Content Matters

This week, both Google and AOL put their toes into the RSS water.

While Google seemed to dip their pinkie toe in, AOL jumped feet first, putting RSS front and center of their new portal.

AOL has teemed with Feedster to create "My AOL", a personalized home page on the AOL portal, in an effort to compete with Yahoo and MSN for ad revenues. In this new portal, currently in beta, feeds are the very heart of the system. Leveraging Feedster, AOL provides a simple, user friendly way to add feeds, whether from major content providers or your cousin's blog. It's a clean interface, with sponsored links on the right column, a la Google.

Google, on the other hand, has taken a very small sip of the RSS waters. In their new portal, you can pick and assemble off-the-shelf news, weather and related topics, while they also have a "Create a Section" area where you can subscribe to feeds. Unlike virtually every RSS reader out there today, the Google interface merely lists the headlines, requiring users to click into an article to see more info. Knowing Google, they will have a full fledged RSS reader in the weeks to come. They've never been afraid to test things, so it's not surprising they would put a limited function RSS reader out there, intending to improve it over time. At the same time, ClickZ reported today that Google applied for a patent today for embedding advertisements into syndicated RSS and Atom feeds.

The combined news is pretty clear. While most people still don't know what RSS is (and probably never will), RSS feeds are about to become a significant part of the content delivery world. And what's also clear is that the "advertising free" RSS feeds we've enjoyed for the past year are about to become a thing of the past. We will soon see significant ad dollars being spent on RSS feeds.

Today, at an SIIA Brown Bag, Anthea Stratigos, CEO of Outsell, presented the results of their study of Information Industry User Habits, comparing habits today to that of four years ago. Outsell surveys knowledge workers to see how they acquire and consume information products. They surveyed more than 8,000 users across 20 industries and 10 job functions.

A few key data points:

The average knowledge worker spends 11 hours per week gathering and analyzing information, up from 8 hours per week in 2001.
Interestingly, the percent of that time spent on the gathering portion has increased from 44% to 53% during that period. Among sales & marketing types, that is even more pronounced, going from 8 to 13 hours, with gathering rising to 58% from 44%. People are spending more time looking for information, with only a modest increase in the time spent on analysis.

Users were surveyed for their top 3 criteria for using information. At the top were:
- Quality & Relevance
- Update frequency
- Ease of access and use

They also looked at the “top 3 unmet information needs” where they saw a trend towards more value-add information, such as Competitor Information and Private Company Info.

One of the top obstacles or problems in using information was listed as “not enough budget to pay for it.” Over the years that Outsell has been asking this question, this is the first time that this answer has shown up with any frequency. This could be due to the fact that corporations are centralizing their information purchasing, limiting the discretionary spending on content by individual users.

A few questions were asked about workflow-based tools. Across their entire user base, the most commonly mentioned workflow application was MS Outlook. Others mentioned were Financial Systems, HR Systems, CRM, ERP and Supply Chain apps. When asked about the importance of integrating content/data into workflow applications, roughly three-quarters of the users surveyed felt that it was very important. IT varied a bit by type of app and by user type, for example, Supply Chain scored 92%, CRM 85% and HR apps 71%.

Overall, Outsell felt that the trends were that users were spending more time searching for info than they would like. Some of that may have been caused by disintermediation (elimination of libraries). She believes that this will cause a return to greater use of “trusted sources” over time. Outsell feels that the big beneficiaries of growth in the coming years will be two groups:
1. Portal providers (e.g. KnowlegeStorm, GlobalSpec, Thomas) – ad supported portals that aggregate a lot of relevant vendor content;
2. Content companies who can do workflow integration on the high end
Conversely, the large, broad aggregators will face a strong run from Yahoo and Google.

Thomson West today announced its acquisition of GSI. Congratulations to Nick Keenan, Phil Brown and the GSI team!

The GSI story is an interesting one. They started up in the early 1990's, leveraging the SECs new (at the time) EDGAR feed. Until that time, Disclosure (acquired by Thomson) had been the primary source of SEC filings. In the early days, Disclosure had a few copy machines at the SEC and would overnight you a copy of a filing for a hefty price. With the "Electronic Data Gathering and Retrieval" service ("EDGAR"), the SEC opened up that market for competition.

