Douglas M. Arthur, Managing Director/Printing Analyst at Morgan Stanley. (Doug had extensive graphics. Please see Attachment A.) Doug showed the growth long-term growth curve of the Dow Jones Industrials and the growth rate is astounding. This includes the growth rates in money flows, mergers and acquisitions, and the movement of money. However, the bulk of that growth, and the lion share of money coming into the market is almost entirely being dominated by technologies. The stock return for technology stocks over 12 months was 51%. The next closest sector was energy stocks, which came in at 15%. Morgan Stanley tracks real earnings returns on stocks to predict the markets direction. The market has been in "Bull" territory for many years, but there indicators seem to show that the market is now over valued and a Bear market may be likely. Furthermore, the ten-year bond interest rate is shooting up, which is an inflation indicator. While the NASDAQ is still growing (technology stocks) the Dow has flattened out. Investors seem to be moving their investments, particularly mutual funds, in to more conservative equity and growth funds. In short, "things are getting a little hair out there," said Arthur.

What does this mean to printers? Douglas showed stock performance of companies such as Bowne, Quebecor, RR Donnelley, Banta, Consolidated, and Wallace – in most cases these stocks peaked in 1998 and they all have seen great losses in stock price over the last two years. What’s wrong?

• Investors believe that what is good for the Internet is bad for printers.
• The technology mania and technology stock growth is very exciting, and hence, the more steady growth (ex. RR Donnelley has shown a 6% growth in the last year) of printers just isn’t as exciting.
• There is huge cost reduction pressure in corporate America and investors know that printers are being pressured to reduce costs and hold pricing at the same time.
• There is a perception that there is over-capacity in the industry. Old presses don’t seem to go away.
• There is a perception that pricing is very "soggy" in the printing industry.
• Consolidations in highly distributed markets such as printing has gone out of favor because of big failures in other industries, such as TYCO.
• A few earning disappointments (a real killer) have turned-off the investors to the larger printing market.
• Weak paper prices cause investor to question the market’s direction.

Morgan Stanley has put the printers and publishers in a ranked order by rating valuation, Internet presence, technology, etc. He also showed Morgan Stanley’s outlook for advertising, For instance:

U.S. Advertising 8% 6%

Marketing Services 8.6% 7.6%

Net Advertising 44% 46%

Highlights include:

• Internet adverting and E-mail advertising will grow the most. E-mail advertising will growth most at the expense of direct mail.
• Daily newspapers are the most over advertised and they believe that there is 6.6 times the amount of advertising its readership warrants.
• Magazines are also over advertised, according to Arthur, and Morgan Stanley believes that there is 3.0 times the amount of advertising than its readership warrants.

However, Arthur concluded that printing company stocks are cheap and that new e-commerce companies such as Noosh and Impresse will draw attention to the printers, and things will turn around for printers.

Joseph M. Jacobson, Assistant Professor at MIT Media Laboratory. MIT formed a group to develop basic technology for media called the MIT New Media Lab. Jacobson that paper, which is a $300 Billion market with $100 Billion market capitalization, is basically safe. However the market will change as printing goes from print "form" to printing "function." For instance, newspapers will be dead in five years, but there are many new opportunities for other types of publishers to pursue.

MIT Media labs developed a chemical (an ink in a bottle) that they call electronic ink. However, the application of chemical charges will change the "color" from black to white. What it actually consists of is a micro-capsule with two halves. Each half is clear and one contains white crystals and the other contains black crystals. As a current is applied, the sides are polarized and can hence, be "flipped" from black to white for the viewer. Jacobson showed a video demonstration as well as an electronic ink print on a very thin card.

They are working on "all-printed carbon memory" that can be printed on surfaces to move a "memory charge" onto a surface. Quite literally, they are making chips on paper by printing the circuit on to the paper or substrate.

