Content Matters

To anyone who has spent a career in sales, consistent lead development remains the holy grail.  A good sales manager can always help close deals at the end of each quarter, but if you can’t fill the pipeline with 4-6x quota, there’s not much that can be done to help hit the numbers.

Throughout my career, I have tested various models for lead generation, most of them focused largely on cold-calling.  I’ve used the approach of having senior sales executives do their own cold-calling, using dedicated lead generation inside sales reps, and also outsourcing the lead generation function to specialized firms like By Appointment Only.  Each of these methods has their pros and cons, but regardless of which one I was using at the time, I was always scrambling, trying to find ways to just deliver a few more qualified opportunities.

In recent years, a series of new web-based lead generation companies have arisen, each with their own methods.  Traditional directory publishers such as Thomas and relative newcomer GlobalSpec drive leads in the manufacturing sector, while price comparison sites like CNET, PriceGrabber and Shopzilla create leads in the consumer markets.  For the technology sector, whitepaper portals such as TechTarget, BitPipe (recently acquired by TechTarget) and KnowledgeStorm generate tremendous traffic of qualified IT executives researching software.  Bankrate’s recent acquisition of FastFind provides banks with leads of people seeking loans.

The rapid growth of this segment of the content market, as exhibited by a number of recent acquisitions at high multiples, is the focus of a new research report by Ken Sonenclar of DeSilva & Phillips entitled “Lead Generation: Digital Media’s Killer App?”  The report provides a clear picture of how the disintermediation of the web has allowed these lead generation companies to better connect buyers and sellers, whether in b2b or b2c markets.  Where Google was able to demonstrate that clicks are more traceable than branding initiatives, these companies take that a few steps further, aiming to provide qualified leads at the right stage in the purchasing cycle. 

While I can hear Alec Baldwin’s voice stating “Coffee’s for Closers” in the back of my head, I still believe that generating enough qualified opportunities is the hardest part of sales.  I plan to profile a few of these lead generation companies in the coming weeks in my “50 Content Companies that Matter” segment.  In the meantime, if you’re looking at segments of the content market poised for strong growth in 2006-07, the lead generation segment is certainly a good place to start.

With the right business model, a single-minded focus, and an understanding of customer needs, sometimes David can slay Goliath.

Like many dot.com businesses, Netflix saw inefficiencies in the brick & mortar approach of traditional business.  Unlike many of their counterparts, Netflix focused its efforts on a specific, yet widespread area of customer dissatisfaction, late fees on video rentals.  The team at Netflix saw that the traditional “Blockbuster” approach to video rental was not customer friendly.  Driving to the local outlet only to find the video you wanted was out, plus paying large penalties if you didn’t return that video on time, led many customers to think of video rental as a necessary evil.  These late fees were significant.  Recent estimates for Blockbuster showed roughly $250M of their revenue coming from late fees.

Based upon this, Netflix saw an opportunity to provide a more convenient service, eliminating visits to the store as well as the concept of late fees.

Early on, Netflix focused its efforts on building the logistics infrastructure to scale its business.  Its systems for managing, processing, delivering and receiving DVDs have driven costs down to where it’s nearly impossible for others to compete.  After a few years of ostrich-based management, Blockbuster responded to the Netflix threat by launching their own subscription-based plans combined with grace periods to eliminate late fees.  But, by waiting until 2005 to do so, they had given Netflix the opportunity to establish itself in the market with enthusiastic viral marketing. 

Meanwhile, barely two years after WalMart entered the video rental market, in May, 2005, they and Netflix announced a partnership by which WalMart exited that market, making Netflix its exclusive partner.  Through the partnership, Netflix agreed to direct customers seeking DVD purchases to WalMart. 

In 2005, more than 6 million subscribers rented DVD’s over the Internet.  According to market research firm Screen Digest, the online rental/post-office delivery model will grow to 25% of the US market and a third of the European market by 2009.  There will continue to be new competitors – including on-demand cable and web-based video services.  In anticipation of such, Netflix inked a deal with Tivo, to enable online ordering and Tivo-delivery of video on demand.  While this partnership seems to have run into some roadblocks, as video on-demand becomes more significant, I expect Netflix to position itself to be a major player in that market as well.  In the near-term, though, it seems that the movie studios will push DVD over video on-demand, as the margins are much more attractive.

The keys for Netflix have been its patented video rental system and its cost-saving infrastructure.  But more than anything, their success is due to their complete focus on delivering a better video rental solution to their customers.  And for that, Netflix is certainly one of the 50 content companies that matter.

Just a brief note of appreciation to Scott Thompson and the team at Content.biz (sister company to MarketingSherpa), for naming Content Matters one of their "13 favorite blogs" on the content industry.

