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Content Industry Outlook

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Notes from an industry overview session at the Buying and Selling eContent conference in Scottsdale, Arizona.

Link: Buying and Selling eContent

I just arrived so I might have missed a little of the intro, and already missed David Weinberger’s keynote (podcast). Here’s what I didn’t miss:

M&A and Venture Deals:
M&A came back over the last year. On the B2B side most of the activity is focused on the business database. On the VC side it is about organizing, organizing RSS feeds, tags (as noted in David Weinberger’s keynote).

Open Source Media Ethic:
Convering of consumer and the open source media ethic (being open to different sources of information and trying to incorporate into your company to use other’s expertise). Notes the Business 2.0 article I read on the plane on open web services. For media and business information companies, using search data and open APIs, its a hot area.

Becoming the Center of Gravity:
For media companies, new models to contend with. My site is a blog, pure news aggregation, news intelligence service. We are doing well compared to to become the center of gravity. The reason for my existence is to send people to other sites. How to incorporate social tagging? Look at InfoWorld’s use of del.icio.us. Aggregation and vertical search, custom branded news readers (Guardian, News.com) lets you become the source of information for your topic using all the resources out there.

Content packaging and distribution: new opportunities, especially mobility.

John Blossom from Shore, a research and advisory services for the content industry.

Content and technology plus people to get high human input and value, high productivity and high content value. Publishing has moved from being a black art to being a pervasive tool with things like weblogs. From where content was a rare commodity to raining content and a challenge of extracting value with abundance. The Star Wars kid video with 15 million downloads and lots of remixes. Google News takes content from premium sources and creating context for it that is of greater value. “Good content is where you find it.” Database era meant you had to go log in to get it, now entire libraries of content go where they want to go.

2005 is about the 4 Cs. Cooperation, Commercialization, Containerization and Consolidations. Cooperation: publishers, advertisers and search partnering around highly contextual audiences, authors and markets (weblogs, wikis and social networks), institutional clients and content technologists, instiutions and public content outlets. Commercialization: Google Scholar, Rich Data mining technologies, monetizing in open contexts (Reuters.com, BBC/Moreover, CCC, ValeoIP), empower users as aggregators (RSS, desktop search, iPod, Weed, collaboration tools). Containerization: more options, DRM is the beginning of letting content be useful, but a taboo word, eBooks growing. Consolidation: Collapse of quality mass print circulation, titles search for identity in a search-centric ad world, huge multiples for key companies that fit (Capital IQ for functions, MarketWatch for ad pages).

Winners

* monetizers of contextual value
* close to the user
* leverage affordable power of publishing
* source-agnostic content integrators
* licensors creating useful content objects

Losers

* product centric (vs. user centric
* under investors in content technologies
* anyone wishing that it would all be simple again

Jeffrey Dearth of desilva phillips provides an investment banker’s perspective.

Customers are in control. Search engine disruption: Google scholar, library and news — look at their acquisitions to see where they are going in fulfillment of their mission statement. Google informs reader and advertiser, the brand equity belongs to the search engine.

Tradition information providers are consolidating (Thomson, Lexis-Nexis, McGraw-Hill), feeding frenzy for eyeballs. Traditional publishers scrambling to position themselves online (NY Times, WSJ, etc.). New media companies buying strategically (i.e. InfoUSA, Google, IAC), private equity firms are flush with cash and targeting content companies, banks are providing great debt leverage to fuel higher multiples. 70% of the revenue for AskJeeves is driven by Google, he doesn’t understand the billion plus valuation. Oneline ad growth an gaining share of market, 20-30% growth next year, while the B2B publishing market is only growing at 4% — pick which market you want to be. 2005 is going to be one of the best years for eContent in M&A, a seller’s market.

What’s hot: New Vertical Aggregators, lead generation such as franchise solutions that arbitrage google keywords, SEM/SEO/Affiliate network companies, vertical search/local search, rich media, blogs & RSS, business/financial data. “Technorati likely to be snapped up one of these days, at least that is the rumor.”

