Monday, November 30, 2009

Google Scholar Takes On Legal Content: Are Enterprise Suppliers Threatened?

When Google Scholar launched five years ago on the Web, its aggregation of freely available scientific literature and citations launched some sizable seismic activity in publishing circles. All of a sudden, content that had been aggregated only via expensive subscription database services was available for free and accessible as easily as any Web page. Five years later, Google Scholar has expanded to include most freely available academic research sources, as well as abstracts from subscription sources and public patent records and is an increasingly popular resource for researchers and students. However, major aggregators of scientific publications still remain successful, in large part because they continue to develop more sophisticated search and display applications and, well, because time has been on their side. Pressures from Open Access advocates who press for free access to scientific research and an increasing array of applications built using Google Scholar as a source have begun to open major cracks in the barriers to entry into scientific publishing markets, but the people in charge of enterprise purse strings did not use Google Scholar in their university days. So, in spite of budget cuts. the status quo remains largely intact for many scholarly publishers.

With this in mind, some reasonable skepticism is probably in order as Google announces the launch of a new Google Scholar service that makes full text legal opinions and legal citations available for case documents from U.S. federal and state district, appellate and supreme courts. Public records are becoming more commonly available in general thanks to both Google and other publishers that see opportunities in generating value from public content, so this move should come as no major surprise to anyone. Yet this first major foray by Google into legal content is surprisingly strong - and may be the beneficiary of better timing than earlier Google Scholar product improvements. While legal publishers will rest soundly knowing that the search capabilities for legal documents in Google Scholar are limited to simple "white box" queries, they may not be so tranquil when they look at the results themselves. Documents are rich in links to legal references in the cited documents, a capability that has been for many years one of the key calling cards for legal databases.

Things get even more interesting when you look at the citations tab that is available for each located legal document. Google Scholar offers you brief, in-context snippets of how a case was cited in key documents, as well as comprehensive listings of citations in court documents and documents related contextually to the selected document. While that's far from the full capabilities that a LexisNexis or Thomson West offer to their professional clients, it's pretty much pointed at the core of their database offerings, nevertheless.

The Above the Law blog has a good summary of analysis and reactions from both legal experts and publishers, but I think that the most salient point comes from Social Media Law Student, which points out that this freely available information is likely to become a "go-to" content source for students who may not have ready access to subscription-based content sources. Looking at the offerings coming to market from Lexis.com, though, which I walked through recently as a part of my SIIA CODiE judging for Best Aggregation Service, it's not as if LexisNexis isn't aware of this "digital native" culture gap, as they try to index both public documents and freely available Web content to make it more accessible to legal students and professionals.

The threat that Google Scholar's new legal content represents to established publishers, though, is the exposure of a huge body of public documents to applications builders and content services. Much as Google Books' scanned out-of-print library holdings have created a resource for ebook platforms from the likes of Sony and Barnes and Noble, this new initiative from Google opens up more cost-effective competition for legal services publishers who may want to attack legal markets from new and innovative angles using Google Scholar as a resource. Some of the innovators may be startup companies in the mold of Collexis, which leveraged publicly available scientific content to showcase their innovative content discovery tools. Others may be business information competitors in adjacent markets, who may see a way to pick off some of the "low-lying fruit" using core legal content maintained by Google.

None of these really add up to a significant challenge to either LexisNexis or Thomson West in the short run, but they will tend to hold down their margins as they lose some market share and lose leverage at the negotiating table at contract renewal time. What this does add up to, though, is a strong case to have professional-grade legal information services more integrated into a far wider array of business information sources to support enterprise decision-making on many levels. If digital natives will have increased access to well-integrated legal content, the high end of legal information markets will need more unique content and integration across a fuller range of business information sources to justify premium prices.

As I mentioned earlier on ContentBlogger, I do think that Reed Elsevier would be smart to consider selling LexisNexis at this time in anticipation of this likely consolidation - or, alternatively, expand its business information holdings to build a broader base of services for LexisNexis. I think that the former is more feasible than the latter given current market conditions, and would enable Reed Elsevier to cash in on the still-formidable value of LexisNexis before it begins to lose significant market growth potential. Thomson was able to spin off its print assets near the peak of their value before print publishing markets ran aground, a trick that Reed Elsevier was not as fortunate in managing in the sale of its Reed Business Information publishing assets. Google's new legal offerings are not a death knell for premium legal information services, but they are a canary in the coal mine for database services based on public legal records. We'll be watching this space carefully in the months ahead.