GSI introduced LivEdgar about the same time that FreeEdgar and EdgarOnline and a few others were launched, not to mention the SEC's free site where you could look up a filing gratis.
While the others seemed to get caught up in the dot.com frenzy, looking to push their content out to the individual investors (who, let's face it, were buying a lot of stocks without reading a business description, no less an EDGAR filing), GSI focused on the legal market.
GSI cleaned the EDGAR content and made it much more accessible. More importantly, they built a delivery platform and portal that focused on the needs of the legal market. Various subscription and pay-per-view options, combined with strong reporting so that law firms could bill their usage back to clients, gave GSI a huge advantage over other sites. Over the years, GSI continued to improve their offering, keeping their focus on the core legal market.

While it must have been tempting to chase other markets who had needs for the filings, GSI's focus on serving the needs of the M&A legal community gave them a core customer base of active users. And now, that focus has paid off, with the Thomson/West acquisition.

Blogger's note: Since full disclosure seems pertinent in a discussion of SEC filings, I note here that Nick Keenan, GSI's technology leader, worked for me on a few development projects in the early 1990's. In addition to being a technical innovator, Nick's insights into foreign affairs and economics always impressed the hell out of me.

Two interesting earnings reports this week - from Dow Jones/WSJ and the New York Times.

At Dow Jones, despite an overall decline in earnings, earnings for the WSJ digital division were triple that of the print business - $29M vs. $7M for print. Electronic revenues were reported at $128.4M, the growth driven largely by two major factors: subscriptions to the WSJ Online edition increased by 60,000 to 744,000, while the acquisition of MarketWatch from CBS added to advertising revenues. The subscription increase is significant, because while WSJ Online had been able to increase its pricing in recent years, subscriber growth has been pretty flat during that period. A nearly 9% growth in subscribers bodes well for their model.

Meanwhile, over at the New York Times, a similar story. While net income overall declined by 20% as compared to Q2 '04, online ad revenues were up 27% for the quarter due to ad rate increases during the past year. Interestingly, About.com posted a 39% gain in ad revenues for the quarter, with net income of $2.5M on $12M in revenues. It looks like About has found a much more suitable partner in the Times than it had during its tumultuous days at Primedia.

I guess, in some ways, the most interesting part of these releases is that they're not big news. Even for old-line newspaper publishers, electronic revenue is the key to growth, while their supposed core business of print continues on a downward path.

A lot has been made of News Corp's acquisition of MySpace. Most of the early buzz has focused on the cost of the acquisition and whether it means that News Corp has failed in its attempts to garner its own traffic. In my view, that's silly. News Corp has acquired a strong player in an emerging market offering traffic with great demographics. Yes, they paid a strong premium - $580M, but they have acquired some strong properties. MySpace has more than 18 million users today, the type of critical mass needed in a social networking property. It's not like a search engine; there are high switching costs for a social networking site. Just ask the millions of parents who wanted to drop AOL but couldn't because their kids were using AOL for IM.

I think that the social networking space will continue to be interesting in the next few years. I'm sure that Reid Hoffman and his colleagues at LinkedIn are keeping a close eye. While their business model (services, rather than ads) and market (business users, not teenagers) are quite different, I think that this helps validate the social networking space. Whether it's for dating, sharing information or brokering business deals, leveraging technology to expand your social network seems to have some staying power.

Hoover's launched a new portal last week and with it, a more task-focused approach. Instead of the generic search box to look up a company, Hoover's has now created three tabbed pages - for "finding a company", "finding a person" and "generating a list". At the same time, they've reduced the amount of free information provided for an organization - both in terms of the quantitative/financials and the number of executives listed. The move is clearly aimed at pushing users to its subscription-based services. At the same time, the task orientation shows their first steps towards providing solutions, rather than a generic product for all. Each step of the new site pushes the user towards a function that they need, for example, to create a list. Hoover's used the "heroin" approach - give free access to everyone, then gradually take it away and make them pay for it. They've been more successful with this approach than most content providers, probably because they didn't have a large legacy base to cannibalize. Even with the new site, they provide a free "taste". Each day, the editors select a handful of companies whose complete profiles are made available for free; when you build a list, you see the first 10 records that qualify, though you need to subscribe to see the rest. I think that Hoover's has struck a good balance here between free & paid. The free site is still useful enough for the occasional browser to go to, but leads users to many tasks that require a paid subscription. This approach also gives them terrific growth opportunities. The portal becomes a platform for launching new products, all built around the base content. The careful balance will be in determining how much content to leave available on the free site, so that they maximize the ad-based revenues and overall traffic, while holding back enough value to push users towards subscriptions. They also have the option of selling it via pay-per-view, though other than D&B reports, they do not seem to be pushing in that direction.