MIT Media Labs is also working on "Radio Paper" where they print both the memory and display to a substrate, but integrate these so that the "radio paper" can take a signal and make changes as directed. Conceivably, a radio station would broadcast the news to these "papers" in their area. You’d just pick up the "paper" and it would have the current news on it. An early prototype only does white print on a blue background. Yahoo! Uses "Radio papers" on old-fashioned sandwich boards and send people with messages into malls and stores.

So what are the printing opportunities?

• New types of printed displays that are customized continually at the point of delivery.
• Radio frequency tags that report information from printed products – it is too expensive to make print-on memory with silicon, a printing process makes more sense.
• …And there are electronic books.

Any future printing technology must have a resolution of about 1200 dots per inch, or 80 microns or smaller dots. Electronic books, combining all the above technology developments and using several pages rather than one, would allow one media to be used over and over. Furthermore, the same book could change to another "book" with the press of a button: at one movement you are reading a Stephen King Book, press the button and now you’ve got the Wall Street Journal. It is part of the evolution of the printing process:

• Manuscript was one-to-one
• Printing is one-to-many
• Electronic books are many-to-one

Electronic books are in fact the ultimate customization. Jacobson said that there are even AI technologies in the work that will automatically assemble books from raw sources. The production cost goal of the e-book program is $.10 per square inch. Although this is high for printing, it is very competitive against silicone publishing systems (electronic). Issues to be worked include color and high reflectivity. They are also aiming for 100,000,000-cycle lifetime for the media, and they want a product that is durable enough to survive for three years. They envision that these digital books will be produced on something that looks like a printing press. More information, as well as some of the graphics and videos shown can be found at www.media.mit.edu or www.eink.com.

Moderator: Christina Dochtermann, Major Account Manager at RR Donnelley & Sons Company

David Rasmussen, Senior Media Director and Group Planning Director at Ogilvy & Mather. Discussed some of the things that they are seeing in trends within segments, what the media choices are, and how magazines fit into the mix.

When Sears or a retailer looks at a target, they may look at age, home ownership, number of children, and house hold income. However, a package goods product seller may use a psychographic profile and look for a "traditional mom, who looks after family, and thinks of food as love." While an insurance company may look for regional information and who makes a buying decision.

The media options are numerous. There is the obvious, such as television, radio, outdoor, etc, but there are a lot of new or specialized options that the general public does not normal consider part of "advertising":

• Mall Kiosks
• Bathroom advertising
• Stadium signage
• Truck advertising
• Mobile billboards
• Bus advertising
• Back of parking tickets
• Grocery carts
• Grocery floor graphics
• Bill stuffers
• Train cards
• Sides of buildings
• Produce wraps
• Gas pump handles
• Cinema advertising
• Concert signage
• Air writing

About half of all advertising is local as opposed to national. TV, Newspapers and direct mail account for about two thirds of all national advertising. Magazines represent only 5.2 of the advertising media market expenditures in 1998. What are the big advertisers? The top eight, in order is:

1. Automotive
2. Retails
3. Food Products
4. Computers & Software
5. Beverages
6. Cosmetics & Beauty
7. Liquor
8. Pharmaceutical

The media mix is very different for each market segment, and even within a segment, leading companies will buy very different media mix depending on its own priorities. Some examples of factors that influence the media planning process include:

Magazines are competitive. David said that studies by MRI, AC Nielson and others have shown that when advertisers took dollars out of broadcast and put it into magazines they acquired new customers. Furthermore, studies have shown that broadcast is good for brand awareness, but magazines are better for brand recognition.

(Note: David’s data on market size is from 1998. The total market, as projected by MPA, for all US advertising is $233 billion.)

Tom Johnson, Senior Partner and Director of National Print, Ford Motor Media. Ford created this group to buy for all of its operations, (ex. Jaguar, Ford, Audi, etc.), and to us its clout to get better pricing. He does not get into the mix of which ads are placed, but works with the agency to determine budget and direction. He said that there are three things to remember about Ford:

1. Ford is changing the way they talk to customers. They want to be more one-on-one.
2. The media landscape is changing
3. Magazines need to change to remain relevant

Tom then discussed the process. First, in planning they start with brad objectives, media landscape and budget. Old brand objectives were to be national, have reach, and build awareness. Today the objectives include brand positioning, determining the target audience and the message, focusing on timing, lifestyle, customer life-events, and other more detailed objectives. The media landscape has also changed. Today, in addition to traditional media, there is the Internet, e-commerce, events, displays and other channels that can help them get closer to the customer. They are even looking at an opportunity to advertise on the back of checks!

