By West McDonald, Vice President of Business Development, Print Audit & Owner, FocusMPS

In 1979, the Buggles came out with a hit called “Video Killed The Radio Star.”  It chronicled the impact of music videos in an industry that was previously promoted almost exclusively on radio.  It was the1st music video ever played on MTV and speaks to the profound changes that technological innovation can bring to any communication medium.

Since the first music video first aired we have seen the rise and fall of how people acquire music.  Vinyl was replaced by tape, tape by CD, CD by Digital tracks (think iTunes).  My wife used to be “master of the mixed tape” and reluctantly became “master of the iPod playlist.”   The truth is, however, that even iPod playlists are going the way of the Dodo. In 2015 the idea of “purchasing” music is on the decline.  From 2013-2014, CD and Digital downloads decreased by nearly 15% while music streaming increased by 54%.

“My wife used to be ‘master of the mixed tape’ and reluctantly became ‘master of the iPod playlist’.”

Stop and think about it: The purchase of music is on the decline as people begin to “stream” tunes via web enabled services for FREE.  Online music streaming services  like Rdio, Google Play Music, and Spotify can all be enjoyed free of charge.  Yes, you have options for paid versions that take away annoying advertising but the average consumer of music now doesn’t have to pay a red cent.  I am a good case in point.  As I write this piece I am listening to Rdio.  Based on me selecting the band “Chvrches” Rdio is automatically building me a playlist based on similar sounding bands.  My wife would be mortified that an algorithm is creating a playlist instantly, a task that takes her hours using her iPod.

The lightening speed at which music streaming services have taken hold has a direct relationship with the availability of free WIFI.  Airports, fast food joints, libraries, hotels, bars,  friends houses, even city downtown cores.  I don’t just Rdio at home on my computer, I use Rdio on my smartphone when I am at the gym running on the treadmill as they (and most places I go to) provide complimentary WIFI.

Of course nothing is truly free.  For the music industry what has changed is the way in which music is monetized.  For the first time in history, revenues for digital access to music (iTunes & streaming services) equaled that of physical format (CDs).  Instead of making money on the purchase of a song, artists are paid on how often a song is streamed.  Rdio and other streaming services also have paid subscription services and 41 million people subscribed in 2014, up a whopping 5 times from 2010.  To say that the internet has had a disruptive impact on how music is shared and monetized is putting it mildly.  The internet has completely changed the music game and there is no hitting the rewind button.

The music industry is not the only one that has to pay heed to the pervasive impact of ubiquitous internet proliferation.  The internet has had, and will continue to have, a profound impact on industries across the board, particularly those related to content sharing.  The industry I work in, the Office Imaging Industry, is no exception.  In our world, the equivalent of the tape or CD is paper.  Traditionally, people have shared information with coworkers by printing or copying.  But look closely and you’ll see that is changing.  Boardroom meetings are now dominated by iPads and other tablet technologies.  Documents are shared via DropBox, Google Drive, and other cloud storage repositories.  The old argument of the cloud being “unsafe” have gone the way of the Dodo.  Known cloud storage providers like Amazon, Google, DropBox, and others, use two step verification as well as sophisticated encryption methods.  You can click here to read a good write up on the security efforts of the main players.  Huge companies have moved their documents to the cloud.  Coca Cola, PricewaterhouseCoopers, General Mills, HTC and Best Buy were all named as new adopters to the cloud in 2015.

[Tweet “How Internet Killed the Radio Star and Forced The Recording Industry to Evolve”]

It’s not just Fortune companies that are making use of cloud services.  According to PC World, 87% of businesses are operating in the cloud and 43% wish they had adopted cloud sooner.   Print Audit, the company I work for, is a cloud adopter.  As I listen to an Rdio stream, this article is being written in Google Docs.  When the draft is finished I will “share” it within Google Drive with my marketing team to do edits and prepare for publication.  Comments are left around things they think I should change and I get notifications when they occur.  I see these recommendations instantly.  I also have Skype open and have responded to 3 questions from coworkers already in the midst of writing this paragraph.  Once this article is finished being edited I will NOT receive an emailed copy of the final document.  Only one copy of this document exists and it’s in the cloud.   This article is a living document and every single change to it is recorded forever.  This workflow is freeing to say the least and our IT department likes the fact that our internal bandwidth isn’t being consumed by attachments.

The attachment, like the CD, is dying.  Sharing links for cloud documents is on the rise. If the email attachment is dying what about the humble printed page?   Any way you shake it, if you are billing by page consumption, revenue growth slows when people print fewer pages.  The printed page will be around for a long time to come, but there will be less of it.   If people are sharing documents differently doesn’t it stand to reason that people are printing less?  The answer is obvious yet the office imaging industry has been exceptionally slow to heed the truth.  In our world, print is billed for through CPP (Cost Per Page) as the billing mechanism of choice.  The model was born to help de-commoditize toner and ink sales in a time when the internet allowed people access to more information than ever before.  This was a time when computing was tethered and the easiest way to share information was to print it.  With the proliferation of tablet based technologies and digital workflows all of this is changing at breakneck speed.

“The attachment, like the CD, is dying.  Sharing links for cloud documents is on the rise.”

Need some examples of organizations making direct efforts to go adopt more digital-based workflows?  Check these out:

• Healthcare in the UK: The NHS to go Paperless by 2020
• Government Billing in France: French Government Mandates Switch to Paperless Billing by 2020
• University Admissions in Canada: Ryerson University Admissions cycle goes paperless
• New York Legislature in the USA:  New York Voters Pass Paperless Legislature Initiative

These examples are arguably in the minority and have nothing to do with the humble office on main street USA.  I will be the first to admit that paper consumption isn’t going away anytime soon.  It is without question, however, slowly declining.  If you make money on office copy and print you should be paying attention to this downward trend.  According to IBISWorld, annual growth from 2010 to 2015 saw a – (negative) 1.6% annual growth rate.  The study states directly that “Competition from electronic communication will stifle revenue resulting in few growth opportunities.”  Not exactly an upper if you are in the business of making your money on paper.

As the world moves to the cloud and as subscription based services become commonplace, the office imaging space has some big decisions ahead of it if it wants to remain relevant.  Some of the hard questions that face our industry today:

• If people are printing less, how do I protect myself from decreasing revenues?
• What are the opportunities and dangers that come with new billing models that are subscription based vs. usage based?
• Is Seat Based Billing (subscription based) poised to replace Cost Per Page (usage based)?
• Do I diversify what my business offers or stay the course and hyper-verticalize?
• What do other business leaders in office imaging think?

“As the world moves to the cloud and as subscription based services become commonplace, the office imaging space has some big decisions ahead of it if it wants to remain relevant.”

The Top 100 Summit is an annual event that helps office equipment dealers to explore questions around the future of the managed print business.  MPS Is Changing (#MPSIsChanging for all you Tweeters out there) and we face many of the same challenges that the recording industry does.  The recording industry has aggressively mastered new ways to make money in a changing landscape and music subscription services are the fastest growing area. For those lucky enough to have been invited to the 2015 Top 100 Summit, we discussed new ways to profit from the changes happening in how people access and share information.

The internet may have killed the radio star but music is alive and well.  Similarly, the printed page may be in decline but the information being shared is at an all time high.  How will you profit from the new ways people share information?  What changes to your office imaging and equipment practice are most likely to generate powerful new growth in 2015 and beyond?  If you are in an entirely different industry and experiencing the effects of the digital revolution what kinds of dramatic change are you seeing?  Please share your insights and comment on this post!  Print Audit is here to help!

https://youtu.be/Iwuy4hHO3YQ