'NCD,' 'ADR,' 'IPO' and Others Spell the Future for Indian Firms

In January, signs that funds might soon begin to flow again for corporate India showed up when Tata Capital went to the market to raise $100 million by issuing a non-convertible debenture (NCD) with an interest rate of 12%. (NCDs are basically unsecured loans with high interest rates. Unlike convertible debentures, they cannot be converted into company stock.) It was six times oversubscribed.

Since then, companies have begun employing what seems like an alphabet soup of fundraising tools, including American and global depository receipts (ADRs and GDRs), foreign currency convertible debentures (FCCBs) and qualified institutional placements (QIPs).

Even initial public offerings (IPOs), which many thought would never fly in the current economic environment, have reappeared. The market seems to be responding: In late June, timeshare company Mahindra Holidays and Resorts became the first IPO to be listed on the Indian bourses since July 2008. The IPO was eventually oversubscribed 9.8 times.

Despite optimistic signs in the fundraising environment, a looming tsunami threatens to drown any momentum: The Union Budget has projected a deficit of 6.8% of GDP in fiscal 2009-10. To finance this, the government will borrow around $80 billion from the market. "The government borrowing will put upward pressure on the interest rate," says Rajiv Kumar, director and chief executive of the Delhi-based Indian Council for Research on International Economic Relations. This could squeeze out the private sector.

Finance minister Pranab Mukherjee, however, is not worried. "The government borrowing will be managed in such a manner that there is no starving of the private sector," he told the media shortly after the budget was announced.

To read more about how Indian firms are raising funds, see “Indian Companies Ride New Waves of Fundraising” in the current issue of India Knowledge@Wharton.

Congress Is Poised to Buy More Defense Systems the Pentagon Does Not Want

President Obama and his Defense Secretary, Robert M. Gates, succeeded in their effort earlier this month to block additional orders for F-22 fighter jets. The administration argued that the aircraft are unnecessary for the kinds of armed conflicts that the United States is likely to fight in the coming years. (See: "As the Pentagon Shifts Spending Priorities, Some Defense Contractors Gain While Others Lose" in the Wharton Aerospace & Defense Report.).

But according to a report in The Washington Post today, Congress, acting largely in response to defense industry pressures and campaign contributions, appears determined to approve spending about $2.75 billion on other defense systems and programs that Gates says the Pentagon does not need. The unwanted programs were attached as earmarks to a $6.9 billion defense spending bill that could come up for a vote today or tomorrow. About half of the extra spending was requested by private firms, including 95 companies or related political action committees that donated a total of $789,190 in the past 2 1/2 years to members of the appropriations subcommittee on defense, according to an analysis by Taxpayers for Common Sense, a nonprofit watchdog group.

The Post notes that Gates vowed in April to fundamentally overhaul the military's "approach to procurement, acquisition and contracting" and urged Congress to support the termination of many traditional weapons programs in favor of more spending on counterinsurgency efforts and operations in Iraq and Afghanistan.

Microsoft-Yahoo Finally Strike a Deal, but It's Not a Big Deal, says Wharton Expert

After an tumultuous 18-month courtship, Microsoft and Yahoo have finally consummated a deal to meld their search services and online advertising technologies. But the partnership poses little threat to search giant Google, according to Wharton marketing professor Peter S. Fader.

“The deal has no impact on consumers or on the search market," Fader said today. "This is a total non-story. The only reason it's news is because of the names of the companies and their long and sometimes bitter history.”

Microsoft and Yahoo called a news conference this morning to announce the 10-year agreement in which Yahoo will use Microsoft’s Bing search and advertising technology across all Yahoo properties, and Microsoft will use Yahoo's sales force for search ad sales. There is no upfront payment as part of the deal, although the companies will share search revenues with Yahoo receiving 88% during the initial five years of the agreement.

The deal allows both firms to reallocate resources and play to their strengths, but Fader, who co-directs the Wharton Interactive Media Initiative, believes it is unlikely to reallocate market share. In June, Google commanded 65% of the search traffic on the Internet, Yahoo and Microsoft shared about 28%, according to comScore. Despite incremental gains for its new Bing search service, Microsoft has yet to made a significant dent in Google’s market share.