In planning, input comes from customer service, corporate, and the seven car divisions (Ford, Lincoln, Mercury, Jaguar, Volvo, Mazda, and Visteon). Each division has product and brand groups that provide input as well. There is also input from six different advertising agencies. Then they need to consider cost, alternatives, resources, partnerships, positioning, availability, and history of each media option. All this happens before they even get to negotiations! Negotiations are two-way: Tom negotiates with the media representatives and the internal representatives of the Ford operating divisions and product groups.

Magazines need to become a marketing resource and stop focusing just on the number of pages sold. Magazine representatives need to sell "magazines" as a category and not just sell against competitors. Furthermore, magazines need to be creative and suggest new ideas. To do this, magazines need to learn more about the customer and needs to work closer with agencies to discover opportunities. In negotiations, magazines need to "over communicate" and focus on revenue as opposed to "pages."

Ellen Oppenheim, Senior VP and Media Director at Foote, Cone & Belding. Ellen discussed a more specific advertising example: the changing role of print in pharmaceutical advertising. As a result of FDA policy changes all pharmaceuticals have increased advertising spending. Since 1997, pharmaceutical advertising expenditures have grown from about $650 million dollars per year to about $1.7 billion, but magazine advertising has barely budged in terms of dollars; hence, magazines are losing market share!

As these companies do more advertising the are becoming both smart buyers as well as more active buyers of advertising. Planning factors are the same as mentioned by Tom above, but with some twists: the biggest consideration (of the competitive factor) is whether or not you are first to market with a new drug. The two key issues are increasing usage or increasing usage and compliance (the amount time people stay with a drug.)

Magazines are desired often for their ability to be highly targeted to intelligent, reading segments of the market. Allergy drugs are targeted to different groups than something like osteoporosis drugs that are highly targeted. Patient concerns over privacy and other personal issues are important. For instance, where do advertise AIDs drugs? Finally, side effects need to be covered in advertising and this is difficult to do tactfully, yet clearly. If there is something that may be offensive or sensitive, it comes across much better in print than in broadcast. (Ellen showed two weight loss television ads and the side effects portion was of the ads were both very long and quite graphic. The audience got the point.) Some drugs are seasonal (ex. allergies) and there is a need to get these ads on the air quickly.

The FDA is also studying the impact of changes in pharmaceutical advertising. This review may cause a cutback in direct mail and collateral, but my benefit magazines. Studies have shown that, for all products, a combination of two media outlets is always more effective than a campaign that focuses on just one media outlet.

Nina Link, President and CEO of Magazine Publishers of America. Advertising revenues for 1999 closed at $15.5 billion, an increase of 12.8% over 1998. Traditional advertisers have all increased their magazine spending, and so had television advertisers and dot-coms! What are the competitive strengths of magazines? There is brand relationship: everyone has a favorite magazine. Magazines are perceived to be trusted authorities, personal contacts, and source of information that relate directly to the reader’s interests and comfort level. BBDO Brand Fitness Study showed that 61% of US adults have the greatest affinity for magazines – over TV and the Web. Several magazines have cross media relationships, to include:

• Biography
• Cosmogirl
• Martha Stewart
• ESPN
• Essence
• Pets

Adults 18-24 are the heaviest readers of magazines! While time per day with TV declines, magazine time is on the increase. According to NAA (1998) 80% of 12 to 17 year olds read a magazine every week. 1999 there were approximately 6,000 magazine, of which 894 were new.

