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A Good Business in Bad Times
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InfoCommerce Group -- Specialized Business Information Publishing Expert InfoCommerce Group -- Specialized Business Information Publishing Expert
For Immediate Release:
Dateline: Philadelphia , PA
Friday, March 27, 2020

 

As I write this, the federal government has announced 3.3 million new unemployment claims – and this in just one week. In other words, this could likely represent just the tip of the iceberg. The human toll of the coronavirus is difficult to comprehend, with the toll on businesses not far behind.

In any sudden downturn, it has long been understood that some businesses will always get hit harder and faster than others. The rule of the game in any business downturn is to preserve cash in anticipation of reduced revenue. Consequently, expense reduction becomes the focus. Rightly or wrongly, most companies view advertising and marketing as something that can be suspended for some period of time with little consequence. Other business activities, such as company meetings and events, quickly get postponed. Every company reacts slightly differently, and often in uniquely arbitrary and sometimes ill-advised ways. But the goal is always the same: slow spending as much as possible to conserve cash.

With everyone trying to cuts costs and slow payables at the same time, an adverse ripple effect is created that amplifies the pain. That’s why in widespread business downturns, few businesses are left truly unscathed by the resulting fallout.

Can one ever find safety from events of this magnitude? Probably not, but while few if any businesses will be totally untouched, some business models are clearly stronger than others. 

The information business is inherently one of the stronger industries to be in right now. That’s not because information products are uniformly essential to their customers. We learned during the Great Recession that many information products believed to be “must-have” became “nice-to-have” almost overnight. But the B2B subscription model employed by most information and data publishers adds an important additional level of resiliency.

B2B subscriptions tend to be, in effect, annual or even multi-year contracts. Many are prepaid. Many are difficult to cancel during the contract term. This buys information and data publishers the most important protection of all: time. Time to ride out the storm, for conditions to improve or at least for calmer heads to prevail. Sure, new subscriptions will decline and renewal rates will drop during a downturn, but the bulk of the business will remain relatively safe.

In addition to being contractual and often prepaid, subscriptions to information products typically are not high visibility or so expensive that they capture the early attention of cost-cutters. And for data products in particular, they don’t sit idle during downturns like our current one, because they are just as useful to employees working from home.

Some data products have even a further level of protection because they are embedded into the workflow and systems of their customers. Simply put, it’s too slow, complicated and sometimes even risky to turn them off.

As I said earlier, there are no winners in a global pandemic. But the importance and value of data products, coupled with the strength of the dominant industry business model, will help this industry spring back quickly.

This pandemic is bigger than all of us. But if we all act responsibly, we can minimize severity and duration and get back to business sooner. Stay safe … and stay healthy. We’ll get through this if we all work together!

 

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