Microsoft's new and improved search engine, Bing, has had little impact on Google's traffic,despite a considerable marketing effort. "If Bing was amazingly better than Google ... it might grab some market share," said Fader. "But it's not. To use a baseball analogy, this deal is like the San Francisco Giants picking up a big player who will get them to a distant second place – and there’s no wild card to get them into the playoffs."

Indeed, Fader argued, Bing and the marketing campaign to support it "is a red herring aimed at Yahoo, to push them aside or into a deal, which is what it accomplished." He noted that the same strategy was deployed by Visa in a marketing campaign in which it compared itself to American Express. The real target of that campaign was MasterCard.

The deal announced today is a long way from Microsoft's unsolicited bid to take over Yahoo back in February 2008 -- a fact which might turn out to be a benefit to both companies. As Wharton Management professor David Hsu told Knowledge@Wharton at the time, the broad scope of original deal would have presented numerous challenges. "When we think about the previous cases of success versus failure in these mega-acquisitions in the technology or Internet space, that track record does not look good."

The smaller deal may also invite less antitrust scrutiny, allowing the arrangement to go through more quickly. The companies stated that they hope regulatory approval will be forthcoming in 2010.

Despite all the ups and downs of the negotiations, in the end, Microsoft gets the one thing it wants: a bigger presence in the online search market. As Wharton management professor Lawrence G. Hrebiniak told Knowledge@Wharton in February 2008, getting a larger share in the search market was critical for Microsoft. "Let's put it this way: There is no other hope if they want to compete with Google. I can't think of any other way to compete."

In an interview with Knowledge@Wharton last year, Microsoft chief research and strategy officer Craig Mundie, stressed the importance of scale in the search market: "Once you get to scale, the economics are very favorable. Even if you had perfectly equivalent technology, if you start late -- which we admittedly did on the advertising side -- you have to work hard to get back to scale. You're always at a disadvantage. No matter how much money you have, you have to build up to scale. It just takes time."

In spring 2007, Microsoft chief software architect Ray Ozzie told Knowledge@Wharton that Microsoft needed to "take a different approach toward search than simply trying to copy Google's success," stating: "History has shown that any time you have a fairly significant market leader, the best way of competing is not to just simply take the same approach." In video released today, Microsoft CEO Steve Ballmer stressed his view that Microsoft's new search engine, Bing, "makes search more relevant to consumers and more than just a list of blue links."

And way back in November 2006, when Microsoft CEO Steve Ballmer spoke at Wharton, he pointed out that Google "didn't invent search. They weren't the first guy to the party." Ballmer underscored that Google spent "six, seven, eight years before it established a position [in search] and beat AltaVista and Yahoo." Ballmer continued, "We're getting the basics right. We think that we have some clever ideas coming, but you know we're going to be in there battling for years and years and years." Now, years later, Microsoft just fired the latest volley in that battle.

More from Knowledge@Wharton:

Carol Bartz's Challenge at Yahoo: Choose a Path, Build a Team and Do It Fast

Microsoft and Yahoo: Does It Make Sense (and Will It Work)?

Fast Forward: Tech Giants Scramble For Bigger Piece of Growing Online Ad Market

Will Its 'Chrome' Web Browser Put a Shine on Google's Long-term Strategy?

Default on a San Francisco Office Tower Is a Case in Point -- and More

When a real estate investment partnership paid $281 million for the soaring office tower at 333 Bush Street in San Francisco in June 2007, near the top of the market, the property was 75% leased. Today, the nearly 550,000-square-foot property is 65% vacant, and the owners -- a partnership of Hines, an international real estate investing firm with U.S. headquarters in Houston, and Sterling American Property, a real estate investing fund based in New York -- are handing it over to their creditors. The San Francisco Chronicle notes today that the forfeiture was the city's second distressed transaction involving a major commercial building in recent weeks and another sign of the growing pressures in the commercial real estate sector.

The stressed commercial real estate market is the subject of a current Knowledge@Wharton article titled, "On Shaky Ground: Commercial Real Estate Faces Financial Tremors." Falling vacancy and rental rates, and a dearth of creditors willing to help commercial real estate investors refinance loans taken out during the boom years prior to the financial crisis, are putting a tight squeeze on the business.