The Internet is not a threat: It allows magazines to expand their brands. Furthermore, dot-coms use magazines to drive readers to their sites. New magazines such as Fast Company, Industry Standard, and Yahoo cater to the Internet community and are among the most successful new magazine introductions. 85% of MPA members have a web presence and they are using the net for subscription renewal and new sales. It allows publishers to test new concepts and enhance content. Finally, the Internet allows them to communicate more directly and more frequently with their readers.

Thursday, February 10, 2000

Panel: Multimedia Marketing Session

Moderator & Conference Chair: Ann Marie Bushell, VP/Sales & Marketing at Quebecor World

Wenda Harris Millard, Executive Vice President/General Manager at DoubleClick Network. The size of advertising on the Internet has grown from $3.8 to $5.4 billion in 1998 (depending on who you ask) to $8.8 to $12.6 billion in 1999. Double click is an advertising service the help Internet users place, plan and evaluate on-line advertising. Internet advertisers want the same things from the Internet as they want from other media, plus there is more of a focus on the people part of advertising because of how new the industry is: advice and counsel, knowledge sharing, trustworthy sellers, long-term relationships, and partnerships are all in demand.

Online challenges include proving the power of branding online, selling the interactive and transactional aspects of the Internet, and helping advertisers create new advertising concepts. Wenda showed a Media Force statistic that showed the web to be more effective than television for creating brand awareness, but less effective than print. Improvements in Internet advertising for the future include:

• More precise targeting in terms of both placement and much more detailed target customer profiling.
• Better tracking and reporting
• Post-click analysis
• Ability to tweak and change campaigns that are in progress
• Rich media opportunities (e.g., interactive)

The double click system supports eleven languages and does real-time currency conversion on transactions. Users are less likely to click through on an ad the second time they see an add:

One service that DoubleClick offers to advertising agencies is overnight ad testing. They will take a campaign theme and variations, send the variations out to up to 70 million customers and respond quickly with customer response data very quickly. This allows the agency to save a lot of time and money on ad testing and helps them to advertise more effectively overall. There are a lot of types of advertising available on the Internet, including:

• Banners (Static, animated, and HTML)
• Sponsorship
• Pop ups
• Interstitial
• Retail buttons
• Richer media

Static banners are very flat and are being replaced by animated banners and the other forms of advertising on the Internet. A Wired study showed that Internet advertising increased response 340%. These types of statistics sound almost ridiculous and Wenda cautioned that the Internet is not going to replace tradition media, but must become a strategic component of the overall media mix.

DoubleClick’s network of customers is set up to capture each visit and purchase by each user so that later, when the customer goes to another site, the DoubleClick system recognizes the user and delivers a targeted ad! (They call this technology "boomerage.") This does raise some privacy and security issues. Wenda said that the issue of privacy is very hot and we will here the terms "opt in" and "opt out" more often. Web sites have three main options for developing a web sales staff:

1. Build your own web-dedicated team
2. Combine your print team with Internet sales
3. Outsource your Internet ad sales

Tim Saunders, Evangelist, Broadcast Services at Yahoo! Tim said that they’ve learned that some advertisers will hurt their brands by advertising on sites that are not complete or are poorly designed. Yahoo! Has learned to make a profit, and advertisers want them to send traffic through to them, but now they are pushing back and refusing many websites. Hits and site visits are not important. Sales and response are much more important now, as are non-text Internet content. Many new companies (cube farms) are more adapted to video and radio Internet delivery.

Tim recommend a book entitled, "Welcome to the Experience Economy," by Joe Pine and James Dillmoore. The book puts forth that economies grow through four stages:

A market example may be: cake à cake mix à bakery à ChuckECheese. Twenty years ago kids were happy with a cake baked by mom or grandma, today Discovery Zone, ChuckECheese, and others have build a market pressure to spend much more on kids birthdays by selling the "staged experience." Tim said that as people in our country become more secure in their ability to survive, they start spending more time and money on making their experience of survival more enjoyable. This logic translates to the evolution of the web as well, but it is moving very quickly: (Also see, "Delivering the right experience is key for e-commerce," by Bernd Schmitt.)