Friday, November 20, 2009

Making More Pies: The "Google Phone" and Chrome OS Aim to Expand Content Markets

It seems as if there's hardly a week that goes by lately without some major announcement from Google, Microsoft and other technology providers that has major repercussions for the content industry. In the past week, we've had not just a major announcement but a major rumor surfacing anew that has me thinking about how Google's strength as a marketing organization is in defining new markets that others are often unwilling to develop. In other words, where many publishers and technology companies focus on gaining slices of the same old market share pie, Google seems to be becoming the leader in defining whole new kinds of content markets to bake.

On the product announcement front, Google used the unveiling of its Chrome OS operating system as an open source platform to give a quick demo of its still-developing features (video). As I highlighted in ContentBlogger in July, Chrome OS, targeted for release next year, will be a computer operating system expressly for devices such as netbooks that use mostly Web-oriented content and applications. The result is a machine that can operate with minimal local data storage and that can boot up to a login prompt in seven seconds and get on the Web in just a few seconds more. So in less time than it takes the typical mobile phone to get ready you can access Web content and applications easily.

The Chrome OS interface is no real surprise to those already using Google's Chrome browser to look at the Web - it is, in essence, the same. There is a permanent "tab" open to allow one to start applications, which operate in tabs much the same as Web pages do currently in the Chrome browser, or you can have the applications pop up from the bottom of the display as "panels." Web links can activate apps as well, such as in the above display, which shows a music clip on MySpace playing after clicking a link on a Google search results page. The demo also showed how data in the Chrome OS "cloud" from any tabbed window can be pulled into Google Docs for more sophisticated manipulation and how games and ebooks from Google Books can be viewed easily and stay as persistent content in a given tab or as full-screen applications.

People expecting the "wow" factor that Microsoft or Apple has tried to engineer into its most current operating systems are likely to be underwhelmed by Chrome OS, a non "wow" factor that was echoed in a recent poll that I conducted in Google Wave. In the poll, only a plurality of people felt that Chrome OS would have a major impact on computing in two to three years. After all, who is going to get excited about an operating system that looks and acts just like today's browsers? I think, though, that this is where the pies come in. With only about a fifth of the world's population having access to the Web, Chrome OS as an open operating system is perfectly positioned to help the other five billion people who do not have Web access to build content in the clouds very cost-effectively. Most of these people will never see a PC in their lives and will find a Chrome OS device to be perfectly adequate. Of the 1.4 billion people who have access to the Web already, most of their time is spent on the Web anyway. That leaves Apple Macs and devices using Microsoft Windows 7 to go after the relatively affluent and sophisticated markets that have a lot of sophisticated gizmos in their homes and enterprises, a significant market, to be sure, but one in which the need for content outside of the cloud will be a diminishing factor. All of a sudden Chrome OS has the ability to make the entire PC-based marketplace look like a niche market.

Underscoring this positioning of an expanded global cloud as an expanded marketplace pie is the recent repackaging of the "Google Phone" rumor by TechCrunch. If Michael Arrington's latest "confirmed, super-high confidence information" is to be believed, Google is going to start advertising a Google-branded mobile phone device in January that will be built by an OEM hardware partner to Google's own specifications. In the short run, one assumes that this will be an "apples-to-apples" competitor for Apple's iPhone, supporting applications and Voice over IP telephony in a way that is less compromised than Google Android implementations found on smart phones released so far. But with heavy investments in Google's Android operating system by handset manufacturers such as Samsung, HTC and Motorola and a still-fragmented U.S. mobile market to navigate, it's doubtful that such a "Google Phone" is going to make enormous headway in developed markets any time soon based on just these features.

Instead, the more likely play for Google's potential phone device is a new market altogether: ad-supported mobile VoIP telephone and Web access. In other words, in the middle of a global recession and with a huge number of people who have yet to touch either a mobile phone or the Web, what better price point for a mobile phone service could you have than "free?" The features of Google Voice already await people needing voicemail and phone call redirection, so people falling off of telephone calling plans as the economy continues to tighten may see access to phone calls through ad-supported broadband and Web "hot spots" to be a "good enough" telephony and Web combination while they await funds to get more high-powered services from major telephone carriers. For those who could never afford or deal with mobile Web access, the Google Phone may offer a simple and affordable way into mobile communications that would be a stepping stone to a Chrome OS-powered netbook device.