But, according to the newspaper's report, the owners of 333 Bush Street faced an additional twist -- the surprise dissolution in September 2008 of 118-year-old law firm Heller Ehrman, which leased 250,000 square feet of the building. Though law firms have also been struggling as corporate clients cut spending in the recession, Heller Ehrman's demise appeared to be due to a flight of talent: 14 intellectual property litigators left in mid-September. Their departure, according to an October 2008 article in The Deal.com, triggered a clause in the firm's contract with its banks regarding a line of credit, which in turn led to the seizure of accounts receivables and other expenses. 

The firm's dissolution contributed to another aspect of the financial crisis -- unemployment. According to the report in The Deal, more than 650 lawyers and other professionals at Heller Ehrman were left jobless.

Assessing One of the Nation's Worst Real Estate Markets

The U.S. real estate bubble that burst in 2006 was more like a froth of individual bubbles, some bigger than others depending on that most important of all real estate value factors -- location. Among the biggest bubbles was the southwestern boom town of Phoenix, which in 2007 supplanted shrinking Philadelphia as the fifth most populous U.S. city.

Phoenix appears on many lists of the worst real estate markets in the U.S. for 2009. On a Forbes worst-markets list published in February, for example, only Las Vegas fares worse than Phoenix. The market is closely tracked by two indices at the W.P. Carey School of Business at Arizona State University. The monthly ASU-Repeat Sales Index (ASU-RSI), produced at the school's Center for Real Estate Theory and Practice, tracks patterns in the single-family market. The Greater Phoenix Blue Chip Economic Forecast presents forecasts for single-family construction, and for construction, absorption and vacancy in the commercial sectors.

So how bad is it in Phoenix? It's so bad that the 35% decline in the ASU-RSI from April 2008 to April 2009 was an improvement over the values reported in February and March, when prices fell by 37% compared to last year. Nationally, according to the S&P/Case-Shiller Home Price Index of prices in 20 large U.S. metro markets, prices of existing homes fell 19.1% in April.

Two-month projections in the ASU-RSI offer some encouragement for Phoenix, with an expected 33% decline in May and 31% in June. According to W. P. Carey finance professor Karl Guntermann, who prepares the ASU-RSI with research associate Adam Nowak, the numbers are "pretty good evidence that the worst of the price declines are in the past." An article about the two surveys, "The View From the Bottom: Phoenix Real Estate Market," appears in the most recent issue of the Knowledge Network's Knowledge@W.P.Carey.

Microsoft Is Charging Forward Despite the Downturn

Although Microsoft yesterday reported a 29% drop in quarterly profits on weak demand for its products, the company appears to be charging forward undeterred. As reported in today’s Wall Street Journal, despite a year of declining sales, Microsoft CFO Chris Liddell nonetheless struck an upbeat note on the news, stating "[T]here is some sense we have hit bottom."

Indeed, Microsoft has been on something of a tear of late. Bing, the company’s revamped search engine launched just last month, is garnering accolades and showing signs of ratcheting up Microsoft’s share in the prized search market. Earlier this month, Microsoft unveiled details about the next version of its Office suite of productivity tools, including plans for a free web-based edition of Office to complete with Google Docs. And Windows 7, the next version of the company’s flagship operating system, is slated for general release on October 22. In addition, the blogosphere has been abuzz over renewed rumors of a deal between Microsoft and Yahoo following a report by Kara Swisher on All Things Digital.

All of this activity may be evidence of the strategy Microsoft Business Division president Stephen Elop outlined to Knowledge@Wharton several months ago: “Part of the reason we're here today [at the Wharton conference] is to stake out the position that we're driving innovation more aggressively than we've ever done in the past. That's something, particularly during tough economic times, that we feel is important. Now is the time to double down.”

The software giant seems undaunted by the economic slowdown, seeing it as an opportunity to lay a foundation for future growth. As Elop stated in the Knowledge@Wharton interview, “[N]ow is the time to … make those investments, [so that when the recovery starts] we're in a strong position and can take a share and be more successful than we were in the past.”

