 1768, a 244-year run.

At the time, president Jorge Cauz said that the company had foreseen the end of the print set for some time, saying it was simply "the latest step in our evolution from the print publisher we were, to the creator of digital learning products we are today."

Four years on from "dumping the last print set", Michael Ross, the Senior Vice President and General Manager of Education at Encyclopaedia Britannica, remains bullish about the company’s prospects in the digital era.

"Once it was clear where things were going we couldn’t have been more thrilled with our ability to become fully digital," says Ross, who wrote the book ‘Dealing with Disruption’ about what he had learned from the company’s move to digital.

To him and Encyclopaedia Britannica, the company had a distinguished history of moving with technological changes. Ross says that the transformation to digital technology began with its embracing of previous digital technologies, an exploration which began back in the 1970s.

This involved creating the first digital version of the Britannica for LexisNexis users in 1981, publishing the first multimedia encyclopedia on CD-ROM in 1989, and first Internet encyclopedia in 1994.

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"We went through transitions that had to do with changing formats and not knowing where the formats would go. I’m going back 20 years, when things first went onto CDs and the internet."

Ross is unambiguously positive about how the shift has affected his company, saying that he "can’t think of anything that is negative at all about it."

"Everyone is happier, because we reach millions of people rather than tens of thousands. Our editors see their work published every single day." says Ross.

Those who work in publishing may be scratching their heads at this point. Surely moving away from selling hefty encyclopaedia volumes for hundreds of pounds a set would derail their model?


He says that shifting from selling the encyclopaedia volumes had given the company "huge" margins.

The key to this, according to Ross, is that while the medium for delivering Encyclopaedia Britannica’s material to readers may have changed, what they are delivering hasn’t changed.

The value, as Ross sees it, lies in the material that is available on the site, as well as its personnel. This includes thousands of expert contributors worldwide with a staff of over 100 editors. The contributors have included Bill Clinton, Desmond Tutu, Ian Rankin, Francisco Jose? Ayala, Jody Williams, Chris Evert and Tony Hawk.

Making the operation work from a financial perspective has meant using the internet to increase the Encyclopaedia’s reach; as Ross says, "we’re dealing with digital pennies rather than print dollars, but we’re talking about millions of pennies."

"Our customers get access 24/7 to our content at a very low price. We don’t have to deal with printers and stuff falling off ships, or put a lot of money into inventory," he explains.

The move to selling to a larger customer base brought on by the shift online revealed inadequacies in the Encyclopaedia’s CRM system, with software unable to integrate with other back-end systems.

The company adopted Salesforce in 2012 with the deployment of Sales Cloud for its CRM, later adding Service Cloud, Chatter, Salesforce App Cloud, and Pardot across in-office and remote teams.

To increase its reach to achieve the "millions of pennies" in revenue that Ross describes, the key was in providing a strong offer to customers at an affordable price.

"We’ve been able to make it successful by charging an extremely fair price. Our average cost for a subscriber is about the same as a glass of milk."

Most of the company’s revenue comes through subscriptions through the institutional market, targeting schools and universities.

Encyclopaedia Britannica also has a free site, which is advertising-driven.

Even at these prices, with so much free material now online, epitomised by the success of the website Wikipedia, which famously eschews advertising, how could Encyclopaedia Britannica compete?

"What Wikipedia has demonstrated is the value of our kind of content, because it’s such a popular site."

Ross says that the Encyclopaedia does not compete with Wikipedia because the latter is largely indistinguishable from the internet.

"Basically what they’ve done is scraped the internet and put it in a format. But it shows that people want information like that and they want knowledge like that."

While he says that Wikipedia is fine for certain types of content, for other types people will not want to trust "an unvetted site and an uncurated site".

Ross believes that Encyclopaedia Britannica’s adaptation has lessons for many other industries.

"Find your value proposition. If you don’t have a value proposition that is separate from a format, particularly if that format gets made obsolete, then you are in trouble."

He cites several examples of companies that failed to adapt: Blockbusters, the video rental store, for example.

"If you look at the video industry, Blockbuster thought they had it wrapped up, but they thought their value was in stores and not in the content, so Netflix took over. There’s no reason Blockbuster couldn’t have done that."

He gives the success of Amazon as an online bookseller as another example, saying that Barnes & Noble or any other publisher could have moved online. Going further back, he cites the move from tube in radios to transistors.

"The printing industry has been affected by the move to digital, but the ones that do well are the ones that have adapted to do things like print on demand or other solutions that didn’t require large inventories.

"Our value was never in the printing," explains Ross. "It was the only way of distributing the product at the time but our value was in the content."

In the end, he says, success requires constant adaption to new technologies.
"If you try to milk your own format for too long and you don’t have a value proposition aside from that, you’re in trouble."

But this is not just a danger; he says there are many positive reasons to take advantage of the change.

The universal lesson, in the end, is to work out what your company is doing that nobody else can do and focus on advancing that business.

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