Internet Stage Year

Price 96-98

Packaging 98-99

Service 99-01

Experience 00-09

Experience staging is moving into web site design and marketing today. GM, Ford, GE, and Intel all feature the "experience" of being their customer or using their product on there website. Videos delivers the "experience" well. In a study of the JFK Jr. tragedy people spent 43 minutes on average watching CNN, even though there was little content substance, but only spent five minutes on average reading the same information in national newspapers such as the New York Times, USAToday, etc.

What are the metrics of the future? CPM is worthless in this environment. Cost per experience and Return on Attention, which factor in things like returns to the site by customers, customer enjoyment, and more are more important today. Time covered examples including Victoria’s Secrets, www.leadership.broadcast.com, and Neiman Marcus.

Session Keynote: William H. Booth, President of Hammacher Schlemmer. Hammacher Schlemmer started out as a hardware store that over the years has sold hard to find items. Hammacher Schlemmer has sold London taxis, "invento turnpike toll gun," gout stool, mustache spoon, night vision goggles (in 1984!), virtual game chairs, and even a two-man submarine. Hammacher Schlemmer has been around since 1848 and they published the first catalog in 1881. Every image in their catalog was hand illustrated. Their biggest edition, published in 1926 was hard bound and was over 1,000 pages long!

Hammacher Schlemmer has lasted so long, says Booth, because it has always been an early technology adopter. They were among the first to sell automotive parts, they were the first to introduce home delivery via automobile, and they were among the first to use a phone, and so on. This willingness to use and sell new technologies attracted inventors to the store. The first blender, the first electric shaver, the first home microwave oven, the first answering machine, and many other items that are in every home today were first sold at Hammacher Schlemmer — even Mr. Coffee.

In 1984 Hammacher Schlemmer established the Hammacher Schlemmer Institute to test new products for quality and to validate claims. They will even have people use the manufacturer’s product instructions to determine whether they are understandable or if they need to be supplemented by Hammacher Schlemmer! Hammacher Schlemmer also runs an annual contest for inventors of home use products, and they provide national media attention to the inventions through this program.

In the spirit of their tradition, Hammacher Schlemmer began advertising on via Compuserv in 1988, and went to the Internet in 1994 through MCI, and they introduced Hammacher.com in 1998. It took radio 38 years to reach 50 million users, but the Internet hit that mark in just five years. A Forrester Research study forecast that in 2003 on line retail would produce $108 billion of sales or 6% of all retail sales. Hammacher Schlemmer’s own study produced many insightful comments. Users liked the web site because it made it easier to find a specific product, while other users liked the fact that the pricing was current and did not expire like catalogs.

Panel: Print and Internet Synergies.

Moderator: Mark Jones, VP of Technical Solutions at Quebecor World. (See attachment B.)

Tom Hardy, President of printCafe.com. Tom Hardy asked what e-commerce is: is it a business model, a tool for integrating business, or what? Tom feels that e-commerce is only a result of the Internet infrastructure taking place and the primary advantage is that it allows everyone to integrate better with customers at all levels. However, e-commerce seems threatening to many printers because it was presented at simply a new tax on printing. If all the e-commerce sites are doing is charging for the purchase, but are not providing data that run into the seller’s system, where is the cost-benefit? Tom suggested that we need to leverage the system components and intellectual property we’ve already built into a program that allows us to make the most of e-commerce through our knowledge of the printing domain. The intellectual capital represented in current standards such as GCA’s PROSE,

Tom made several announcements. PrintCafe.com was formed by Creo and Prograph who contributed assets. Mills Davis, formerly of the Digital Road Maps Project has become printCafe’s fulltime evangelist. PrintCafe.com has merged with AHP systems, Logic Systems, Hagard systems, and PSI have all merge with printCafe. RR Donnelley will provide packaging handling support to printCafe. PrintCafe.com signed an agreement Moore Business Forms, Banta Digital Media, Time Warner, Sheridan Group, and Champion Paper to provide Internet services.