More from Knowledge@Wharton:

Flying High: Microsoft's Stephen Elop Balances Future Vision with Present-day Realities

Microsoft and Yahoo: Does It Make Sense (and Will It Work)?

The New York Times Reported a 2nd Quarter Profit -- Surprising Analysts

The New York Times today announced a modest profit for the second quarter of 2009, and noted that it expects the decline of ad sales to moderate in the third quarter. Ad sales fell 27% in the first quarter and 30% in the second. Gannett, McClatchy and Media General have also reported a moderation in the tumbling of ad sales.

Profits at the Times came not from increased revenues, but from deep cost-cutting. So far this year, the newspaper and digital publishing company has trimmed $210 million from its operating expenses,,and expects to reach $450 million in cuts before the end of the year.

Meantime, the company said it is eyeing a new source of revenue: charging fees for access to its online content. Already, the Times has successfully boosted subscription rates for its flagship newspaper, which now costs about $700 a year for a seven-day subscription outside the New York metro area, according to the "Biz Blog" published by the web site of the Poynter Institute, a journalism training organization. "Circulation revenues ... account for 40% of revenue for the publishing group, by far the highest share in the industry," the blog report noted. Most newspaper companies derive only 20% to 30% of their revenues from circulation.

An analyst today asked Times CEO Janet Robinson "how far can you go" before further price hikes spur too many cancellations. Robinson did not exactly answer, except to say in effect, "not yet," according to the blog.

More from Knowledge@Wharton about challenges to the newspaper industry:

Urgent Deadline for Newspapers: Find a New Business Plan before You Vanish

All the News That's Fit to ... Aggregate, Download, Blog: Are Newspapers Yesterday's News?

Unlike Its American Counterpart, Publishing in China Is Thriving

Last week, the Association of American Publishers reported that as of May, book sales in the U.S. are down 3.9% for the year. In December, Random House, the world's largest publisher of consumer books, announced a major restructuring to cut costs, and a month prior to that, Houghton Mifflin Harcourt took the unprecedented step of suspending new acquisitions, except in rare cases.

If all of that is not bad enough, Amazon’s Kindle, Sony’s eReader and Google’s new plan to sell books digitally represent another threat to traditional publishers’ market share.

China’s publishing industry, in stark contrast, is doing reasonably well during this global recession. In fact, it looks to be poised for a growth spurt, thanks in part to looser government restrictions on what can be published and on foreign investment. The sector is also well situated because of new regulations slated to consolidate the industry and make it more efficient.

According to financial reports, the four major domestically listed publishing companies -- Shanghai Xinhua Media, Sichuan Xinhua Winshare Chainstore, Northern Alliance Publishing Media and Time Publishing -- all posted double-digit revenue growth in 2008. OpenBook, a Chinese market research agency, reported that by January 2009, its composite index -- a tracking number which monitors retail book sales -- was up 20% from 2008.

Chinese publishers are mainly domestically focused, and their lack of global reach may be a boon in the current economic environment: Since China hasn’t been hit as hard as many other countries by the worldwide economic downturn, there has been less of a reduction in consumer spending on books.

Read more about the growth of the Chinese publishing industry in the current issue of China Knowledge@Wharton.

Counting More Than Ever on the Geek Squad

While Best Buy is the only national chain still in operation in the consumer electronics industry, a July 18 article in The New York Times suggests that this isn’t much to crow about. The article notes that shipments of electronics in the U.S. are predicted to decline 7.7% this year and that Best Buy’s domestic sales fell 5% in the quarter ending May 30 (14% internationally), compared to a year ago. “Analysts argue that Best Buy has inherited a lump of coal,” the article states, referring to the depleted -- and recession-challenged -- industry.

Brian Dunn, CEO of the $45 billion company, headquartered in Richfield, Minn., doesn’t agree with that diagnosis. But he does agree that “being the last remaining chain won’t ensure success,” he told The Times. His game plan, as predicted in a recent Knowledge@Wharton article titled, “Best Buy vs. Wal-Mart: Is There Room for Both, and Others?” is to focus on service, service, service. That includes expanding the role of its youthful, somewhat geeky sales force, but also bringing them up to speed on popular consumer products such as mobile phones, laptops and global positioning systems (GPS).

