This is a difficult blog for me to write. I’m a huge supporter of publishers – after all, we need them to have a PR business – but recent events at Aspencore are concerning. It’s not just me that’s worrying: it’s also our clients who have been spooked by the departure of key figures in the business.
We have tried to get comments on the record from a number of people in the Aspencore/Arrow management, and when I started writing this we had only received a copy of an internal memo, despite promises that we would get a statement. Between me completing the post, there was an article written by Junko Yoshida on EETimes.com that presents Aspencore’s side of the story. I’ve therefore included a section that discusses this new information.
You should also know that Farnell, which is part of Avnet is one of our clients. As Aspencore is part of Arrow, a direct competitor to Avnet, I’m not totally independent. People who know me, however, will understand that I won’t bring any conscious bias to this post, although I’m the first to admit there may be some unconscious bias because of this relationship.
What’s Happened at Aspencore?
Aspencore has laid off some of its best-known journalists and publishers. Although there are still many great journalists there, without doubt, the layoffs mean that they now have less talent available.
The following “big name” journalists were laid off in the USA:
- Rick Merritt
- Clive Maxfield
- Dylan McGrath
- Steve Taranovich
In Europe Jurgen Hubner, a great publisher who build ICC media has left, while “intergalactic” sales rep, Bob Dumas, has left to join EE Tech.
Although this is a significant amount of departing talent, it should be remembered that Aspencore still has the biggest, most global editorial team in the industry and that it still includes some of the industry’s most highly experienced and respected journalists.
What Caused this to Happen?
I’m going to have to make a few educated guesses, but the reasons seem fairly clear. Arrow has decided that the publishing business needs to be exactly that: a business. This isn’t quite as obvious a move as it might seem, because publications such as newspapers have a strong history of being supported by a benefactor who chooses to fund the publication for the influence and status it gives them, and you’d think that influence and status would be helpful to a distributor.
Making money in electronics is hard. Without doubt Arrow’s strategy is to reduce cost by shedding the most expensive publishers and journalists. They’ve decided to reduce quality. Again, this isn’t as crazy as it might seem. It’s not that Arrow won’t get quality content: as it is the Internet said “information wants to be free“ and when it comes to information that might help suppliers or products, that information is desperate to be free and widely available as possible. Even better the individuals in the suppliers who are writing this content are typically world experts on the subject, so the quality is likely to be great even if it might be a little slanted to present the vendor and the products in the very best possible light! EE Times also still has a great team of journalists: losing some of their talent still leaves a large number of great writers in Aspencore.
So getting the content isn’t hard. Perhaps the biggest issue is how that content is valued. Suppliers value the content hugely: one significant design win as a result of a technical article can pay for an entire year of PR. Readers value it highly too, as it is essential for engineers to keep learning if they are to be able to do a good job. Unfortunately valuing the content doesn’t mean they’ll pay for it. Bizarrely the channel in which information is presented has a major impact on its value. If you want to work with an analyst, you’re going to pay an eye-watering hourly rate to talk to them. Yet the same people who pay these fees are shocked when you suggest they should pay for publications, even if the same analysts are providing content to those publications.
Perhaps the biggest challenge is the way Google values quality of content. Google is possibly the world’s smartest company, and it still doesn’t have a clue about the difference between average and great journalism. Traffic to the website, which ultimately means money to the publisher because a large percentage if not majority of their income is display advertising, are those charged on a cost per thousand bases, is frequently determined by Google. Sadly Google values speed and search engine optimization over high-quality insightful journalism.
The cost per thousand model used when publications charge for advertising also presents an incentive to eliminate in-depth high-quality content. Reading long form content takes time, and the number of adverts that can be placed next to the article is limited. This means that an in-depth article requires considerable time on site but generates little revenue. Someone clicking through superficial news articles is far more valuable to a publisher and someone who reads a highly insightful 2000 word article.
So this is the problem. readers won’t pay, suppliers think providing the content is sufficient value to publication, Google completely fails to raise the very best journalism to the top and publishers have failed to find alternative business models to the cost per thousand advertising model.
In other markets what happens is the most experienced journalists tend to launch their own publications based upon their personal brand. These publications are more like blogs and have a very low cost base, allowing a different business model. This doesn’t really happen in electronics, perhaps because we’re such a niche industry that you simply can’t get the traffic without a team of SEO experts.