Rich Burke, Director of I Media at Spiegel.com. In 1994 Spiegel got into the on-line and later entered the Internet in 1995. In 1996 they added electronic ordering, change design to "Spiegel Directions," and sales increased 20 fold.

In 1997, the moved away from a life-style design to a straight e-commerce site, the home page included more promotions, and they introduced a b2b site for business buyers and sales increased 15 fold. In 1998 Fry Multimedia became the ISP and sales doubled. In 1999 dedicated staff was assigned to Spiegel, they employed an AOL partnership launch and an on-line banner ad campaign. They moved to a dynamic banner promotion program and are moving away from static advertising. (20% of their traffic was from AOL, after partnering with them on promotion, there is now 35% AOL traffic.) Spiegel uses a lot of email marketing. On average, said Rich, every email sent out produces $4.00 in sales. To date, their w

website has mirrored the catalog, but this may change this year.

They are working to integrate fulfillment at DFS directly into the order system. The typical Internet customer is a female who is slightly younger and a little less influential than the typical print customer. Spiegel.com is trying to transition from a on-line shop to an e-market for working women. (They want ot market the experience.) They may add more electronics and jewelry to their line, and they will partner with other marketers. They will add content that supports Spiegel as the lifestyle resource, but they have learned that the content must have dedicated people (editorial) working on it to ensure the content is accurate and current.

Oliver Knowlton, VP of operations & new media at Sports Illustrated. Oliver said that the Internet space is important to SI, but there were several challenges that need to be addressed. Subscription renewals will be addressed more directly via the Internet. The Internet is also thought to be a channel that will allow SI to get to a young reader easier and more directly. Ad sales for print and broadcast will be conducted on-line. Furthermore, content is extended on the web through more frequent and more detailed content, and this is being leveraged to build brand. However, the on-line brand is a new brand and needs to be developed editorially… how is it different than the magazine? How do these younger reader read?

Barry J. Reiss, Senior VP of Business and Consumer Affairs, Columbia House Company.

Matthew D. Connelly, Group Procurement Director/Supplier Management Division at AT&T.

[The notes do not cover these speakers as the editor had to leave the room.]

Panel: Technology — Electronic Ink, Paper and Books

Moderator Peter Meirs, Director of Imaging & Transmission Systems, Time Incorporated. Peter first presented and overview of what is going on in the world of e-publishing and suggested that there are ten challenges for e-publishing:

1. Standardized Format (HTML, XML, PDF, LIT)
2. E-device Independence (OeB, CSS)
3. Delivery system for content (e.g., kiosks in the mall? Internet?)
4. Display technology (Sufficient resolution to compete with print.)
5. Rights Management & Encryption
6. Ease of Use
7. Portability, Utility, & Battery Life
8. Affordability
9. Availability of Content (i.e., the number of available titles on the market.)
10. Market penetration (Only 15,000 units shipped to date)

Russell J. Wilcox, VP and General Manager, E Ink Corporation. Paper is still a prefer visual medium because it has a better resolution, better color, better battery life, better durability, and so on. Electronic medium only wins in the category of change: computer screens can switch to new content readily, but print cannot. Electronic Ink is addressing this one advantage of electronic publishing over print, and on print’s behalf. Electronic ink uses electronic pulses to either attract white chips through a blue liquid sphere to the surface of the printed area, or to push the white ships back (and hence only blue shows.) Investors include media companies such as Hearst, Havas, Interpublic and others. IBM is also pursuing an electronic ink development program.

Michael Nowak, Senior Principal, Xerox Venture Lab, Xerox Technology Enterprises. Michael showed a variety of digital "papers" as well as a video of the first "digital paper printer" in action. Xerox is working with 3M on a large-scale manufacturing program. Currently, the process produces images that have a gray background, rather than a white background, the resolution is limited to 200 dpi, and only a black color is currently available. They are working on improvements and even ideas such as "digital wallpaper."