Now, I know some of you are probably wondering "are there really 13 blogs covering the paid content space?"  Well, it is a narrow niche, but thankfully it's one where part of the job is to be focused on content technologies, and so there is a healthy community of content industry bloggers. 

In addition to Content Matters, the Content.biz list includes Bill Trippe's blog, Poynter Online's eMedia Tidbits and Russell Perkins' Infocommerce blog among others, along with podcasting sites such as Inside Digital Media and On the Record...Online.

The ranking only included non-commercial blogs (i.e. those blogs which were not serving simply as a delivery mechanism for a publisher's content). I think it's fantastic that so many people in this community are so enthusiastic about the content business that they take the time to share their thoughts. 

I also applaud the team at Content.biz for relaunching their blog after a one-year hiatus, and have added it to my RSS reader.

I am guessing that in the next seven days, more digital pictures will be taken than in any previous week in history.  During 2004, more than 18 million digital cameras were sold in the U.S.  Worldwide, the total is more than 55 million (according to Fredonia Research).  A high percentage of cellphones today have cameras as well.

I anticipate that Christmas morning (and Chanukah too), millions of additional digital cameras will be unwrapped, while the tens of millions already out there will be snapping dozens of pictures.  I know that I will be using my Digital Rebel XT to take shots of my 6-year old unwrapping a Canon point & shoot that was at the top of her list for Santa.

What does this have to do with Content?  Plenty.  Unlike with film cameras, where all of those pictures would eventually end up in shoeboxes in the back of your closet, the digital world turns that into valuable content.  And, just as Del.icio.us allows users to tag their text-based content so that it’s accessible to the rest of the world, its sister company, Flickr, makes image content readily available to share with friends, family and (if desired) the rest of the world. 

One of the huge benefits of photo sharing sites is the ability to easily upload photos from practically anywhere.  You can send an image from your phone directly to your photo account.  What Flickr offers, beyond the simple capabilities of Ofoto or Shutterfly, is that it adds tagging to the process, enabling your pictures to be found. 

Just this week, I’ve been following Fred Wilson’s travels to Cambodia and Thailand.  Fred has posted a few photos to his blog, but the rest can be found on Flickr,

I can recall a former colleague emailing a daily diary (via CompuServe) to 50 close friends during his annual adventure vacations in the early 90’s.  He was cutting edge at the time.  Now, blogging from an airplane or sending images from your Treo are things we can take for granted.

Flickr has developed a number of tools to make their site more useful.  In addition to basic tagging, they have developed algorithms to rank photos based upon “interestingness”, as well as by the number of times a photo has been viewed, the number of comments it received and how often a member marks a photo as a “favorite”.  Flickr also offers a “Blog This” link to each image, so you can easily blog any photo.  Through these capabilities, Flickr has developed a fairly loyal and active user community of photographers and photography lovers.

Just as text was about 10 years behind structured databases in your ability to access it, image files are a few years from being part of the mainstream search environment.  But, Flickr has carved out a compelling niche to drive social interaction on the web and seems to be a critical part of Yahoo’s Web 2.0 strategy.  And, for that, it’s clearly one of the 50 content companies that matter.

The news is out.  This week, I joined Alacra as Vice President, Product Management.  The official press release can be found here.

Those of you who know me, or who read ContentMatters regularly, know that I have long admired Alacra.  Started nine years ago as Data Downlink, Alacra has established a preeminent position within the investment banking and management consulting industries. 

At the heart of the Alacra business is its concordance process, where it integrates and normalizes data from more than 100 business and financial databases.  By solving this massive data integration problem, Alacra creates tremendous value for its customers and has created a strong barrier to entry.  Its customer base is a “who’s who”, including 19 of the top 20 investment banks and 9 of the top 10 accounting/consulting firms, plus hundreds of law firms, M&A advisors and other leading organizations.

While focused on its core customer needs, Alacra is also extremely forward-thinking.  The Alacra Blog was one of the first CEO blogs on the web.  Earlier this year, the Alacra Wiki was launched, serving as an information resource for the content industry.  The recently launched Alacra Store allows Alacra to reach beyond its core customer base by providing content on a pay-per-view basis.

I am thrilled to join an organization with such a strong management team and which generates so much praise from its customer base.  It will be exciting to leverage the Alacra data warehouse to develop new applications to meet the needs of our existing markets, while exploring new ones.  It's sure to be a fascinating ride.

To help make RSS feeds more interactive, Feedburner has launched a new capability called FeedFlare.  Their announcement is here.  FeedFlare automatically inserts up to seven metadata elements as a footer at the end of each post, enabling users to more easily tag the content with del.icio.us, email the post to another user, email the post’s author, or to see links and comments for that post.

