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Last January we published 10 predictions for 2005.
As the year comes to a close, we look back and
grade our predictions. Were we on target?
#1. Content will come from new sources
We predicted that the internet would start adding
high-value content that previously was not online or
was behind “pay walls.” As an early example, we
cited Google Scholar, launched in 2004, which began
making premium content from some of the most
important academic and scholarly sources
discoverable via its search engine.
We were on target. Google went much further,
announcing Google Print, an effort to digitize books.
While this initiative sparked a lawsuit from publishers
because of Google’s plan to undertake its efforts
without the explicit approval of copyright holders, a
similar effort launched by a consortium of Yahoo,
Adobe, Hewlett Packard, and several major
universities has been well received by publishers.
The same goes for Amazon Pages, the online
bookseller’s new program to sell book content by the
page, section, or chapter. All these initiatives will
bring much more content from traditional
publishers to the internet.
New content from user-contributed sources also
started flowing in 2005. Google announced Google
Base, a service that lets anyone post just about any
type of content in its database. While pundits have
been quick to note the potential impact of Google
Base in the classified advertising arena, we see it as
a vehicle for publishing a wide range of content,
including directory listings, scholarly articles, white
papers, and just about anything else. On another
front, blogs became a well-accepted new form of
content during 2005. Several mainstream media
organizations acquired or licensed blogs, and
advertisers began to take note. Wikis were not far
behind. Wikipedia, the collaboratively-authored
encyclopedia, is beginning to spawn other works
using the same collaborative model, and we expect
to see much more new wiki content in 2006.
Grade: A
#2. A new model will drive content commerce
We said that to achieve much broader
penetration, publishers would need to change the
process by which users find and purchase the
content they need. Making content more
discoverable by search engines and packaging
information for pay-per view purchases were two
necessary ingredients we cited.
We were right. With the rise of search engines, more
publishers realized that their content – whether free
or premium – gets discovered mostly via search
engines and not by users going to publishers’ home
pages. In 2005, publishers have been in a frenzy to
expose their content to search engine spiders, so
that the content will appear in a search. Equally
significant, more publishers have begun selling their
premium content on a pay-per-view basis, often as a
complement to their traditional subscription models.
Thomson Gale is a case in point. Its reference
database content is now packaged for sale as
individual documents, which can be found through a
search engine and then purchased by credit card. In
another example of this discover-then-pay model,
publishers are starting to sell book content by the
page, section, or chapter, on their own or though
third parties such as Amazon. This approach could
dramatically change how book content is purchased
and used. Grade:
A
#3. Segmentation will become critical
We predicted that customers would increase their
spending on information this year -- but mostly for
specialized content services that meet the needs of
specific
job functions. We said that general news and
business information services would be hard pressed
to grow.
The growth stories this year are about information
companies that are highly focused on specific
industries or job functions. Companies in this
category include FactSet (financial analysts),
GlobalSpec (industrial engineers), and Morningstar
(equity analysts and investors). Even as they
spawn new products that may leverage existing
content, these players are tailoring content and
applications to meet the needs of specific types of
users and their workflows. Among healthcare
information companies, such as Elsevier Health
Science and Wolters Kluwer, we saw continued
investment in 2005 to repackage reference
content from books and journals into useful nuggets
that can be easily accessed by physicians at the
point of care through PDAs and online
systems.
A poster child for segmentation is Thomson Financial,
which launched a series of products targeting
specific job functions, such as investment bankers,
retail brokers, and analysts. These products are
formed from the various content assets that
Thomson acquired over many years, but which
Thomson ran as separate companies until relatively
recently.
On the general news front, newspapers
continued to lose ground to the internet, with no
solution in sight. At the same time, general news
and business information aggregators, such as
Factiva and LexisNexis, launched new
products in 2005 tailored to specific functions in
sales, PR, risk management, and purchasing.
Grade: A
#4. Acquisitions will drive transformation, not just scale
We predicted that with the economy recovering,
information businesses would focus again on top line
growth, rather than cost-cutting. We further noted
that the recovery would force some companies to
look for acquisitions to fuel growth in businesses that
may have become commoditized by technology or
competition.
2005 turned out to be a bonanza year for
acquisitions. Several of these are intended to be
transformational. The New York Times’ acquisition of
About.com is an effort to reduce its parent
company’s dependence on its newspapers for
content. This follows a similar move by Dow Jones in
2004 in its purchase of MarketWatch. That
acquisition has worked out very
well, given both the rise in online advertising and the
soft market for print advertising and circulation.
Proquest continued its diversification into the K-12
market with its acquisition of Voyager. On another
front, LexisNexis continued to acquire legal
applications and software as part of its strategy to
broaden its suite of offerings to law firms and to
reduce
dependence on its traditional legal research for its
revenues. Standard & Poor’s acquisition of Capital IQ
in 2004 appears to be playing a transformational role
by serving as a core platform for a new generation of
S&P products and also providing a strong operation in
India for various data preparation activities
companywide. A major failure this year also
illustrates our
point: VNU tried to convince its shareholders that its
proposed acquisition of IMS Healthcare would
be “synergistic” by creating a larger entity that could
achieve significant cost savings. A better argument
would have been that the addition of IMS would
enable VNU to accelerate its transformation into a
market research company (it already owns A.C.