Daniel Munyan, CEO & Founder, Everybook Inc. Daniel brought a working prototype of an "Everybook" and was an electronic folder that opened in half to show two panels with two "pages" of the book. Each page could change quickly. Dan said that book is the perfect form for human consumption: forty per line, 15 or more lines per page, facing pages, etc. and this was according to research done by Xerox.

Everybook wants to sell books, in terms of content, over the Internet. Unfortunately, they have found that many publishers don’t keep track of or even know where their final electronic files are. This is a problem, but Everybook offers a market extension mechanism to the publisher at no additional costs. The can also offer new twists on the "book of the month club" or serial publications.

Friday, February 11, 2000

Keynote: Gregory C. Cudahy, Partner, Media and Entertainment at Anderson Consulting, and Richard Joyce, Associate Partner, Media and Entertainment at Andersen Consulting. The market is moving to faster change, market defined content, customized configurations, and hybrid physical configurations. This environment is challenging production. Some products are becoming not just commoditized, but "loss leaders" while some traditional products are being used to fund and to promote new media investments. Meanwhile, pricing pressures and time compression are tightening down production. What are the driving forces behind all this? Cudahy said that Andersen had identified seven:

1. Increased consumer control: directly from their Internet connections
2. New distribution platforms: Internet, wireless, PDA, etc.
3. New technology paradigm: e-technologies are changing how work happens
4. New entrants: New companies are entering all markets with new technologies and strategies.
5. Increased talent power: Individuals with skills are taking more control
6. Making good on previous acquisitions: Acquisitions from the late 80’s
7. New Wall Street Metrics: How Wall Street evaluates companies is changing. Growth is sometimes more important than short-term profit.

Andersen believes that the major implication for printers and publishers is that the distribution strategies are changing and these companies need to:

• Gain (or regain) scale
• Create supply chain economies of operation
• Acquire new distribution channels
• Acquire new technology.

Gregory highly suggested that managers read, Clockspeed, by Charles Fine, Sloan School of Management, MIT, 1998. Clockspeed looks at how different industries change. It was found that the closer an industry is to the consumer, the faster that industry changes. Web site developers change faster than PC Makers, who are faster than chip makers, who are faster than their equipment makers. In publishing the retailer changes faster than the publisher who is faster to change than the printer, and so on. Gregory said that printing and publishing is not dying, it just suffering the pains of trying to keep pace with the retailers and advertisers who are already changing faster than their suppliers. Printers and publishers need to focus on:

• Supply Chain Design
• Web-enabled architecture
• Human resource management

The challenge for today’s manager is to find where improvements in the supply chain can give them a temporary advantage that they can turn into profit and market share. For instance, Dell built a company based soley on changing the channel of distribution. AOL is betting that control of content will give them an advantage, where as Disney is betting that channel control will give them an advantage. RR Donnelley has invested in both Noosh and printCafe, what are they betting on?

There are two types of supply chain optimization: internal supply chain optimization (within company) and external optimization (within customer-supplier relationships). Now the Internet steps in to the market as a new influence, and the concepts of supply chain optimization change. Web-enabled supply chain improvements allow you to move faster by allowing you to focus your IT and business resources on one common platform. Web-enabled supply chains are also less costly than private integration; allows for customer personalization, and you don’t have to "bolt down" everything by building change one component at a time rather than replacing all legacy systems with a grand design.

The biggest challenge is the human performance and management environment. The current generation has great information on your company and operations, as well as opportunities and wages. Combined with a tight labor market, it is tough to attract and keep new talent. Modern human management and intellectual capital management techniques are a new area where managers can gain competitive advantages. Overall talent and training lags behind technology changes. Printers and publishers need stop hiring based upon skill testing and start hiring based upon adaptability and ability to learn quickly. They also need to find people need to be comfortable with ambiguity. This new generation of employees need the flexibility to move quickly. They need to be able to advance based upon merit, not time in grade, and salary and equity are more important than salary and bonuses once were.