While the initial launch is focused on blog posts, Feedburner announced plans to provide tools which would allow publishers to automatically add the FeedFlare metadata to all documents being published.  In essence, Feedburner will provide publishers with a simple to use plugin to generate useful metadata.  Feedburner also intends to provide an open API to enable publishers to add new web services. 

So, what’s the benefit of FeedFlare?

First, it enables bloggers and publishers to retain some of their “identity” when their feeds are syndicated.  Sure, if you’re reading this at www.ContentMatters.info, then you can already or tag the post on del.icio.us, etc.  However, if you’re reading this in an RSS reader, or if it’s been syndicated to another site, you can still email me and I will be sure that it comes to me, not the owner of the other site.

Once the API is released, the benefits become more clear.  Publishers will be able to modify the metadata created – for example, to post to a del.icio.us competitor, to provided various language versions of the metadata or to create contextual advertising links.

In the coming months, as RSS feeds become part of the mainstream web environment, tools like FeedFlare will be needed to make RSS an interactive environment, rather than a simple feed of text.

Initial comments on FeedFlare are provided by Richard McManus, Fred Wilson and TechCrunch.   

Yahoo announced today that it has acquired social bookmarking / tagging application Del.icio.us.

It’s an interesting acquisition and quite possibly could help make tagging more mainstream.  Del.icio.us has been very successful in the early adopter market, but has hit a bit of a wall in its efforts to “cross the chasm”.  Yahoo obviously provides the market strength to help Del.icio.us move beyond its current user base.

The idea of pushing tagging to the content consumer, rather than the publisher, remains intriguing, though I remain a bit skeptical of how much of a mainstream application it can become.  For years, knowledge and document management vendors tried to get users to tag documents, with little success.  Take a look at the “properties” of the last slide deck someone sent you and you’ll see that even the simplest information (such as author) is rarely updated.

That being said, it’s intriguing to see major web players focused on making their content more accessible.  Rather than putting up walls to try to force users to stay within their site, Yahoo seems to be embracing the open architecture vision of Joshua Schachter and the Del.icio.us team.  This, following the acquisition of Flickr, shows Yahoo has continued interest in social networking and tagging.

Web 2.0 brings the promise of community, social networking and open systems.  Del.icio.us was clearly and early poster child for Web 2.0 and I’m sure there will be many bloggers who curse this deal as a sellout.  However, I think that it will be interesting to see where Yahoo takes Del.icio.us in the months to come.  Whether mainstream users will begin to tags content remains to be seen.  In the meantime, it’s fascinating to see tagging become a hot market.

Congratulations to Joshua Schachter and the Del.icio.us team.

For more information, see posts from Union Square Ventures, Del.icio.us and Jeremy Zawodny of the  Yahoo Search team.

Answers.com announced today its acquisition of natural language processing (NLP) company Brainboost Technology.

Brainboost takes a heuristic (pattern-matching) based approach to identifying likely answers to questions.  They have a question-answering engine that will expand Answers.com’s database of answers to user-posed questions.

The field of Natural Language Processing has evolved quite a bit from the early days of Ask Jeeves, where NLP simply meant removing a few prepositions from a user query, then submitting the rest as a simple search term.  Even so, a random test of questions to the Brainboost engine resulted in a mixed bag of responses.  Some were dead on, but others missed seemingly “easy” answers.

Combined with Answers.com’s extensive knowledge base of reference data, the inclusion of Brainboost should provide a robust and comprehensive question answering capability.  The knock on Brainboost to-date has been its reliance on serving up web pages rather than answers, while Answers.com has strong reference data, but when the questions went outside that realm, could merely pass the query through Google.

Answers.com (the former GuruNet) has begun to establish itself in the search/research field.  With this acquisition and some smart channel partnerships, it is poised to give Ask.com a run for its money.

Earlier this week, the New York Times published an article detailing a case of malicious tampering with the Wikipedia bio of John Seigenthaler, Sr., former editor of the Nashville Tennessean newspaper.  According to the article, an anonymous contributor to Wikipedia added that Mr. Seigenthaler had been “thought to be directly involved in the Kennedy assassinations of both John and his brother Bobby”.

While the episode triggered much debate about the reliability of Wikipedia, it really raised a much larger question: can you trust information from an undetermined source? 

I am sure that many executives from content businesses got excited when they read that story, saying “I knew that our value proposition is solid; the Internet can’t compete with us in terms of quality”.  From my standpoint as an information consumer, it’s not so clear.

Users have various content needs.  For some of those needs, they require a “trusted source”, particularly business users.  For other needs, even business users can trust “any” source.  For example, if I need the direct dial phone number of a senior executive at Cargill in Wayzata, MN, I’ll use a paid source for that.  If I simply need the area code for Wayzata, I’ll Google it and assume that among the first few results I’ll find the correct answer.