All of this in the short term is likely to be fairly underwhelming stuff for people looking for the "what's in it for me for better results this quarter" solution to all of their content market problems. But in a sense that's the exact point. Google is one of the few companies in the content and technology industry that has been investing very patiently in long-term market development goals that will broaden their potential revenue base by huge magnitudes. Others have been innovators, to be sure, and profitable in their own right. But by plodding away at technologies and content services such as Chrome OS, Android, Google Apps, Google Wave and Google Voice, and by continuing to refine existing services such as its search engine, ad networks and YouTube videos, Google learns how to build a larger market in which they can satisfy at least 80 percent of its daily needs.

As Google expands into developing nations and "digital natives" markets more rapidly than many of its competitors, the slice of the "old" 20 percent that can be satisfied by more specialized technologies will continue to look smaller and less powerful as a content market play. With everything to gain and little to lose, Google's greatest barrier to competitive forces is the unwillingness of its competitors to risk everything to play on the same ground. The sophisticates who follow the content industry will continue to be underwhelmed by many Google products and services - until they recognize that in large part it is becoming the content industry as we will know it.

Monday, November 16, 2009

Darn, Why Did They Think of It First? News Media Companies Adapt to Online Value Points

I have to chuckle a bit at the recent Poynter Online email interview with Wikimedia Foundation's Jimmy Wales, in which he discusses an internal memo gleaned from Associated Press (PDF) by Nieman Journalism Lab. The AP memo, entitled "Protect, Point, Pay - An Associated Press Plan for Reclaiming News Content Online," covers a lot of ground already familiar to those following AP's efforts to put in premium packaging for news content. However, in addition to conjuring up long-standing concerns about Google and other major search engines as competitive forces, the memo also highlights AP's concern about the millions of topic-oriented pages in Wikipedia that are capturing traffic when people search for breaking news. At last the light bulb begins to go off in some minds that perhaps the issue is not so much search engines but that search engines are directing people towards the most popular destinations for specific topics. Hmm, perhaps this might have something to do with...the quality of the content that they find there?

The AP memo points out that Wikipedia articles are rich with links and structured content that drive people to other trusted information sources, a concept that the memo suggests could be adopted by the AP for its own content. As Wales points out wryly, though, "Creating authoritative canonical pages based on the latest from the AP sounds like a good idea they should have implemented years ago." In other words, after more than five years of Wikipedia building both its content and its brand as a "go-to" source for freshly updated topic-oriented content that dominates search engine results, it dawns on some folks in the news business that perhaps there's a business model in there somewhere. Layer in the growth of online portals that are aggregating links to top topics content more effectively, and one wonders just what people are going to be willing to pay for those carefully designed hNews objects that AP is hoping to use to "reclaim" the news business.

The answer to that wondering seems to come in part from a recent study on consumer attitudes towards premium news content by the Boston Group highlighted in The New York Times. The study indicates that fewer than half in the U.S. are willing to pay for news content online and that of those who would be willing to pay the preferred tariff weighs in at about $3 a month. This seems to line up with long-time assertions by Journalism Online's Gordon Crovitz, who claims that premium news sites can expect to be able to charge for about ten percent of their online content. I've noted oftentimes that a system for managing access to paid content is long overdue, but news organizations should take a hint from the payments being extracted from iPhone apps and recognize that online markets reward functionality and community input that meets personal needs more than it does deathless prose and a good network of inside contacts.

A topic-oriented Web site for news content sponsored by AP would be a good idea, but one wonders whether AP or any other news organization is up to the task of building both the content and the brand necessary to contend in search engine wars for their audience's attention. At the same time, AP's emphasis on "protective" content packaging as a means to establish fair licensing of AP content seems to miss the real revenue opportunity available to AP and other news organizations. When a publishing-enabled global audience is your most effective distribution mechanism, a strategy of "joint supplier negotiation" suggested by the AP memo is not likely to succeed.

What is needed for AP and other professional news organizations to succeed in online content licensing is a system that encourages the distribution of their content through the most efficient and popular channels available at any given moment. Instead of fighting your audience, empower and encourage your audiences to be distributors of your content - and help them to profit from it as well. Highly automated content licensing with a billing mechanism akin to mobile phone usage units - and that can help individuals to profit from AP content when it's appropriate - is the key to this concept, and should be the cornerstone of AP's premium content strategy.