One of Best Buy’s goals, as the Knowledge@Wharton article noted, is to differentiate itself, in both service and products, from the big box atmosphere of Wal-Mart and from other competitors as well, including Dell, Apple, Costco and Target. Yet given the economic downturn that has seen consumers saving rather than spending, the question these days is whether strapped buyers will continue to pay a premium for good service, especially as electronics products become more commoditized.

As one analyst in the Knowledge@Wharton article notes, “technology enthusiasts are willing to buy at a specialty retailer and pay top prices early in the product cycle. As time goes on and many consumers become familiar with a new gadget, they are willing to buy them at mass merchandisers or online. The retail distribution channel may also change as manufacturers become a more important part of the landscape -- following the same path as Apple, which has opened its own chain of popular retail outlets.”

For related Knowledge@Wharton articles, see:

Here Today, Discounted Tomorrow: Strategic Shoppers Know When to Buy, and at What Price

Wal-Mart: Is There a Downside to Going Upscale?

Slimmed-down Spending Means Less Money for "Hogs"

After several years of strong performances, iconic motorcycle maker Harley-Davidson last week reported that its net income dropped 91% for the second quarter -- or by $19.8 million. Revenues were down 27% from the same period a year earlier for the company, which earns much of its revenues through sales of extended, branded products ranging from leather jackets to underwear.

Now Harley-Davidson plans to cut 1,000 jobs and close four plants. That’s quite a crash diet for the company, which also uses HOG as its New York Stock Exchange listing symbol. And it follows the elimination of some 1,300 jobs earlier this year, which left the total number of workers at about 9,300.

Perhaps it’s no surprise. After all, Harleys are high-end machines, and luxury goods typically suffer more during a recession than other products. The bikes are favored by lawyers, doctors and other professionals -- sometimes called “Rolex riders” -- in addition to groups that buy into the company’s storied history, retro style and, for some, the fact that Harley’s bikes are made in the United States. That’s all part of what some call the "Harley mystique" that often allows the company to charge double the price of, say, a Japanese-made Yamaha with comparable performance characteristics.

“Harleys are expensive,” says Wharton marketing professor Patti Williams, and so Harley-Davidson is bound to suffer in an economic downturn. It has also suffered some losses in connection with motorcycle-related loans. But are the problems entirely the making of the economy, as the company maintains, or are there additional factors related to a new kind of consumer? One big question is whether the Harley-Davidson brand name “will continue to be the same kind of self-expressive brand it has been in the past,” Williams adds. Consumers may just cinch their belts and discover other, less-expensive forms of self-expression -- or they will find other “selves” to express, she says.

“We’re seeing some of the latter certainly as consumers find pleasure and identification through being thrifty and economical,” Williams notes. It’s also possible that younger consumers -- Gen X and Gen Y -- may turn toward other self-expressive brands.

“I think it’s possible that Harley’s success may be a baby boomer phenomenon,” Williams adds. The ethos of the brand may be tied to a place and time that resonates only with that generation. “It’s also possible that there are still plenty of consumers out there who want to live the HD [Harley Davidson] lifestyle, but simply can’t afford to now. And I guess if that’s the case we’ll have to see whether or not HD can survive long enough in this economy for its consumers’ consumption to pick back up.”

The company expects to build 25% to 30% fewer motorcycles this year than last year, when it sold just over 300,000 units. The overall damage stems not only from fewer sales, but also more directly from the financial crisis: The motorcycle maker reported a $72.7 million credit loss provision for bad motorcycle loans and a $28.4 million charge related to the purchase of Harley-Davidson Financial Services 14 years ago.

As is often the case in these situations, however, Harley-Davidson’s stock rose after announcing its austerity measures, at least initially.

Williams is co-author of a just-released book, Marketing for Financial Advisors -- Build Your Business, Bring in Clients, and Establish Your Brand. Her fellow authors are Eric T. Bradlow, also a Wharton marketing professor, and Keith Niedermeier, director of Wharton's undergraduate marketing program.

For related Knowledge@Wharton coverage, see the following:

The New High-end Consumer: 'Please Put My Bottega Veneta Wallet in a Plain Bag'

Half-a-Million Job Cuts: Is There a Strategy Behind the Layoffs?

