ABH 2010 Conference University of York, UK

1. The Creation of the Borderless World: IT projects and the digitisation of magazines at IPC during the 1980s Associate Professor Simon Mowatt, AUT University, NZ, and Professor Howard Cox, University of Worcester, UK ABH 2010 Conference University of York, UK

2. Introduction • IPC represents an example of how dominant incumbents respond to changes in the competitive structure and technology • Response to Rosenbloom & Christensen’s call for detailed historical cases to examine the failure or lag for incumbents to invest in new technologies (1994:675) • Rosenbloom & Christensen (1994) refine debate by asking whether incumbents fail because: • 1. Failure to invest (to change strategy) • 2. Failure to create new capabilities (to implement strategy) • Disadvantages for incumbents: • Core competences become core rigidities (Leonard-Barton, 1992); no incentive to invest in new technologies and organizational inertia (Henderson and Clarke, 1990); lack of strategic awareness (Burgelman, 1983) and a large lit. on political and social barriers to strategic change

3. IPC: Failing the Strategic Challenge • Mid-1980s sees IPC needing to radically cut costs and focus on core business. • 1985 £3.5m reduction in profits, asks for 500 voluntary redundancies. Advertising revenue down £3,476,000 and circulation revenue down £1,253,000. IPCs closes 10 titles. (Simpson, 1985) • Sells all remaining printing works (Fleetway and Chapel River) in 1984 and buy all print on the open market. Uses 37 contract print firms (Simpson, 1984). Printing works had been key strategic asset in 1960s (Cox and Mowatt, 2008) • Investment in core business: lower production costs by introducing new technology

4. The Challenges to IPC: I • Direct competition from local and international firms • Major threat to core market from the entry of Gruner & Jahr with Prima (1986) and Best (1987); H. Bauer with Bella, (1987): • 4 titles (Woman; Woman’s Own, Woman’s Weekly and Woman’s Realm) account for 70% of group profits in 1985 (Simpson, 1985) • “Who would have thought the German’s could come over here and teach us how to publish women’s magazines?” (BRAD, 1989) • Bauer spends £9m promoting Bella in first year • IPC total annual marketing budget for weekly magazines £4m, and monthlies was £3m (BRAD, 1989) • Undifferentiated products: “There was a time when people would say you could take the cover off Woman and put it on Woman’s Own and nobody would notice the difference” (IPC Advertisement Director, 1989)

5. The Challenges to IPC: II • Domestic competition from large publishing houses such as EMAP, with titles such as Elle and Just Seventeen. • IPC MD Ron Chilton response: “If there isn’t a gap in the market we’ll put our head down and create a gap.” £650,000 promotion for Mizz, short-lived IPC-response to Just Seventeen • International and domestic competition forces IPC to adopt Sale or Return (BRAD, 1989), greatly lowering barriers to entry and accelerating the entry of small independent firms and the creation of new niches • With the Face (1980) Nick Logan had shown potential for successful low-cost launches (£4,500; first issue sold 56,000) using contract printing (Mercer, 1993) • This is a lot less than the £1 million typical new weekly magazine launch price (Price Commission, 1978).

6. IPC: A Project-Based Approach • Huge uncertainty surrounds new technology investment at the pre-paradigmatic stage • Existing Prime mainframe technology poorly suited to magazine production • Magazine publishing has been considered a project-based industry Ekinsmyth (2002) • Projects are suited to phased technology-trials to control costs. • IPC decides to take a cautious approach to new technology investment within the editorial office – aim to reduce costs with DTP

7. DTP: Falling cost of galley printing • DTP technologies become accessible to IPC and smaller rivals • Internal editorial office printing of galleys major step in process • Cost of early first generation laser printers : • Xerox 9700 (1978), £200,000; smaller 8700 (1983) £130,000. Speed 120 ppm. (Lithoweek, 1984) • Cost of ‘new’ generation in 1984/5 • Canon LBP-10; Mini LBP-CX & Xerox 2700 £12,000-20,000. Speed only 12 ppm; Apple LaserWriter 1985 under £7000 & Epsom FX-800 Dot-Matrix £591

8. The 1987 New Technology Trials • IPC New Technology Projects: New Technology Trials into 3 magazines started July 1987 • Woman’s journal • Installed Page Planner. Only titles to see any savings or increased efficiency • New Scientist • Used Wooten Jeffrey’s S-Word running over central Prime Computer. Programme a text editor and only six terminals for 20 staff. High central re-charge costs. • Woman and Home • Installed Page Planner. Lack of hardware sees only one PC used and only for basic first stage word processing • 2 further magazines are later included, Yachting Monthly and Horse & Hound