With such a scheme in place, AP's members can focus on beating the competition at their own game by becoming the most effective agnostic aggregators of news content in any given market. Yes, news organizations will continue to staff up with their own editorial resources, but the news of today - and tomorrow - needs to collect the best content from whatever source that it comes from more effectively than the competition. You can have some exclusive content, to be sure, but exclusivity alone cannot power success.

This can be seen clearly in how information providers in the financial industry are required to aggregate content from as many different sources as possible to help information-hungry decision makers. Over time you may develop unique assets, but the fundamental game is giving people what they want, where they want it, when they want it. If you yell at your markets for wanting to play a different game, don't be surprised by the blank stares that you get before they go to pay attention to people who listen more effectively.

I do hope for the sake of professional news producers that AP does come up with an effective content distribution strategy, and there are some hopeful outlines in the AP memo to that effect. But the largest thing that needs to change in the AP strategy is their attitude, which still treats the Web as an object of fear and scorn. More than 1.4 billion people around the world seem to feel otherwise about electronic content, people who both consume and contribute value to the news gathering and distribution process. It's time for the AP to recognize that their mission needs to embrace those 1.4 billion people more effectively if they are to value their brand and their content enough to consider seriously the prospect of regular payments for it.

Friday, November 13, 2009

Business Information Consolidation: D&B Pursues InfoGroup to Diversify Offerings

While business information remains a robust market segment in the content industry, it has not been without its challenges in recent years. Increasingly rapid changes in organizations and careers trigger demand for ever-fresher information on companies, people and products, making services that can help it to be found and used effectively critical to most business operations. What was once an industry of bulk data, mailing lists and a few integrated company reports is now a market that demands integration of business information into sales and marketing platforms, strategic dashboards and all-in-one online services.

It's no surprise, then, that Dun & Bradstreet is among the companies mentioned by Reuters putting in a bid for infoGroup, the Omaha, Nebraska-based business information service that produces mailing list services and OneSource, an integrated database of global business information sources targeted at major corporations. D&B finds itself in the awkward situation of having a "gold standard" reputation for its core company information listings but relatively few options for it to leverage that information for greater profits in its own operations. D&B's Hoovers online business information service is doing well in capturing users in small and medium organizations with a mixture of subscription and ad-supported services, but that leaves larger organizations and bulk data services to others - including its parent D&B.

While the infoGroup bidding process could go any number of ways, including a "no-sale" decision, my guess is that we're very likely to see D&B come out on the top of this process. D&B and infoGroup have much to offer one another, in terms of both operations abilities and markets. For infoGroup the pluses it brings include a huge wealth of business and consumer contact data, its ruthless efficiencies in driving out costs from data acquisition and maintenance and a OneSource platform that brings together a very broad array of high-quality business information sources in both its own online services and in enterprise platforms such as CRM and business intelligence portals. For D&B, its company ratings, profiles, Hoover's online savvy and its highly respected brand and enterprise sales and support organization would combine to provide a parent that could build a far more complete portfolio of business information services. No merger is perfect or without pain, but this looks like one that will create some pretty strong market mojo.

And it will take some mojo to keep up with the changes in the business information market over the next few years. The emphasis on business information services is on integration, real-time freshness and usefulness and having all of the sources at your fingertips needed to make decisions about corporate strategy, sales and marketing. Companies like Axciom and Experian are expanding their footprints in business information services rapidly, making an expansion of D&B's overall profile in business information services a priority if they are to leverage their brand effectively. And in the wings are expanding business information services from Dow Jones, and probable expansions by Thomson Reuters as well - with perhaps even an acquisition of LexisNexis assets from Reed Elsevier in play. Throw in younger business information brands such as Jigsaw, InsideView and Zoominfo beginning to cater to not only online-aware companies but core corporate markets as well, and you can see that business information is not a sleepy content market sector by any stretch of the imagination.

This appears to be one of those situations where two companies with both the right needs and the right level of maturities in their operations and management come along at the right time. It took a few years for infoGroup to whip its properties into better shape, and it's taken a few years for D&B to integrate Hoover's operations effectively and to identify the greater opportunities for their products and services. Here's hoping that these two companies find that their fits are as complementary as they appear to be.