Luxury Brands: Marketing the Upscale During a Downturn

In a New Budget, India Directs More Investment to Rural Regions

Aiming to spark economic development beyond its booming cities, India's new national budget allocates more funds for job guarantees, infrastructure improvements and food subsidies in rural communities. According to an article in India Knowledge@Wharton, critics contend that the additional spending is too modest. Still, Wharton professors and other experts say that encouraging growth in rural India is a welcome trend. The focus on rural India is particularly important, says Jagmohan Singh Raju, a professor of marketing at Wharton, because "growth brings with it the potential for greater income disparity. I believe the focus on rural India and rural jobs is appropriate. They have not been a part of India's growth story. These efforts will also improve productivity and eventually increase the buying power of rural India."

Apple Blocks Users of Pre Smartphones from Its iTunes Store as Mobile Wars Intensify

The smartphone market is one of the most competitive in the very competitive world of telecommunications. Anyone who doubts that should read the multitude of blog posts and news articles about Apple's decision to block users of Palm Inc.'s Pre smartphone -- and other non-Apple products -- from using its iTunes software to download music and other media files from its iTunes Store.

The Pre is Palm's answer to Apple's iPhone -- a multi-purpose smartphone with a touch-screen interface. One of the Pre's selling points was its ability to run the iTunes software. Palm spokeswoman Leslie Letts told the Associated Press that Apple's move is a "direct blow to [Pre] users, who will be deprived of a seamless synchronization experience." For a workaround, she noted, Pre owners can stick to the older version of iTunes, move music from computers to a Pre with a USB cable or consider third-party music applications.

As Knowledge@Wharton noted in a recent article -- "As Smartphones Proliferate, Will One Company Emerge as the Clear Market Winner? -- consumers usually reap benefits when competition gets fierce. Though Pre users who feel compelled to use the iTunes Store may not see this particular development as a benefit, the fact remains that the smartphone marketplace is full of increasingly clever devices offered at steadily falling prices. 

 

Sitting In on Google's Pitch to Ad Agencies

Knowing that ad agencies' feelings about Google range from curiosity to terror, the Internet search giant has been reaching out to them, trying to sell itself as a powerful partner. A reporter at The Boston Globe recently sat in as Google made its pitch at the Boston offices of Arnold Worldwide.

Google has been calling on agencies around the world, according to The Globe, "trying to gain ground in major ad campaigns." Its pitch: "Google is an ally, not a rival, in the fast-evolving world of online marketing." One agency executive summed up the mixed feelings his industry has about Google, describing it as a "frenemy, both friend and enemy." Another compared it to Skynet, the network of artificially intelligent computers and robots that took over the world in the Terminator movies.

Google now offers advertisers free programs, including Google Analytics, which measures and analyzes Internet traffic, and Ad Planner, a tool to help advertisers “identify websites that your target audience is likely to visit.’’ Last month, Google introduced an "educational" tool to help agencies train staff in the use of Google's various marketing tools.

Some of the tools are designed to attract advertisers to Google's immensely popular but mostly unmonetized YouTube video site. Turning the site into a revenue-generator is an important goal for Google, which paid $1.65 billion for YouTube in 2006.

More on Google and YouTube from Knowledge@Wharton:

Fast Forward: Tech Giants Scramble For Bigger Piece of Growing Online Ad Market

Getting Engaged: Advertisers Search for Their Voices on YouTube

Google: In Search of Itself

Coming Attraction: YouTube's Business Model

BusinessWeek Selling for $1? Not So Fast, Say Wharton Faculty

Has it come to this for the hobbled business of selling journalism on paper? BusinessWeek magazine, which is expected to be offered for sale by McGraw-Hill, could sell for just one dollar -- and that's not just for a single copy, but the entire enterprise. To be sure, that's the view of just one industry analyst, as reported today in the Financial Times. Still, the fact that such a scenario can be reasonably suggested out loud speaks volumes about the state of the magazine business.

But two Wharton marketing professors, David J. Reibstein and Eric T. Bradlow, can see a brighter future for BusinessWeek and other magazines. That future may be only online, and it will require content that is truly unique and timely.