What Does Aspencore Say About the Changes?
After I started writing this post, EE Times wrote an article presenting their side of the story (see below for more information). Although I had previously approached several people at the company, the vast majority were unwilling to comment. We did, however, manage to get the following, which is part of an internal email sent by Bolaji Ojo Global Editorial Director and General Manager of Aspencore Media in Europe and David Chivers Global Publisher for Aspencore Media:
A. ASPENCORE is global in coverage and outreach. We have publications in all parts of the globe and editorial representation in every major region. This hasn’t changed. In fact, we are expanding our coverage of the entire industry and expanding our team in China. For Silicon Valley, we have contributing editors and stringers based in the area and we have signed partnerships with research firms for unique and independent insightful reports. We haven’t left the Valley – see these recent articles EE Times published this past week:
i. Hot Chips 2019 Has Never Been Hotter, or Bigger
ii. Does Your AI Chip have its own DNN?B. ASPENCORE is distinct in terms of its coverage of developments in engineering, technology and the business of high-tech. We have introduced expanded coverage to dive deeper into the topics and issues of importance to the entire industry. We launched our Special Projects unit to do comprehensive coverage of distinct topics, covering these from various angles and involving major stakeholders, including companies, researchers, engineers, financial analysts and contributing writers. We cover everything from Aviation, Automotive, Communication, Security, AI to Quantum Computing, Apple and Tesla.
C. ASPENCORE’s product range is comprehensive. In addition to digital media, ASPENCORE has print publications, newsletters and research-grade content in Asia, China Japan, Europe and North America. The topics we treat are global and our reach is global.
D. We have added and continue to hire experienced editors and contributors globally. Our new hires include editors in Europe and contributing editors in North America and Asia-Pacific
E. ASPENCORE is nimbly responding to market conditions with new products and offerings, including our unique podcast, EE Times on Air, and special projects/reports. If you haven’t already, take a look at our Special Project landing page: https://www.eetimes.com/archives.asp?section_id=242
F. ASPENCORE is committed to maintaining the integrity of the independent media covering the electronics industry. The company will continue to invest in the segment to elevate discussions in the industry.
G. As we look to the future, we are
a. Expanding and extending our contributor network to include the likes of key experts, executives, researchers, academics
b. Introducing more special projects and reports
c. Focusing on our premium titles
H. We have in recent months added the following key editors to the team:i. Nitin Dahad – A prolific editor based in London and covering semiconductors, AI, Communications and key European, Asian and North American chipmakers and OEMs
ii. Sally Ward-Foxton, an Engineer and versatile writer and editor
iii. Maurizio Di Paolo Emilio, a technical and highly knowledgeable and respected editor
iv. Anne-Françoise Pele, experienced, motivated and well-known industry resource who will join the company early in September, resuming as editor-in-chief of EE Times Europe Magazine, eetimes.eu and specialist on sensors and MEMS
v. Brian Santo, Experienced, creative editor and host of EE Times On Air podcast
vi. ASPENCORE China editorial team, eager and positioned in the world’s fastest-growing high-tech market
vii. We have through our partnership with ITMedia, inc. in Japan a team of editors covering the entire electronics industry through the EE Times Japan, EDN Japan and MONOist websitesI. The editors handling our key publications are as follows. They can be contacted directly regarding each of the properties. General inquiries can also be sent to editors@aspencore.com.
i. EE Times (eetimes.com), Brian Santo, Brian.santo@aspencore.com
ii. EDN (edn.com), Martin Rowe, martin.rowe@aspencore.com
iii. EEWeb (eeweb.com), Maurizio Di Paolo Emilio, Maurizio.dipaolo@aspencore.com
iv. Electronic Products (electronicproducts.com), Gina Roos, gina.roos@aspencore.com
v. International Editor-in-Chief ITmedia – EE Times Japan/EDN Japan and MONOist, Mayuko Murao, mmurao@mx.itmedia.co.jp
This is a reasonable repost to the concerns, although citing just two articles from Silicon Valley in the last week does seem a little light for a publication like EE Times. It’s also perhaps a bit of a stretch to suggest that some of the above journalists have been hired in “recent months” as (according to their personal LinkedIn profiles), Brian joined in September 2018, Nitin in December 2017 and Sally in April 2017. To be fair, Maurizio joined in February of this year and Anne-Francoise is about to join, so they do qualify as recent hires.