9. The results of the trials • “The experiment has shown there are potentially significant benefits in these systems in the area of magazine operation and shorter deadlines (provided suitable management action is taken to structure the magazines to take advantage of the opportunities and enforce necessary disciplines) and that major typesetting costs can be achieved ... the most tangible benefits would be from direct inputting. Industry estimates are that between 30% and 70% savings are possible … and [for IPC] 50% has been assumed.” (Willams, Bailey, and Budgett, 1987: 1-2)

10. New Technology Investment Project • IPC comprises of 93 ‘units’ • “With good management a reduction in staff … of 32 … would completely offset [project] costs” and planned cost savings of £3m p.a. • 3 or 5 year implementation plan planned with cost estimates between £1,831,032 and £2,167,311. (Williams, Bailey, and Budgett, 1987: 21-22) • DTP systems to be in place by 1992 • Problems of PC-based software and hardware incompatibilities, and the associated training problems are partially resolved through the development of the Macintosh computers and networked Laserwriter printers.

11. iHype: The importance of Macs I • Problems with DOS and Windows-based PCs hardware and software • DOS bottle-necks, incompatibility of software and hardware even when from the same vendor • “we are, as ever, at the mercy of software developers.” “In general all new versions of computer software will have bugs and be slow … a new version of Quark Xpress has just been released that is bug-ridden slow to the point that most users are refusing to upgrade to the new version … and it was delivered some nine months after it was first announced.” (Bailey, 1990) • Problems with supply-chain partners • “’Well if you were using a Macintosh…’ [turned out] to be Linotype’s catchphrase for 1988” (Bailey, Bellenberg, Budgett and O’Callaghan, 1989)

12. iHype: The importance of Macs 2.0 • Mac trials show efficiency gains (Bailey, Bellenberg, Budgett and O’Callaghan, 1989) • “The long-term advantages of installing Macintoshes in these two key departments [subs & art] could prove decisive in the successful adoption of electronic page makeup in IPC magazines.” • “The Macintosh’s intuitive user interface is well known. Proof of its effectiveness has been seen on the Woman & Home installation. The speed, and competence, with which Pagemaker was adopted in the Art Department was far in excess of our most optimistic expectations.” • Apple claims half the training time over PCs. “It is generally believed that the majority of the problems encountered by the ESO are of a human rather than technical nature. The adoption of Macintoshes would, we believe, greatly reduce the effect of the ‘human factor’.” • Typical installation cost: 386 PC £21,987; Mac £22,554

13. Consumer Magazines Titles: 1980sSource: BRAD Aug 1990 37:8 p.xi

14. The Creation of the Borderless World • Need for integrated electronic communications • Several large titles receive >60% of their copy from external contributors: • Horse & Hound; A La Carte; Melody Maker • The majority of small IPC magazines receive the majority of their copy from external contributors: • >75% Antique dealer and collector’s guide; Loving; Practical Boatowner; Practical Woodworking • Initial aim to equip offices with the ability to receive work on Disc; and to be able to scan copy with OCR software and for the “full integration of systems within the IPC network … and the growing facilities offered by typesetters, Repro houses, Ad Agencies and Printers.” (Willams, Bailey, and Budgett, 1987: 5) • Long-term aim to enable collection of data remotely

15. Ongoing Organizational Rigidities and implementation failure • IPC fails to capitalize in the short-term on DTP-trials and investment as the organization is not able to change working practices effectively • Antagonistic management-unions relations a long-term feature • NUJ Strike in 1983 led to closure or sale of six titles. • Vote of no confidence in magazine editor by staff forces closure of Honey. • “How can six people put together 124 pages of Golf Monthly each month but it take fifty-six people for the 160 pages of Women’s Realm?” (Bailey, 1990) • IPC fails to gain short-term benefits of DTP-systems by retaining existing working practices

16. Discussion • Shows incumbents firm IPC strategically aware of impacts of technological change – choose to invest • Control of new technology expenditure through project-based trials and phased roll-out • Highlights proactive attempts to change strategies in the face of competitive uncertainty • Organizational constraints and path-dependency remain significant for incumbents to implement strategies • Inability at IPC to successfully tackle root causes of inflexibility • Installed base, in terms of both hardware, software and human resources a constraint