Britannica鈥檚 quest to survive
How an information aggregator is facing the challenges of the digital age?
In May 2012, Britannica announced that it will discontinue the聽print publication of its multivolume Encyclopedia sets after 244 years. The writing had been on the wall for many years. The sale of Encyclopedia had reached an all-time peak of about $650 million but that had collapsed by over 80 percent over the next 20 years [1].
Britannica had become the undisputed king of reference libraries, with over 2,500 door-to-door salesmen peddling the expensive Encyclopedia sets to families across the world. However, it struggled to find a place in the digital age. In late 1980s, Microsoft had offered to work with Britannica on developing a version of Britannica鈥檚 Encyclopedia for PCs. Britannica refused and Microsoft went on to partner with Funk & Wagnall鈥檚 to launch the highly successful 鈥楨ncarta鈥� 鈥� Microsoft鈥檚 CD-ROM encyclopedia [2]. Britannica鈥檚 sales fell precipitously, it went bankrupt and was bought by a Swiss investor who ended its door-to-door sales operations. When Wikipedia emerged five years later, it was only a matter of time before Britannica had to rethink its strategy if it wanted to survive.
How Britannica responded
Britannica realized that despite all the troubles it still had a unique offering 鈥� a large volume of content generated by a 鈥榬igorous editorial process鈥�. This was in contrast to the increasingly popular Wikipedia whose content was driven by user-provided data and hence its accuracy was questionable.
Britannica decided to change its business model to align it with Britannica鈥檚 core strengths. Firstly, it decided to focus on educational institutions 鈥� who else needed information which was verifiable and accurate! Britannica launched multiple products for schools under its 鈥楧igital Learning鈥� initiative [3]. Operationally, it had to re-deploy a large sales team to target educational institutions. Moreover, it had to not only digitize its content but also make it more relevant for the digital medium 鈥� Britannica shifted towards shorter articles, online quizzes, listicles and also focused on user interface and design. As a result of this push, the global educational business now represents 90 percent of the company’s revenues and virtually all of its profit [4]. It caters to聽more than half of the 112,000 K-12 schools in the United States [5].
Secondly, Britannica opened half of its online database to public at no charge (earlier all content was paid). As a result, online site visits tripled [6]. The bigger audience has meant that Britannica鈥檚 revenue from digital advertising has increased from 5% to 25% of total online revenues (which includes subscription and advertising revenue) [4]. Operationally, Britannica had to redesign its content for websites 鈥� increase focus on overall user experience.
Additional steps that Britannica could take
Britannica has done a good job of finding its niche in terms of its value proposition. However, there is significant scope of further refining its operating model.
Firstly, Britannica needs to focus more on 性视界 Engine Optimization (SEO) as it is an important driver of ensuring greater number of site visits and hence greater advertising revenue. Currently, Britannica is not doing a great job at it. As a test, I decided to google 鈥楢lbert Einstein鈥�. The first suggestion, was of course, a Wikipedia article. The Britannica article did not come up on the first page 鈥� it was in the top half of the second page.
Secondly, Britannica needs to cast a wider net for content generation. Britannica has just 4,000 contributors [7] as opposed to Wikipedia which has over 29 million registered editors in addition to an unknown number of anonymous contributors [8]. Though Britannica prides itself in having a rigorous editorial process 鈥� it can still use more contributors for generating initial content which can later be edited. In a business where having more content will mean more site visits and hence more advertising revenue 鈥� this 鈥榙emocratization鈥� of initial ideas can be a low-cost way of generating more content.
Thirdly, Britannica is limiting its user base by offering content only in English. Its main competitor, Wikipedia, is present in over 284 languages [9]. Offering more languages will contribute towards increasing user base which can drive higher subscription as well as higher advertising revenue. This will also allow Britannica to launch its 鈥楧igital Learning鈥� products in other markets as well.
In a world where information is so easily accessible, it is interesting to see how an 鈥榠nformation aggregator鈥� is creating a new value proposition around how reliable and rigorous its information is. It will be interesting to see if in the future years Britannica is able to maximize the revenue potential of this new brand identity.
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Shantanu 鈥� thank you for the thought-provoking article. I would have thought that discontinuing print would be the end of Britannica as these physical books were core to who they were and what consumers associated them with. However, I was wrong in assessing what Britannica’s true value proposition was. It wasn’t the book itself, but as you mentioned, it was the reliable and verified content. I was pleasantly surprised to read how they鈥檝e successfully navigated the transition from print to online by sticking to their core value proposition while viewing print vs. online as just a means of delivery.
