Thursday, November 17, 2005

SIIA Brown Bag: The New Aggregation on the March. Shore Rates Survivability of Evolving Models

Hal Espo of Contextual Connections chaired a great panel on aggregation at today's SIIA Brown Bag, with panelists Ethan Eisner, VP of Marketing and Strategy for Corporate & Federal Markets, for LexisNexis, Alf Poor, VP of Client Services for Relegence Corporation, Debby Richman, Senior Vice President, Consumer Products for LookSmart and Larry Schwartz, President of Newstex LLC. While the videoconferencing was problematic in the beginning of the session, eventually the connection revealed some of the best practices motivating aggregation in today's content marketplace.

For LexisNexis, aggregation is increasingly responding to the "sea change" that they're hearing from their clients seeking value from premium content and focusing more content integration solutions, though LexisNexis continues to pursue lucrative content deals such as today's announced exclusive distribution of the Wall Street Journal to North American law firms. Integration of content from all sources is the future for LexisNexis, but they still rely on licensed content for most of their revenues. LexisNexis services a broad array of highly focused user requirements in the legal space and in the process of doing so with exclusive content is developing a value proposition that is ever harder to resist.

For Newstex aggregation is about adding contextual value to content from both free and licensed sources in a variety of formats in feeds to portals, publishers and institutions. In addition to adding stock ticker symbols Newstex has been honing its technology to tag news and weblog content with "people tickers" to associate content with individuals. This is a key factor for business intelligence applications and business information databases, which will benefit from Newtex' recently announced"Weblogs on Demand" service that tags high-quality weblogs the same as mainstream news content . Larry Schwartz sees user-generated media such as weblogs moving from about ten percent of their current content base to about half of it within two years, underscoring the importance of a more complex array of content sources needed to succeed in today's aggregation marketplace.

For Relegence aggregation is about developing a best-in-class business intelligence tool that is designed to filter content from a broad variety of premium, Web and enterprise sources into a common desktop alerting mechanism. With its roots in financial services Relegence focuses on low-latency content delivery and programming interfaces that can feed their sophisticated filtering output to other applications that can display content or execute various functions based on their analysis. While Relegence has recently announced a partnership with Dow Jones for a Dow Jones-branded intelligence platform for financial professionals they still see their future as an independent, agnostic provider of content services that provides value to content through highly effective filtering.

For LookSmart aggregation is about providing more value to online publications by providing effective vertical searches of free and premium online content in well-structured taxonomies that guide users to specific topic areas. LookSmart offers searches of open Web content but also provides a segregates search of articles from mainstream publishers, a relatively finite universe of content for which their taxonomies service audiences fairly well and drives up the value of their click-through advertising. LookSmart's Debby Richman notes that you don't have to own content to provide effective aggregation, though partnerships such as the recently announced availability of high-quality images from RLG's research library databases help LookSmart to help users to focus on the best of the Web without traditional redistribution agreements.

All of these are in their own ways excellent examples of The New Aggregation, the evolving business environment for content aggregation services that relies less on distribution control and more on focusing on specific attributes of content aggregation that add value to a user's experience of content in venues that they value most. But which models are most "survivable"? As seen in the recent acquisition of Moreover by Verisign, being a pioneer in The New Aggregation is no assurance of survivability. There will be only a handful of generalists in The New Aggregation dominating each attribute of aggregation, while others will select industry verticals and user roles that they can dominate with domain-specific knowledge of content and user needs. From this perspective let's look at the panelists' offerings and consider their roles:

- LexisNexis' focus on users in legal and justice markets allows them some sense of security, but as with most aggregators with traditional roots balancing old-world content licensing agreements with the more functionality-oriented expectations of today's users will put pressure on margins for some time to come. More integrators are getting skilled in legal content integration with workflow-oriented solutions that provide integration of collaborative content and other types of critical communications.
SURVIVAL RATING: Good, but they run the risk of being shackled to expensive and out-of-date content licensing deals that may limit the growth of true solutions positioning.

- Relegence's capabilities are highly polished and well-adapted to the real-time expectations of financial specialists, but those expectations tend to hem in many content technologies from focusing on a broader array of user needs and verticals.
SURVIVAL RATING: Fair, its functionality is well-honed by years of refinement by a demanding audience but those demands have made the product over-focused on a narrow range of requirements. They may require stronger partners to carry them to broader markets.

- Newstex faces the challenge of trying to add value to what is at its core a distribution model, but by focusing on their indexing expertise, value-add packaging and moving aggressively to enhance user-generated sources that others hesitate to tackle Newstex can position itself as a dominant supplier more in tune with the value points in today's content than traditional feed suppliers.
SURVIVAL RATING: Good, if they can maintain an aggressive pace of digesting sources untouched by others and developing value-add services tailored to advertisers as well as content acquirers.

- LookSmart offers categorized content from a finite and filtered universe of publishers and sources, which can benefit users and advertisers trying to find one another in quality content settings. But in spite of a savvy verticalization strategy its core focus on traditional ad-oriented sources limits the range of high-value tools that browsers and searchers may be seeking to solve questions that drive them to a search portal in the first place. You may get the right audience through a product like LookSmart, but whether that audience will return to you through them may be another question altogether.
SURVIVAL RATING: Fair. It's not clear that they can develop the right range of content for the right audiences in the right contexts fast enough to differentiate themselves in the eyes of users. Their Alexa stats show increasing per-user pageviews but soft overall traffic, indicating that pleasing advertisers may not be enough to drive revenue growth over the long haul.

So all in all The New Aggregation is honing content companies into new shapes that oftentimes resemble older business models but that have to be far more selective when choosing which attributes of aggregation are going to be in their best interests. Letting go of "owning" content distribution is just the beginning of finding a successful formula in today's aggregation. It's all about owning audiences in the contexts in which they value content the most at a given point in time. Those contexts and the venues in which they appear are shifting at a very rapid pace, even as new sources of content change the proposition of what audiences will be valuing as content sources a few months from now, much less in a few years. Unaddressed by the panel is the increasing power of personal content distribution and its impact on aggregation: if users and enterprises are the most effective content aggregators today, how do aggregators tap into those models more effectively? More to come, to be sure. Thanks to the panelists for a great session, and thanks to the SIIA for working to make webcasting technology a core component of making their own content more valued around the world.
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