A look at the numbers shows the challenge facing the print side of the news and information business. Advertising pages in U.S. magazines dropped 29.4% in the second quarter of 2009, following a first quarter plunge of almost 26%, according to the Publishers Information Bureau. Media Daily News says that at the current rate, "2009 is shaping up to be the worst year for consumer magazines since 1932, when total revenues dropped 30%." Already this year, U.S. News & World Report cut its publishing cycle from weekly to monthly, and Conde Nast's glittery business magazine, Portfolio, ended a 21-issue run in May; even its web site will be turned off later this year.

The cause of all this is no secret. It's the same one-two punch that is battering newspapers: a recession on top of the disruptive force of the Internet. Marketers like the fact that they can measure the impact of online advertising, notes Reibstein. "You can easily measure click-throughs online, whereas in traditional media, you don't know who has seen your page."

Reibstein believes BusinessWeek, and other magazines and print products, can survive on the Internet if they have, as his colleague Bradlow suggests, unique content. "They have to have special writers who readers know and want to read," Bradlow says. "They have to have special interest forums. They have to have content that you just can't get anywhere else."

BusinessWeek can bring another valuable asset to the online world, Reibstein adds: "They still have a great brand," which already draws visitors to its online site.

But it hasn't and won't be easy for traditional print media to grow online revenue sufficient to sustain what may be their strongest asset: professional news and information gathering staffs. Just ask the Society of American Business Editors and Writers, which says that at least 250 business journalists have lost their jobs this year. Today, it's offering a conference call to counsel its members on "Staying Positive After Losing Your Job -- and How To Find A New One." The teleconference is to be moderated by Bill Choyke, a former business editor at the Virginian-Pilot of Norfolk. He was laid off at the end of last year.

More on publishing and the Internet from Knowledge@Wharton:

How About Free? The Price Point That Is Turning Industries on Their Heads

Urgent Deadline for Newspapers: Find a New Business Plan before You Vanish

All the News That's Fit to ... Aggregate, Download, Blog: Are Newspapers Yesterday's News?

In Alabama, Proof that Even the Strongest Family Business Can Succumb

Ask French Forbes Jr. if he is related to the Forbes who owns the publishing empire, and he'll tell you that if there is a relationship, it's quite distant. "When Uncle Malcom died, I waited for that phone call about the will, but it never came," he deadpans.

If that sense of humor is a family trait, it might help explain why his family's Forbes Piano Co. of Birmingham, Ala., has lasted so long. And that longevity may help explain why the news of its closing triggered a surge of emotion in Birmingham and beyond, which was well documented in an article and slide show last week by The Birmingham News.

The recession, coming amid a decades-long downward trend in piano sales nationwide, contributed to the decision to close the family's 120-year-old retail store.

According to an industry journal, The Music Trades, piano sales in the United States have fallen from a peak of 282,000 units in 1978 to just 54,182 in 2008. An additional 122,850 digital pianos, a category that did not exist until recently, were sold in 2008. The Forbes were "victims of forces far beyond their control," says Music Trades editor Brian T. Majeski. "Piano sales have been trending down for the past three decades. The economic conditions of the past nine months only accelerated the decline."

But the decision to close the store didn't come until after the sudden illness and death in February of Emma Grace Forbes, the four-year-old daughter of French Forbes III and his wife. "The doctor says her stomach burst," Forbes III, who now runs the business, told The Birmingham News. "They rushed her to the hospital, and I got there 30 minutes after she went into surgery. Her heart stopped, and she remained on a respirator. Within a day and a half, she was gone."

The economic climate, Emma Grace's death, and his father's decision to retire, all contributed to the family's conclusion that a change was in order. "This was something we wanted to do," Forbes III tells Knowledge@Wharton.

But he adds that while the store will close, the family business will reconstitute itself as the Forbes Organ Co., which will serve churches in Alabama and Mississippi that have been longtime customers of the family piano business.

For more from Knowledge@Wharton about family business issues, see:

Family Business: Why Firms Do Well When Founders Are at the Helm

 How Family Firms Can Improve Their Long-run Survival

 Family Ties: Succession Seen Through a Successor's Eyes

 Many Family Firms Rely on a Largely Invisible CEO -- Chief Emotional Officer