Case study with Carroll Publishing: used to have to lug big manuals around, now its on the web and his biggest customer is a 411 lookup directory that sells oursourced services for mobile telephony, paid $0.02 per lookup — shows that you don’t know what new markets you will find until you make your information available in a user friendly way for others to use.

Janet Ligget, Phizer, representing content buyers

The mission of our information management group is to provide information and knowledge from employee to patient. Most popular resource she provides is electronic journals. Challenges for content buyers: cost and price structures, integrating information, access and some big changes on the horizon.

Cost and Price structures is a boring topic that wont go away. Budgets are relatively flat. Monopolistic market inhibits innovation in pricing structures: site based pricing (doesn’t work for them, people are remote and travel all the time), named user pricing (restricts agility, creates a burden on the buyer to manage user IDs, we don’t want to spend our resources managing your products), and unpublished prices (when rationalizing licenses in a merger the variation in prices are really unrelated to the product and more to the skills of the negotiator). Site pricing works for small companies, but when you consolidate locations it doesn’t necessarily reduce prices.

Note: these points are eerily familiar to other commoditizing industries.

Integration information: breaking down information silos is a user demand, information needs to be in one place for users (need to search across silos.), single vendor solutions don’t work, integration external information with internal information. Want to bring in XML feeds and not use your interface, want to use our own linking tools and provide access on our site. Want to bring in content with metadata attached to it that is industry specific.

Access: Buyers want sellers to endorse and comply with standards — even promote them such as Open URL and CLI. Buyers need to use information in new ways (text mining, personalization, search across resources, search fulltext). User Names/passwords restrict agility.

Big Changes: Open Access is a revolution in pricing structure, institutional repositories provide new challenge in finding information, author archiving. It stands things on its head and encourages cost to be moved away from the reader, an important feature regardless of who pays for it eventually. Senior Scientist leaving Phizer, but wanted to continue working in academia and asked if its possible to continue accessing their archive, but licensing makes it impossible, so a retiree that we want to keep working as a society is restricted from doing so. This is why Open Access matters. Google initiatives provide other important opportunities.

Chuck Richard, Outsell, representing the content seller

Think of the room as having suppliers, some disruptors (hi!) and consumers. IT becoming more personal, migration from consumer to business and business to consumer. Red Sox interlude. MLB.com is an advanced media site, is the best use of content driven from the user point of view: look at the statistics and the box score with a player’s name and a number of runs linked to get the video clip of the player hitting the run.

RSS & blog experimentation will continue and evolve in ways we can’t predict. This is a new tipping point in the industry. Already pulling some of the ad revenue, will pull in other revenue as well.

Worldwide B2B information industry revenue $280 Billion with 9% growth in 2004. Outsell 100 is 53% of the industry, tracked quarterly, revenue growth 12%, approximately where it was in 2000. If you take out Google and Yahoo it removes 4% of the growth. Rates for online advertising is not in parity to CPM, although online is arguably more effective, prices will continue to rise.

Buyers, or readers, over the last few years have changed their preferred method of obtaining information used to be 68% seeking it out yourself, now 51%. Search and RSS aggregation is a time sink.” (Note: bullshit) Overload is increasing: 8 hours a week in 2001, 11 hours a week now gathering and analyzing, some increase in the relative time gathering. Users increasingly turning towards their Intranet (10% shift). Good news is people are looking for direction and help. What is making the news on disruption isn’t effecting economics yet (one survey says barely anyone wants information delivered to their PDA compared to other devices).

Note: Lots of Fear and Loving in Google. Complete misunderstanding on productivity of blogs and aggregation. Demanding buyers in a commodity industries in a position to drive commoditization. Hot and changing market with big shifts underway, perhaps with fundamentals changing faster than private equity models can keep up.

Ross Mayfield is CEO and co-founder of Socialtext, an emerging provider of Enterprise Social Software that dramatically increases group productivity and develops a group memory.

He also writes Ross Mayfield’s Weblog which focuses on markets, technology and musings.

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