Nielsen) and to move away from its traditional, slow-
growing publishing businesses. Grade: A
#5. Content and distribution will converge
We noted that content distributors historically
have steered clear of owning content, but that more
distributors were buying content companies as they
sought to become less dependent on licensing of
third-party content. During 2004, for example,
LexisNexis acquired Gould Publications, a publisher of
approximately 100 law-enforcement handbooks, CD-
ROM courses and other training materials, and
homeland security publications. It also acquired the
key assets of Rachel Hollingsworth Court Reporting, a
civil public records provider. FactSet, a leading
distributor of financial databases, acquired several
databases in the last three years, including
MergerStat, LionShares, and JCF.
While content acquisitions by large
distributors continued in 2005, it was incremental and
had a limited impact on the industry. In retrospect,
we overstated our case. If anything, the
convergence of content and distribution is occurring
from content providers investing more in their own
distribution, which has become much easier, thanks
to the internet. Furthermore, while content
providers will continue to develop their own direct
distribution channels, they will also continue to look
for relationships with distributors who can reach
niche markets. A case in point: Dow Jones recently
announced a deal to distribute the Wall Street
Journal Online to law firms via LexisNexis. This deal
follows an earlier agreement for LexisNexis to
distribute Factiva to law firms. Grade: B-
#6. Different business models will play together
We predicted that various business models, such
as subscriptions, pay-per-view, and advertising, all
would prove to be viable and complementary. We
noted that publishers like Morningstar and Dow Jones
successfully employ a combination of models,
using advertising to fund free sites containing limited
information, while simultaneously featuring ads within
subscription-based services.
We saw these trends increase in 2005. The New
York Times converted from an all-free model and
started levying a subscription fee for some of its
most sought-after content. Despite early criticism
from pundits, the Times met its initial subscription
goals without adverse impact on its advertising
revenues. LexisNexis stepped up its efforts to sell
business content on a pay-per-view basis to smaller
users, with reportedly good results. As these
various models take hold, we see a challenge for
publishers to set up the right blend of business
models and pricing so as to optimize revenues.
Grade: A
#7. Searching will improve because of smarter content
We predicted that search engine technology
would improve this year only in marginal ways. We
said that more impact would come from the growing
use of metadata to enrich content, thereby helping
search engines better understand the meaning of
a document beyond the words that lie on its pages.
Although we would not point to any dramatic stories,
publishers have been hard at work in 2005 enriching
their content. A key indicator of these efforts is the
number of publishers who have invested in new
XML-based content management systems, which are
valuable for several reasons. First, they reduce
the cost of creating content, especially by managing
the workflows associated with authoring, reviewing,
and editing. Second, they enable re-use of
content across products. Finally, they facilitate
the addition of metadata that can make content
more discoverable on the internet. All in all, 2005
was a year of continued investment in this direction,
but not dramatic breakthroughs. Grade: B
#8. Public libraries will emerge as content sales channels
Our thesis here was that public libraries would
take on a larger role in bringing information resources
to users without other means of getting them. We
were referring especially to subscription-based
services that would not be available to users outside
corporate or academic institutions. A number of
major city libraries and state library consortia have
cut deals to allow their patrons free access to
premium databases from such providers as Thomson
Gale and EBSCO, among others. Importantly, these
deals allow library patrons to access the databases
from outside the walls of the libraries--via the
internet, with a library card number.
2005 was not a year of dramatic breakthroughs for
libraries as sales channels, although one major
provider, Thomson Gale, released the beta version of
AccessMyLibrary.com, a product aimed at helping
public library patrons access to premium
content licensed by their local libraries. Public library
access to premium databases on- and off-premises
remains a well-kept secret, even as more people
have need for such resources. Better luck next year.
Grade:
B
#9. Corporate libraries will wither
We predicted that corporate libraries would shrink
in
both number and size. With that trend, we said that
some information companies would need to navigate
a new set of buyers and users, while for others the
absence of a central purchasing group actually would
make it easier to market directly to end users.
Since the closure of a corporate library does not get
the same headlines as a military base or GM plant, it
is admittedly difficult to quantify this trend. In
addition to closures, we observed some corporate
libraries being absorbed into and realigned with
specific functions, such as competitive
intelligence. Either way, the message for information
vendors is the same: focus more on departmental
buyers rather than enterprise-wide buyers. Moving
forward, we suspect this trend may be bottoming
out, though we
don’t necessarily expect it to reverse. Many of the
former libraries or information centers have been
transformed into “information services” departments
that deal more with the procurement of information
sources than with fetching specific information.
Many companies need this level of expertise to
manage the procurement of information services. We
suspect, therefore, that while this role may not
necessarily grow, it will continue to play a role in
some companies. Grade: B
#10. All predictions will be wrong, including these
Let us know what you think. Grade: Incomplete
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