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Monday, January 24, 2011

Genealogy as a business -- are we in a recession?

If you were at the Mesa Family History Expo this year and last, you probably could not help but notice a few significant differences. One of those difference was the lower level of vendor participation. As DearMYRTLE noted in her recent post, NO ANCESTRY.COM. Speculating, you would have to live in a box not to know that there was a serious economic downturn and that many smaller businesses are hurting. I would assume that includes a lot of genealogy businesses. What about Ancestry.com? Undoubtedly their decision to abandon the local genealogy conference was made on economic grounds. I surmise that Ancestry.com is moving more directly into a different business, closer to being a utility rather than a service provider.

One interesting sidelight is the fact that Ancestry.com is going back free into the Family History Centers. That decision was probably made on economic grounds. More contact with users, more sales. The decision to abandon the smaller conferences may also be a reflection of the demographics. Let's face it. Genealogists are not usually found among the more wealthy members of our society. You don't usually have time to play golf and attend Rotary Club if you are a dedicated genealogist. Likewise, what kind of a vendor can stand there and talk to someone for an hour trying to get the person to spring for a $30 software program. Generally, genealogists are the only people I know that can worry about spending $20. (OK that's not fair. I do know people that live on very limited incomes and would never think of spending $20 on anything frivolous like a software program) Even if you are Ancestry.com and your program costs $80, that is still a mighty small profit for a considerable sales effort. Genealogist in business have to be part evangelists and teachers, used to spending a lot of time talking for very little income.

Let's hope that the promoters of the Family History Expos made enough money from the Mesa show to keep going. Although, I don't mind driving to St. George.

So where are the add-on, or as I used to say, value-added businesses going? By value-added I mean all those businesses that try to sell you something to enhance your main activity. In genealogy there are software vendors, book sellers, scrapbook people, printers, publishers, video producers and some hardware folks. All of these businesses try to use your enthusiasm for genealogy to sell you something that they hope you will perceive to be helpful to "doing your genealogy." The problem with these smaller businesses is that they are subject to the same economics as any other small start-up business. Statistics (of course they don't lie) show that with small start-up businesses tracked over ten years, less than 30% of them will still be in business. Put another way, less than 1 out of 3 small business manage to last for ten years and that is in normal economic times. See Startup Failure Rates -- The Real Numbers.

So bad economic times, changing business models, normal attrition of small businesses, all of these factors may and probably did affect the businesses that showed up at the Expo or didn't show up. Will things be better next year? Only time will tell.

3 comments:

  1. My personal feeling is that Ancestry.com isn't spending the $10,000 or so it probably takes to move their booth to Mesa in favor of hitting a much larger audience by doing TV ads around the upcoming second season of NBC's Who Do You Think You Are?

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  2. The fiscal year for Ancestry.com was up on 31 December and they should be reporting their financial results for the year very soon.

    It may be that their profit margin is down and their cancellation rate is up (it was 4% a month), affected by the recession, or lack of major new record collections, or acquisitions - ProGen and Footnote in 2010.

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  3. We will be back for the 2012 Arizona Family History Expo. The Phoenix/Mesa area has a wonderful genealogy community and we love being a part of it.

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