|Volume 17, Number 2 • February 2000|
Things Fall Apart
How will the industry fare in the new millennium?
by Richard Poynder
But did this annual international exhibition and conference give any clue as to how the industry might fare in the new millennium? Walking around the event for my 10th year I found plenty of questions, but few comfortable answers.
First, while the show attracted an impressive 18,000 visitors, attendance at the event appears to have peaked in recent years (17,728 in 1997, 17,000 last year). With the Internet continuing to grow at an exponential rate, could this indicate that the industry is struggling to attract new users at the very point when the online medium is becoming as ubiquitous as the television?
Second, seeing a subscription agent (RoweCom) buy a real-time news provider (NewsEdge) when news information is becoming a commodity had me wondering if the industry is losing its way. Clearly, consolidation is inevitable in an industry under pressure, but the logic of consolidation is that while there may be too many players, and too few customers, the basic business model is sound. Surely, however, the business model of NewsEdge is being shredded by the Web.
I visited the RoweCom booth and asked J. Charles Germain, regional president for Europe, Middle East, and Africa, why the company had bought NewsEdge. “NewsEdge has a strong database of news articles for the corporate market,” he replied. “They’re strong in the corporate market—which is where the market is growing—and we are strong in the academic market.”
Third, why—at a time when it is under huge pressure from shareholders to reduce its debt mountain—has Dialog committed resources to building a new Web search engine? Does the world really need another one? True, WebTop.com introduces a number of novel features, including the ability to cut-and-paste search queries from documents directly into the search engine, as well as the automatic indexing of selected company Web sites using Dialog’s InfoSort technology. But how, I asked John Snyder, CEO of WebTop.com, does Dialog hope to make money from the new service? There might, he replied vaguely, be scope for advertising and promoting other Dialog services through WebTop.com. “We could, for instance, start to offer Profound data though the service. Likewise, we could sell e-commerce products into it.”
Fourth, does the industry fully understand the extent to which time has been foreshortened by the Web? After all, the launch of QWEB is little more than the release—finally—of the full Questel•Orbit service on the Web. Hardly a rapid response to the Internet revolution. At the Financial Times Electronic Publishing booth, where FTEP staff members were demonstrating a Web version of FT Profile, the situation was still less encouraging. Begun a number of years ago, subsequently abandoned, and now restarted, the business of migrating FT Profile to the Web is clearly a lifetime project. And what was being shown at the show was far from completion. “All we are demonstrating is a concept product,” conceded one of the demonstrators. [Editor’s Note: As we went to press, FT Profile, along with the rest of the Financial Times Group’s Business Information Products division, was acquired by the LEXIS-NEXIS Group.]
All in all, it was hard not to conclude that the online industry is doing too little, too late. Moreover, rather than exploiting the characteristics of the Web to create unique new products for the business community, the industry seems content to simply copy concepts developed elsewhere. No one has been more assiduous in this than Dialog’s Dan Wagner, who has single-mindedly pursued every buzzword to emerge from the Internet, from push to portals, from intelligent agents to e-commerce, and now knowledge management and search engines.
The problem is that many of the resulting products are either 20-day wonders, or based on consumer models that are inappropriate for the business market. And simply aping consumer models, one exhibitor pointed out to me, could rob the industry of its best opportunities. “A recent Dataquest survey showed business-to-business revenue rising from approximately $175 billion in 2000 to over $800 billion in 2003, compared with a rise of $75 billion to just $190 billion for consumer revenues,” said Chris Knowles, managing director of Vrisko, a London-based provider of automated intelligent search solutions for investment banks. “It’s strange that so many companies are developing consumer-type products when the real growth will be in business-to-business.”
This lack of creativity and innovation is a historical problem, rooted in the industry’s early years—a point made to me against the hubbub of the show’s press office by Pierre Buffet, marketing director at Questel•Orbit, and 29-year veteran of the online industry. The industry, Buffet reminded me, was a product of the Cold War, born at a time when there was an abundance of research money, and a shortage of competitive pressures. Consequently, he suggested, it has until now never had to develop finely honed business models. “We are all suffering from the fact that the business model of the ’70s—the pay-as-you-go, connect-time model—is a bad business model,” he said. “Customers are frustrated because they feel they are paying too much, and the hosts are frustrated because they don’t earn money. There is clearly something wrong. The question is: Can we change the business model?”
