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Magazines > Information Today > March 2003
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Information Today
Vol. 20 No. 3 — March 2003
NEWSBREAKS UPDATE
New Developments in Content Licensing, Open-Access Publishing, and More
By Paula Hane

Once again, the past month's news has been dominated by the RoweCom/divine situation. As this issue went to press, EBSCO had purchased RoweCom's European businesses from divine and reported that it was making significant progress in the purchase of the non-European operations (which primarily include the U.S., Canada, and Australia). However, a leading Australian news source (http://www.news.com/au) reported that both Swets Blackwell and DA Information Services were also interested in acquiring the Australian RoweCom business. Check http://www.infotoday.com for updates on the proposed acquisition and news about the lawsuit filed by RoweCom against parent company divine.

Meanwhile, divine very much wants to distance itself from the RoweCom debacle and focus the media's attention on its other products and services. The company has just announced an upgrade to the content management platform it acquired from Open Market 2 years ago. The new divine Content Server 5.0 makes it easier for nontechnical users and business partners to contribute content by using Microsoft Explorer functionality. Users can drag-and-drop documents into publishing formats.

Other improvements include enhanced globalization features, automatic filtering for transforming content into HTML or XML, and expanded support for Web services. In addition, the new version features the divine Content Server Autoclassifier. This is an advanced taxonomy and classification capability that leverages technology divine acquired from Northern Light to automatically categorize and tag content saved to the Content Server.

By the way, divine has closed its (Northern Light) Special Collection service. The public site has been shut down and its enterprise customers have been transitioned to Factiva. (For details, see the interview with Factiva CEO Clare Hart on p. 25.)

Open-Access Publishing

SPARC continues to aggressively push its agenda of "returning science to scientists" and furthering competition in the scholarly communications market. The organization's membership now numbers approximately 200 institutions in North America and beyond. SPARC Europe comprises nearly 50 additional members and is growing. SPARC is also affiliated with a number of major library organizations around the world.

The Open Society Institute's (OSI) Information Program, along with SPARC, has announced the publication of two new business guides for developers of open-access journals. The "Guide to Business Planning for Launching a New Open Access Journal" and the "Guide to Business Planning for Converting a Subscription-Based Journal to Open Access" were developed under contract with the SPARC Consulting Group. Both are available for free and are downloadable from the OSI Web site (http://www.soros.org/openaccess).

In a recent letter to members, Rick Johnson, SPARC's enterprise director, said: "The staff of SPARC recognizes the financial and other challenges many of you face this year. These certainly underscore the need for changes in scholarly publishing. Perhaps the strains created by the RoweCom/Faxon debacle and library-funding constraints will help broaden understanding of some of the cost benefits of open-access publishing."

SPARC recently reviewed its 2002 activities (http://www.arl.org/arl/activities/2002/sparc.html) and issued the 2003 SPARC Plan (http://www.arl.org/sparc/core/index.asp?page=a20). The organization's operating priorities for 2003 are the following:

• Encourage adoption of
open-access models

• Support community-based digital publishing in the social sciences
and humanities

• Encourage and enhance the
viability of alternative scholarly communications ventures

• Expand grass-roots scholarly-
communications-advocacy efforts

• Propel SPARC's agenda
internationally

• Raise awareness about the adverse impact of consolidation in the
journal-publishing industry

SPARC also announced its partnership with The Review of Economic Theory (RET), a new journal published by the nonprofit U.K.-based ELectronic Society for Social Scientists. RET competes with the commercial Journal of EconomicTheory, which has an annual subscription rate of $2,228. The new publication will cost $350 but is offered free to countries with developing and transition economies. This partnership marks SPARC's entry into the social sciences arena.

Company Financials

Reuters was due to report its annual results as this issue went to press, but no one expects the company's prospects to improve. It has been wrestling with declining revenues (down 7 percent in the third quarter), unhappy shareholders, and a gloomy outlook for the future. It has cut staffing and costs, but analysts are generally not optimistic about the company's prospects.

A few companies in the information industry are beginning to show some signs of revenue growth and increased profitability, despite the tough economic conditions and constraints on corporate spending.

D&B, Hoover's

D&B reported fourth-quarter earnings of $64.3 million, compared to $53.9 million for fourth-quarter 2001. Revenue rose to $356.1 million from $337.1 million. D&Bhad announced it would cut costs, sell its European headquarters, and put more focus on Web-product delivery.

In early December 2002, D&B made a $7-per-share purchase offer for Hoover's. (See the NewsBreak at http://www.infotoday.com/newsbreaks/nb021216-1.htm.) Hoover's shareholders were due to vote Feb. 14 on the acquisition, but this was complicated both by a lawsuit that seeks to block the purchase and by a competing bid of $8 per share. Marathon Partners, a 9-percent shareholder, teamed up with technology investor Austin Ventures to fight the D&B purchase with the higher offer. D&B said it would not raise its bid.

Hoover's announced that it would "convene, but immediately adjourn" its special meeting of stockholders scheduled for Feb. 14 and reconvene it on March 3, 2003. Hoover's also said that Marathon Partners agreed to dismiss its pending lawsuit against the company and its directors. Then, as this issue went to press, Austin Ventures and Marathon abruptly withdrew their competing bid, making it more likely the D&B deal would go through. It sure looks as if the lawsuit and bid were just designed to drive the purchase price higher. Hoover's said the March 3 meeting will still be held. Check http://www.infotoday.com for updates.