What Does the EE Times Article Say?
After I completed the first draft of this article, EE Times published the Aspencore side of the story. In this Junko Yoshida acknowledges that Aspencore “lost a few of our top-notch reporters”. The article positions the layoffs as a move to make the editorial team more global. Junko states, “In a nutshell, our answer to the current newsroom upheaval is to go global, whole hog.” Although there is some truth in that EE Times does now have a very international team, the way the layoffs happened doesn’t really back up the idea that they were purely down to a globalization strategy.
Junko focuses on the strength of the Aspencore editorial team, pointing out:
“As noted, among all publications covering the global electronics industry, we are proud to say that we are the only game in town. We boast more than 30 editors for EE Times and other vertical publications owned by Aspencore Media. They are scattered all over the world — from Shenzhen and Beijing to Taipei, London, Paris, Bern, Milan and Portland, San Jose, Washington, Massachusetts, Arizona and even Madison, Wisconsin. Some are full-time and others are part-time contributing editors. We also have a stable of young, passionate and eager-to-learn reporters.”
The strength of the editorial team, albeit that they are supporting several publications, is indisputable, even after the layoffs. EE Times has certainly gone all-out to show the strength of the editorial team: Junko states that some are “part-time contributing editors” and this is borne out by the fact that a couple of the team don’t even list their work for Aspencore on their LinkedIn profiles.
What is the Industry Saying?
Interestingly, it seems to be Aspencore employees who remain that are saying the least. There is a real fear that there will be more layoffs and so everyone is behaving super-professionally.
A couple of the people who have departed have been less reticent. The comments I’ve had range from a simple statement that Aspencore seems to want to drastically reduce costs by reducing manpower to “Aspencore had the world at their feet… Then greed took over.”
Clients are spooked, and I’ve heard worries from whether the editorial quality is going to drop to questions about what will happen to the volume of traffic as a result of a reduction in content-generating journalists.
Lou Covey, who has a super understanding of the US electronics media has written an interesting blog on LinkedIn. He points out that this is the third round of layoffs in 12 months. He explains that the layoffs are simply a result of the business model for Aspencore failing to work:
“The idea for Aspencore was to be a revenue neutral operation. Advertising, content services and events were supposed to pay for the operation and maybe a bit more to cover the cost of the debt. Didn’t happen. It became a cost center and the goodwill gained was short lived.”
Lou ends his post by blaming the industry as a whole:
“When I started blogging in 2005, my first post was on the interrelation of advertising, a free society, journalism and business success. What was true then is true now. If companies do not invest in a free press, they will lose more than a few hundred points on net profits.”
My View of the Aspencore Situation
I guess that the first thing to say is that I don’t see this as being the start of a shutdown of Aspencore, although I would not be surprised if some of the titles closed or merged. In fact, there is a hint of this in the email above from Bolaji and David: they state that as they look forward, they are “Focusing on our premium titles”. Inevitably you’d assume there will be a reduction of focus on non-premium titles, although a lot of the pain of this round of layoffs was felt by titles that I think everyone considers “premium”.
Unfortunately, I believe these layoffs are bad for the industry and bad for the future of Aspencore. Arrow’s construction of their publishing empire was driven by some short-term benefits and over-optimism. This isn’t a situation that’s likely to result in long-term commitment and I do fear for the long-term future of many Aspencore titles.
Why Arrow Bought and Built a Publisher.
I’ve worked in electronic component distribution and it’s a really difficult job. Without doubt distributors are under pressure from several sides: for example, manufacturers are offering “buy direct” options and there is a continual threat that non-specialist companies such as Amazon might choose to enter the market with far greater financial resources and stronger logistics capabilities than any distribution might have. So, the distributors had to do something.
I believe that Arrow has got great value for their purchases. They have acquired great customer data from the publications they purchased and have won new lines with the help of the Aspencore publishing muscle. I would also speculate that some of the traffic data to the publications would give Arrow an insight into what engineers are thinking about, but I don’t know if they have succeeded or even tried to gain insights in this way.
