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By sourcingon, November 25, 2009 3:46 AM

Playboy Enterprises announced on Tuesday that it’s going to outsource all business functions except editorial to American Media Inc. It primarily meant that American Media will ‘handle’ production, circulation, advertising sales, marketing and other services of Playboy magazine and other publications. Playboy CEO Scott Flanders believes that outsourcing operations will significantly cut costs and lead to profitability at its magazines business in 2011.

The first question that comes to my mind (somthing that I havn’t been able to get answers to, as well) is; what do they mean by ‘handle’? Outsourcing is famous for saving costs but is that the real motive behind this association? Undoubtedly, I see this relationship reducing the cost of production of their magazines but i wonder if enough offshoring options considered. Playboy’s partner in Singapore is doing a fantastic job at publishing and even creating content for VIP Magazine. They should have been the ideal choice for a vendor to manage operations for Playboy, in addition to a number of other service providers who have a wide network in the U.S. to manage production and other operations. Wouldn’t this have led to more significant savings?

Executive at Playboy further added that it’s expected to lose about $8 million this year and the deal with American Media should reduce the loss to $5 million in 2010 before turning a profit a year later. Playboy said it expects to record a fourth-quarter restructuring charge of $2 million to cut 25 positions, some of which will be transferred to American Media. Playboy has set March 2010 as the latest date for moving business functions over to American Media. In my opinion, this isn’t the beginning of an outsourcing relationship but an initiation of a bid that American Media could make to buy all brands and assets of Playboy Enterprises in years to come. I may be playing the devil’s advocate here, but believe Playboy is either acting naive, or laying base for creating an environment for lay-off’s (for their stocks to be least effected in the financial markets) and then finally being acquired by another company.

As for now, all we can do is, wait and watch. What do you think?

Comments (1)

By sourcingon, November 16, 2009 11:37 PM

I recently came across a post by Bruce Nussbaum (http://www.businessweek.com/innovate/NussbaumOnDesign/archives/2009/11/american_is_los.html) which makes me believe that the debate about Americans loosing jobs because of outsourcing is a far less alarming than, them loosing the sense of innovation, creativity and conceptulization.

“….Now Fareed is saying what we conceed to be increasingly true—the US is losing its edge in innovation. And with that loss, comes the loss of geopolitical clout. President Obama’s trip to China is about soothing our banker, not pressuring for civil rights. Americans are finding it hard to accept their decline in the world. They can’t admit that smart Asians and Europeans and others are not coming to the US nearly as much as they used to for study. Or that there are increasingly more innovative startups outside the US than inside the country. They don’t see all the people who got advanced degrees at US universities going home to greater opportunities….”

For long Americans have been known to be great at formulating ideas and revolutionizing the industrial space by out-of-the-box ideas and solutions. Has there been a decline in such ideologies? I may not have substantial facts to support it and many may believe that many US born online properties (including social networking sites) are examples of innovation. But I beg to differ. I would like to evaluate this based on the achievements in conceptulizing and evolving processes and implementing cost-effective solutions.

Over the last ten years, the business of outsourcing has grown from simply outsourcing/ offshoring low-end process-driven jobs to high-end creative jobs. The vendors across the world are now boasting about their capability to work from concept-to-implementation. Have the American taken a back-seat and prefer to only use and manage services?

In my opinion, its time the Americans stopped banking on their second best skill of packaging and marketing themselves well, and take up hands-on work that involves greater innovation. The same will have to inculcated amongst the youth in America. Only then will we see the revival supremacy the U.S holds in the field on innovation and technology.

Cheers America!

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By sourcingon,

Growing number of media companies are currently considering outsourcing the design and development of their publications. Many service vendors have already set up strength and are targeting this upcoming segment of outsourcing. But the question really is; Should publishers really outsource?

While many publishers are still comtemplating, believing that executive miles away from home will never be able to relate to the local happenings; the vendors are also finding it extremely difficult to relate to the design culture of the customers location. Very few are not considering it and are beginning to adopt innovative means to increase their circulation; which now includes the online circulation as well.

According to MediaFinder.com─an online database of U.S. and Canadian magazines- 383 magazines folded through the third quarter of 2009, which may be significantly less when compared to the same time period in 2008 and 2007, but is still alarming. Does this again justify outsourcing, to reduce costs and making their product sustainable?

A recent whitepaper featured at MPA (http://www.magazine.org/ASSETS/ACC5AFCF184843B9B8A4CE13080DB232/misperceptions-about-magazine-closings-082009.pdf ) suggests that Advertising is the biggest single factor in magazine closings and circulation plays a far less important role. Further emphasizing their point, the recent research report, The Twenty Tweetable Truths About Magazines (http://www.magazine.org/research/twenty-tweetable-truths.aspx), discusses 20 facts that showcase magazine vitality. These include;

-Magazine readership remains steady in an increasingly crowded and noisy media landscape.

Source: MRI Fall Study 2008, Page 7 of MPA 2009 Magazine Handbook

-92% of U.S. adults read magazines.

Source: Experian Simmons, 2009

-New magazines continue to be launched. The latest figures show that magazine launches surged 10% in the first part of 2009 from the prior year.

Source: Professor Samir Husni, author of The Guide to New Magazines; MrMagazine.com

-Magazines appeal to younger adults. Adults 34 and younger read more magazines than adults +34.

Source: MRI Fall 2008, Page 77 of MPA 2009 Magazine Handbook

-Magazines love the Internet. Almost a quarter of all new subscriptions come from the Internet.

Source: MPA Internet Subscription Surveys 2009 edition  

-The top 25 magazines reach more adults and teens than the top 25 prime-time TV programs.

Source: Carat Insight, Nielsen September 2007-May 2008 (Primetime Schedule) MRI Fall 2008; MRI Twelveplus 2008, Page 75 of MPA 2009 Magazine Handbook

-The number of consumer magazine websites grew 78% between 2005 and 2009.

Source: Mediafinder.com, 2009, Page 9 of MPA 2009 Magazine Handbook

The year 2009 seems to have been amongst the best the magazine industry has seen in any recession so far and yet, most publishers are finding it hard to sustain in the economy. With an increase in the popularity of online social networks there has been a change in the way that media is comsumed but undoubtedly Print remains an intergral part of it.

It’s time publishers re-access their business models and allign themselves to compete in the digital age. Instead of thinking about outsourcing their production, its time they start taking online seriously and digitize their publication. Think about the following;

• Digitize your archives and have a FLASH-based version of your magazine. I am sure you know that both ABC and BPA recognize these.

• Sell MULTI-MEDIA ad space on these FLASH versions.

• Get social about it. Make the best use of social media to promote your magazine.

• Charge for premium content. This implies; focus on extremely niche content. Content, that users will treasure and archive.

• Do not think of breaking news or forming a comunity using your publications. Twitter, Facebook and others are already doing it. In case that is what your audience want; turn a part of your website into a content aggregator that automatically retrieves news from various sources and publishes on your website.

• If possible, have a print-on-demand facility. For those readers who love to sit-back and read a print version, can always pay and have a hard-copy delivered to their mailing address.

Its not the time for Print media to shut down, neither is it time for them to outsource. Its time to revolutionize their business model, think online, adopt innovative ways to monetize the digital world and portray legendary value for hard-copies. Doing so, the publication will automatically begin creating niche communities and have loyal customers and in days to come, I look forward to witnessing a growth in the subscription of print magazines.