From a more practical side, let’s think of the role of a recruiter.  If they are sourcing a C-level role at a Fortune 1000 company, they might use a subscription database to identify the handful of candidates within that industry with comparable experience and financial responsibility.  However, if they are simply looking to identify director-level financial executives in a given industry or geographical market, they might be better served using a service like ZoomInfo, which compiles millions of names from various web sources.  The accuracy will be much lower than that of a high quality information service, but they are bound to identify 10-20 people to speak to, and that group will likely generate enough referrals for them to source strong candidates.

The reality is that some tasks require content from a “trusted source”, while others just need an answer that is likely correct.  Using my Cargill example, even if the first site I clicked on had the wrong area code for Wayzata (showing the old 612 rather than the newer 952), it’s likely the second one would be accurate.  Content publishers should look at their client base to identify those critical business processes that rely upon their data.  Applications like compliance, legal research, medical information and others will always provide markets for trusted sources, while more and more less critical processes will make do with whatever is freely available. 

At the same time, information users will have to learn how to delineate trusted sources from the unknown.  Users today do this for certain types of information – they know to trust Consumer Reports more than a single Amazon review – but it will become increasingly important to filter any critical information through this process.  Ratings and rankings from unknown sources can be manipulated, while trusted sources tend to be more reliable.

Content providers, both "trusted sources" and those which strive to become trusted, must take various measures to earn that trust.  The traditional brands such as Consumer Reports, Dun & Bradstreet and others, should be careful not to dilute the power of their brand, even if it means foregoing revenue opportunities.  Meanwhile, the newer companies should take steps to reduce the ease in which their systems can be manipulated.  Wikipedia, which relies upon its huge community of users and editors to challenge false information, has temporarily locked the Seigenthaler page so that it may not be edited.  Amazon's delays in posting new reviews allow it to scan for potential problems.

Going forward, there will likely be more opportunities for publishers, intermediaries and technology providers to help users gauge the validity of content.  In the meantime, the message of the Internet may be “Caveat Lector”, reader beware.

For database publishers, a key challenge has always been how to scale the business while maintaining quality.  Typical business publishers can effectively track ten or twenty thousand companies.  Outsourcing has enabled some publishers to perhaps double that, tracking fifty thousand companies, but research and data entry remains a critical obstacle to scaling data collection beyond those numbers.

A few startups have taken various approaches to shifting the editorial function to their users (a la Wikipedia).  Today, I add one such company, Jigsaw, to the 50 Content Companies that Matter.

Jigsaw, founded by Jim Fowler, is basically a marketplace for business cards.  Jigsaw’s gambit is that they will “pay you” 2-for-1 for any new contacts you can add to the database.  You simply key in or upload names from your rolodex and you can access the Jigsaw database free of charge.  For every 25 names you add each month, you can access 50 of theirs.  Or, for those who don’t want to bother with the uploading, you can simply subscribe to Jigsaw, paying $25 per month for 25 contacts.

As with any network-based application, achieving critical mass is a key point for viability.  Jigsaw is approaching that today, with 1.7 million contacts, growing another 10,00 per day.  Jigsaw has more than 32,000 members, a mix of “pay” and “play” (swap) customers.

Jigsaw has also applied some additional features, taking their cue from eBay and others.  To ensure quality, users may “challenge” any data they believe to be inaccurate; correctly challenging bad data rewards the user 5 points, good for one additional contact, the same as they would get for adding a new contact.  They have also added the ability for users to sell their points to other users via a Jigsaw marketplace.

A question that often comes up regarding Jigsaw is “who would share their best contacts with strangers”?  The answer, of course, is that no sales or business development professional would share their “best” contacts.  But, they’d be happy to share those which are no longer live prospects or customers for them.  In many ways, that’s the secret to Jigsaw – “one person’s trash is another person’s treasure”.  In glancing at my own contact database, I have about 1,000 people in it.  Of those, probably three-quarters are contacts who I am not actively working with at present.   However, most of the data is still accurate and they can be great prospects to many others.

Jigsaw has taken a unique approach to building and maintaining a massive database.  Their reliance upon users to add and edit the data enables them to scale their database without requiring an editorial staff.  Assuming that 25% of their 32,000 active users are paying the $25 monthly fee, Jigsaw is probably at a run rate of about $2.5M per year.  However, it’s likely that they can begin to sell corporate licenses to their data, providing eight-figure revenue potential. 

Jigsaw is in a strong market niche (sales prospecting data) with a unique and interesting editorial model and looks to have achieved the critical mass to make their database viable.  Based upon that, they are clearly one of the 50 Content Companies that Matter.