Arrow was also optimistic. Distribution represents a huge proportion of advertising business in our industry, and it seemed that Arrow was rather surprised when some distributors decided they didn’t want to advertise in publications owned by a large competitor. Arrow was probably the only organization in the world who was surprised this happened. Even losing a few distributors will make it much harder for Aspencore to be profitable: in a business with notoriously thin margins, cutting yourself off from some of the richest customers is never a good idea.
Clearly, I think that Arrow extracted a lot of value from the acquisition in the first couple of years. But they are left with a business unit that needs financial support and that, at least in its current form, delivers far less value to Arrow. It’s a real business headache.
What’s Next?
Obviously, we don’t know. The fact that the first public statement took so long suggests that Arrow and Aspencore were again over-optimistic, expecting the industry to shrug its collective shoulders and move on. This didn’t happen, leaving Arrow, Aspencore’s owners, in a bit of a quandary. They’ve tried to present it as a move to globalize, which personally I don’t fully buy, and focused on the current strength of the newsroom. Although it’s true that Aspencore still has an awesome roster of talent, you can’t avoid the fact that the trend doesn’t look positive.
So, what should Aspencore do? I think it’s pretty clear that the current publishing business is struggling to make a profit, so here are the most obvious options available:
Arrow could choose to allow the business to gradually decline. I think this was their strategy. With the concern that the most recent layoffs triggered in the market I don’t think that Arrow will want to take a “death by 1000 cuts” approach, with the ensuing bad PR that will rumble on for years as Aspencore slowly and painfully declines.
So Aspencore could choose to invest and grow the business. From what I’m told they are probably subsidizing Aspencore already, and it just doesn’t look like they have the appetite to invest to try to grow it. Realistically I just don’t see the Arrow board, a group of people who talk in tens of billions of dollars, wanting to put money into a business that is a tiny fraction of their turnover and that is unlikely to ever make significant profit.
Arrow could sell Aspencore. This must seem like an attractive option, but who would buy them? UBM was open about the fact that they wanted to sell EE Times for a long period before Arrow finally stepped in to make the purchase. Aspencore is a much bigger, more complex publisher that is likely to be very hard to sell. I guess they could spin off individual titles, but that will take a lot of time and energy, and there is no guarantee they will find buyers.
Just closing Aspencore would be a clean option. With the new lines and the data driving Arrow’s commercial operations, perhaps the best thing to do would be to cut their losses and close the business. I suspect that not only would this be a politically difficult thing for the people involved in the purchase, Arrow also doesn’t want to be seen as the people who killed a huge percentage of the electronics media.
Perhaps the only long-term option for Arrow is to increase the monetization of the publications. Can you imagine the power of marketing automation systems that tracked what individual engineers looked at on these publication websites and then sent offers and marketing information about these topics? What if product stories all had links directing readers to buy from Arrow? Not easy, but potentially hugely lucrative.
I can hear the cries of horror over this suggestion. EE Times becomes a marketing vehicle for Arrow: that’s just not something you should contemplate for a brand like that. Choosing to do this would certainly result in a backlash, particularly an overt move to drive people to Arrow’s website to purchase, but it might be the most palatable option in a rather unappetizing menu. It’s also likely that the sooner they make such a move, the better, as I believe new publications will launch as people see opportunities with the major player in the industry clearly suffering.
I’m going to end with the brighter view of the situation. When one company struggles, others take its place, and clearly some publishers are benefiting from Aspencore’s lackluster performance. EE Tech is probably the best example. With journalist layoffs there is always the opportunity for new titles to launch. Sure, publishers need to be brave, but the electronics market isn’t going away so there are lots of reasons to be optimistic.
My speculation about what Arrow might choose to do in the long term is simply speculation, and I genuinely hope that the Aspencore titles thrive; not least because I want to see great journalists writing great content about our industry. I feel it’s important to reiterate that, although the recent trend isn’t good, Aspencore has a fabulous team of journalists and contributions. If, however, the trend continues and the Aspencore business can’t be turned around, I’m very confident we’ll have the excitement of new publications that launch to take advantage of the hole in the market for insightful journalism.