In late January, Hoover's reported its results for the quarter that ended on Dec. 31, 2002. Net income totaled $318,000 compared to $122,000 in the same period last year. Subscription revenues grew 31 percent over the prior year and now comprise 81 percent of total revenue. This figure is up from 67 percent a year ago. At the end of 2002, Hoover's had 8,919 enterprise accounts, an increase of 244 from the end of the previous quarter.

Moody's

The fourth quarter and full-year 2002 results for Moody's Corp. were even more impressive. President and CEO John Rutherfurd Jr. said: "Moody's produced outstanding results in 2002 after very strong growth in 2001. Moody's Investors Service achieved significant revenue growth in most ratings sectors—including global structured finance, European ratings, and U.S. public finance—as well as in global research. In addition, Moody's KMV had excellent growth, exceeding our projections at the time of acquisition."

Moody's revenue for the 3 months that ended Dec. 31, 2002, totaled $271.9 million, up from $220.9 million for the same period in 2001. Net income for the fourth quarter of 2002 was $69.8 million, up from $58.8 million in the prior year's quarter. Net income for 2002 was $288.9 million, up from $212.2 million in 2001.

OneSource

OneSource also closed out the year solidly, announcing its 10th consecutive profitable quarter. But the numbers were lower for the quarter and year compared to 2001. The company reported revenues of $14.6 million for fourth quarter of 2002, compared to $14.9 for the same period in 2001. For all of 2002, revenues were $57.8 million versus $59 million for 2001, a drop of 2 percent.

During 2002, OneSource launched a number of new products and enhancements. Chief among them is Synergy Solutions, which enables customers to seamlessly integrate OneSource data with internal and other external information in applications such as CRM systems, portals, and intranets.

OneSource president and CEO Dan Schimmel said, "[In 2003], we plan to focus our efforts on creating products and providing services that capitalize on the growing demand for functionally specific solution sets." He said that these initiatives "will require increased spending of approximately $2 million to $3 million in 2003 compared with 2002," but the company believes "this is an ideal time to invest in the opportunity to distance ourselves further from the competition."

The M&A Scene

One company I've covered since its launch is iCopyright, the instant licensing service. In an interview in the November 1999 issue ofInformation Today, Mike O'Donnell, iCopyright's founder, president, and CEO, discussed the need for a system that automated requests for content reuse and talked about his fledgling company's plans.

Over the years, we have reported on iCopyright's Instant Clearance System, Publisher Central, Reprint Central, and most recently, the beta version of its Clip and Copy news-clipping service (http://www.infotoday.com/newsbreaks/nb020909-1.htm). More than 6 million works from hundreds of publications, including those from Tribune, Reuters, Primedia, Reed, and Dow Jones, are tagged for instant licensing with iCopyright.

But iCopyright struggled when the economy turned sour and venture funds dried up. At one point, O'Donnell left the company. He then returned in April 2001 after forming Data Depth Corp. to reacquire the assets of iCopyright.

Now Data Depth has sold the iCopyright Instant Clearance Service to Reprint Services of St. Paul, Minn. Reprint Services acquired the installed base of publishers and end users, but Data Depth will continue to own and develop the technology. Reprint Services will operate the iCopyright Instant Clearance Service under a license from Data Depth, with O'Donnell acting as an executive consultant. Reprint Services also licensed the iCopyright trademark, which it's using to rebrand the service as RSiCopyright.com.

Reprint Services is a custom publishing reprint supplier that has been in business since the 1950s. The acquisition will now provide customers with a single sourcefor licensing online and offline content. In a conference call with the press, O'Donnell said that the combined company represents the culmination of his 5-year goal to provide an integrated solution for the publishing industry. He noted that iCopyright had tried partnerships over the years with Kinko's, Reprint Management Services, and others, but they had "never clicked."

O'Donnell said that Data Depth and Reprint Services share the same vision: All copyright in all forms should be and can be instantly licensable. "Publishers will make more money and readers will be better served," he added. Within a few weeks, RSiCopyright expects to release the full version of Clip and Copy and offer a sleeker user interface and other enhancements.

Infotrieve Bulks Up

In late January, Marydee Ojala reported on Infotrieve's move to dominate the document delivery market with its acquisition ofTheScientificWorld's (TSW) assets and RLG's Ariel software (http://www.infotoday.com/newsbreaks/nb030127-2.htm). Ariel allows libraries to electronically convey and share scanned or digitized documents as high-resolution TIFFs or in Adobe PDF. Infotrieve's purchase of Ariel will allow for market expansion and technical enhancements.

Ojala rightly noted that with these two acquisitions, libraries' options for choosing a document delivery company have narrowed considerably. She said: "The only other company that comes close to doing what Infotrieve does is Ingenta. Now that Infotrieve has added the editorial capabilities of TSW and the instant delivery of scanned scholarly articles, it has much more to offer."

For the latest industry news, check http://www.infotoday.com every Monday morning. An easier option is to sign up for our free weekly e-mail newsletter, NewsLink, which provides abstracts and links to the stories we post.

 


Paula J. Hane is Information Today, Inc.'s news bureau chief and editor of NewsBreaks. Her e-mail address is phane@infotoday.com.
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