The travails of the traditional yellow pages industry are serious, with no end in sight. There are some interesting lessons and insights that can be drawn from the remarkable and relatively rapid meltdown of this seemingly bulletproof and impossibly profitable segment of the data publishing industry.

What made yellow pages arguably the most profitable form of publishing ever was the combination of monopoly-like characteristics, coupled with a product that worked extremely well for advertisers. But with every community sporting a yellow pages product, those monopoly-like characteristics became a two-edged sword because, while margins were wonderful, there was little room for geographic growth. For many years, yellow pages publishers contented themselves with eye-popping annual price increases in their home markets. After the AT&T divestiture, there was a huge effort to poach territory from other publishers, resulting in many people finding anywhere from two to ten different yellow pages on their doorsteps. That’s why when the Internet came along, what the yellow pages publishers saw was a way to vastly expand their territories. Forget adding a new market or even a new region. In one fell swoop, they could become NATIONAL. Nirvana!

In reality, this move to become national online publishers was horribly ill-advised. Yellow pages publishers know nothing about content. All those pesky names and address listings they publish? They simply buy them, and view them as a necessary evil, useful only for separating the display advertisements. And this national expansion overlooked the core dynamic of all yellow pages and buying guides: the advertising is the content. By extension, no advertising, no content. Yet with regional sales forces, these publishers had no capability to sell advertising on a national basis, so instead they offered a thin gruel of content: company name, address, phone and general category. Not exactly compelling even in the early dates of the web, and almost pathetic today. The Internet goldmine turned out to be a black hole.

That’s lesson number one. If you are going to produce an information product, that product needs to offer … information. And the competition is keen in the online world where information begets more information that a user can get elsewhere. That’s why the most successful information producers tend to keep a tight focus. Better, deeper, fresher. And the best data publishers are now wrapping software around their content to make it more useful as well. If none of this sounds like yellow pages to you, you’ve gotten my point.

The other useful lesson revolves around momentum. Until very recently, people pointed to the yellow pages as one print medium that while not thriving, was at least holding its own. Yellow pages, some believed, were different and immune to the forces of the web. It’s amazing how quickly that story changed.

That’s lesson number two. Momentum is a powerful thing. Couple it with a strong brand, years of measurable results, a largely unsophisticated advertising base (potentially as many as half of all local business do not yet have websites) and a saturation distribution strategy, and you can appear to defy gravity for a long time. It’s comfortable sticking with what you know, especially when the old way is more profitable than the new way. But when you’re defying gravity, reality will intrude unexpectedly and you’ll hit the ground hard. The smarter path is to engineer a soft landing, not to convince yourself that your market is somehow special and different.

To sum it all up: if you stay focused, dig deep and keep your feet on the ground (making stumbles is a lot less painful than crashing), you’ve already mastered some of the fundamentals to successful information publishing.