I have been thinking about how other 鈥減rint鈥� companies can learn from Britannica as they look to adapt to the digital age. For example, I think Moleskine (the popular notebook company) can learn a lot from Britannica’s move. As a bit of background, Moleskine launched into the 鈥渄igital notebook鈥� space a few months ago (). I am still skeptical of whether or not this move into digital will be successful. In fact, prior to reading your article, I feared that they were moving too far away from their core value proposition (which I viewed as beautiful paper notebooks) to entering a highly competitive area where they have no expertise and competing with giants like iPads and Kindles. However, after reading your article, I realized I was wrong in assessing what Moleskine’s value proposition is. Moleskine鈥檚 value proposition isn鈥檛 the physical notebook itself (in the same way Britannica鈥檚 value proposition wasn鈥檛 the encyclopedia itself). Instead, its value proposition is the incredible user experience they provide and how they efficiently facilitate brainstorming and journaling. Similar to Britannica, I think sticking to this value proposition will help Moleskine as they move into digital.
On a separate note, in addition to the suggestions you had, I think Britannica has the opportunity to perhaps develop an iPhone app where people could play trivia. This engages consumers and is in line with sticking to their core mission of sharing knowledge.
Thanks for writing, Shantanu. Full disclosure: I’m a big believer in Wikipedia, and in the past have been an active editor on the site, because I think that it’s democratized knowledge unlike anyone ever has. Wikipedia, Google, and Facebook have fundamentally changed the way that we interact with facts and knowledge.
The concern that I have with this approach is that Britannica’s only path to survival has to be the high-brow, academic route. They’re never going to be able to broadly compete with Wikipedia at this point, but I think there’s room for niche development in the academic space. As a result, I think the “shorter articles, online quizzes, [and] listicles” that Britannica is damaging to the brand — it sounds more like Buzzfeed than a reputable source — and moves the encyclopedia maker into a space where they also can’t compete.
Instead, I think there’s an opportunity for growth in the academic world that Britannica could work with. Across multiple disciplines, there are hundreds of different reputable warehouses for academic info (JSTOR, for example) and publications (New England Journal of Medicine, for example). But those aren’t accessible to the hoi polloi, either because of paywalls or because of the density of the content. If Britannica could consolidate that academic info in one space, and make the findings of studies more readily available, that’s a clear value add that doesn’t cheapen the brand name — and that brand name maybe the only thing it has left.
Shantanu – great work. Like Jessie, I thought the old-school Britannica had surely gone extinct years ago when it got out of the print game.
As an information company, the decision to go digital was inevitable. I think the biggest challenge for EB going forward is appropriately scoping its offerings and a firm understanding of its unique value proposition is essential. They need to walk an extremely fine line between user-friendliness and academic depth. That’s an increasingly difficult task, given the proliferation of specialized journals and resources for every information niche.
I worry a little bit about “democratizing” initial ideas. They’ll never compete with Wikipedia on sheer number of articles – and that’s okay. Not everyone needs an exhaustive biographical list of obscure Star Wars characters. I think that crowd-sourcing entries could work so long as they’re weighted and evaluated by the amount of credible sourcing available AND their appeal to the widest possible audience. EB’s goal should be filling its gaps in the most commonly searched-for topics with applications to broad academic purposes.
Shantanu,
I opened your article because I couldn’t help but take a trip down memory lane to read about encyclopedias. When I used to get a project as a kid, the first place I would go was my dad’s office to snag the appropriate book to take a first pass at it. Then when i didn’t understand anything in there, I would ask my mom to explain it to me.
But seriously, I didn’t have a positive reaction to this article. I don’t understand what Britannica is could hope to accomplish with going online. Wikipedia is increasingly being accepted as a peer reviewed source and the content trumps what Britannica could hope to assemble. Like EBS, I think the tactics Brittanica is putting together is too gimmicky and hurts whatever credibility they have left.
What I would like to see Britannica do is play a more active role in writing and preserving modern history. Perhaps they could become a journal for publishing scientific and fresh takes on history. I have long lamented having to pay for access to journals and wanted to have a reliable free online source. I think Britannica could get ahead of the game on this one and offer a free service that generated revenue from ad listings rather than the subscription services that have dominated medicine, science, and the likes for decades.
Great read Shantanu! Thanks for bringing our attention to the impact of digitization on a 244-year-old product. The Britannica Encyclopedias were definitely an integral part of our childhoods. Even though they were a treasure trove of knowledge, I agree with your viewpoint on their incredibly slow and tepid response to the digital era. Even though most of us thought that they were now extinct, it is great to see they transformed their model to still remain relevant.
Given that information is readily available at our fingertips on almost any topic under the sun (and beyond it!), Britannica鈥檚 focus on educational institutions definitely seems the right way to go. Even ed-tech has become a highly competitive field at the moment, with multiple ed-tech startups garnering VC interest across the world. Q2鈥�16 ed tech deals increased slightly from the previous quarter, and funding jumped 30% to $564M [1]. These ventures are innovating beyond the traditional ways of classroom teaching and are using VR/AR to build an immersive experience [2]. These can be a huge threat to Britannica if it makes the same mistake as last time and does not respond proactively
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