The way forward, he suggested, will require discarding inherited shibboleths. “For instance, we have lived for 20 years with one buzzword, which was the keyword,” he said. “The keyword was the core of our business. But today the Web has standardized the concept of the link. So we need to throw away the term keyword, and replace it with the word link, along with all the meanings you can attach to the concept of linking.”
Judging by what was on display at the conference, however, the industry has some way to go. True, there is a growing trend towards building links between abstracts and full text (even Dialog has developed its eDOCS GOLD linking project). But is the industry being sufficiently radical or creative in its response to the new paradigms of the Web?
The most interesting attempt to build a business around Web links being demonstrated at the show was not the work of a traditional online player, but that of a small Web start-up founded by ex-Financial Times journalist Nick Denton. While at first glance moreover.com appears to be simply a database of links to news stories on the Web—and today it provides free links to over 1,500 news sources, including The Economist, The Washington Post, The Chicago Tribune, The New York Times, the BBC, and the Financial Times—closer inspection shows that it does far more than that.
Not only are these links indexed into 200 categories accessible at no cost, but moreover.com provides a simple tool to allow other Web sites to create an instantaneous news service on their own sites—at no charge. All they need do is cut out a script that is e-mailed to them, and then paste it into their own home pages. How does moreover.com hope to make money out of its service? “We also offer [customized] categories from $1,500 a month,” said Heidi Peters, marketing manager at moreover.com. “These are built and maintained by human editors.” Clearly, time will tell if there is a viable, long-term business here, but the Web has taught us that the fast-moving, highly innovative players stand the best chance of success.
Overall then, the conference revealed an industry short on ideas, low in revenue, and in a gloomy frame of mind. The latter point was exemplified in the morning session of the final day, aptly entitled “Moving Past the Millennium.” Here, two upbeat presentations from U.K.-based journalists rapidly descended into gloomy prognostications from industry representatives. Asked to look forward to 2010, Springer-Verlag’s Arnoud de Kemp replied: “I’m pessimistic. The information society is not creating the millions of new jobs we were promised, but less.” Added Elspeth Hyams, of the Institute of Information Scientists, “There will be huge changes in the way in which companies do business, but most people won’t get the benefits of technology.”
Struggling with pre-millennial flu, Ciaran Morton, Dialog’s president for Europe, Middle East, Africa, and Asia Pacific, even thought the unthinkable. “The entire market could change dramatically,” he said, asking rhetorically, “Will we even be charging for information in the future?” However, such gloom is perhaps no bad thing. The industry’s salvation surely lies in thinking the unthinkable. And to move on, it is necessary first to stare into the abyss.
So will the industry make a successful transition to the new millennium? I certainly hope so. To do so, however, it will need to learn a lot of new tricks, and become far more innovative and entrepreneurial than it is today.
Buffet predicts the industry will fragment. “The future lies in niche markets,” he said. “Questel•Orbit’s focus is now firmly on intellectual property.” If he is right, this will have implications for the organizers of events like Online Information, too. After all, if the industry’s efforts shift to the niche markets they serve, rather than the medium of delivery, the logic of exhibiting at an online event will evaporate.
Such a trend can already be seen in the U.K. company information sector. ICC, Perfect Information, and OneSource have all ceased exhibiting at the conference in recent years. “There is increasingly less need to attend events like Online,” says Alistair Pauline, ICC’s managing director. “We know who our clients and prospects are in these markets, and can make much more effective use of resources to ensure we target them correctly. Today, therefore, we only exhibit at a number of credit-focused exhibitions.”
No surprise, perhaps, that exhibitor numbers were down this year, from
296 to 279. To quote Yeats, “Things fall apart; the centre cannot hold.”
Richard Poynder is a freelance journalist based in Oxfordshire, U.K.
His work appears in numerous publications as well as in the London Financial
Times and The Wall Street Journal Europe. His e-mail address
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