Wednesday, November 11, 2009

Cutting Losses: Smith Bows Out as Reed Elsevier CEO

In a move that shocked many B2B media insiders - including Incisive Media CEO Tim Weller - global information provider Reed Elsevier has announced the resignation of their CEO Ian Smith, to be replaced by Erik Engstrom, CEO of their Elsevier division. While early speculation from FT's Alphaville blog depicted the management shift as "a proper executive-level knifing," more considered comments from industry analysts and insiders in The Independent seem to indicate that Smith was falling on his own sword in recognition of some major challenges not easily resolved by someone with limited media experience. Three key factors were arguing strongly for changes at Reed Elsevier sooner rather than later: the selloff of Reed Business Information assets had stalled, pre-tax profits were down 52 percent in half-year results and investors lacked confidence in both projected earnings and Smith's aggressive recapitalization efforts. With Smith's mentor Jan Hommen having departed from Reed Elsevier's board in January to head the ING bank, a graceful exit was probably in order.

For all of the corporate drama that this move has generated, it's easy to forget that Smith's move to float more stock to reduce debt and to fund Reed Elsevier for more aggressive organic growth was a very sound move, even if it is one that displeases investors in the short term. The real question is whether Engstrom will be up to the challenge of using that capital effectively in a struggling economy. Certainly Engstrom's Elsevier unit is the most effectively positioned business unit in the Reed Elsevier empire today, with deep and widely successful enterprise information products and a growing folio of academic and scientific publications. Yet as relatively strong as Elsevier may be, growth will be a major challenge for Reed Elsevier, even if the economy is laid aside as a contributing factor.

The key problem that Engstrom faces is that few of the tricks that have worked for Reed Elsevier in the past are likely to lead to growth in the future. B2B magazine publishers over-romanticized the likelihood of revenues from traditional channels in the face of massive changes in online information delivery and were therefore ill-prepared to adjust to cutbacks in events attendance and slimmer online ad revenues. At the same time growth by title acquisition, licensing and data integration was making for a relatively rosy top line for Elsevier and LexisNexis but failed to leave enough room in budgets after debt and development costs to fund new product development. Fairly aggressive staff and operations streamlining at LexisNexis have improved the outlook for their business information operations somewhat, but the overall forecast for both LexisNexis and Elsevier highlights modestly incremental product development.

On the surface the smart approach would seem to be to "Glocer-ize" operations at Reed Elsevier as rapidly as possible. Thomson Reuters CEO Tom Glocer moved rapidly in recent years to pare away redundancies and legacy products with limited upside and to focus operations on enhanced integration of enterprise content services across their holdings. Unfortunately there are far fewer synergies available between LexisNexis and Elsevier than those found in Thomson Reuters holdings, with the cultures of the two divisions still remaining miles apart, both literally and figuratively. With ever-broadening competition for the core content licensing services of LexisNexis, including more aggressive development of Dow Jones' enterprise information holdings, Reed Elsevier looks increasingly like a company with one fairly stable boat and three heavy anchors failing to find a bottom.

While speculation remains in the air about a possible move to merge Wolters Kluwer operations in to Reed Elsevier, the more probable short-term solution would seem to lie in disposing of some or all of LexisNexis as promptly as possible while its asking price is still worthy. One possible solution would be to spin off LexisNexis operations to Thomson Reuters or Dow Jones to bolster their competitive positions in legal and business information. Thomson Reuters would be a better strategic fit overall for a spinoff, especially if Thomson Reuters could flip back some or all of its scientific holdings to Reed Elsevier, but regulatory concerns about merging LexisNexis into Thomson West would probably make a wholesale spinoff to Thomson Reuters doubtful. A more probable resolution to overcome regulatory hurdles might lie in offering LexisNexis legal assets to Dow Jones and its news licensing assets to Thomson Reuters, which has lacked archives depth since returning its interest in Factiva to Dow Jones.

Whatever the specific solution may be, Reed Elsevier needs cash to focus on building up its scientific and medical assets for growth as rapidly as possible. Cheap financing as a means to grow stables of titles is off the menu for a while, thankfully, so Smith's forecast for organic growth requires an acceptance that it will have to come by focusing far more aggressively on its Elsevier division. Elsevier is not without its own challenges - scientific publishing faces strong pushback from corporate and academic libraries that find it increasingly hard to afford the full range of journals that most publishers offer - but both scientific research and applied sciences are markets still crying out for productivity gains that would warrant increased product investments. By contrast, productivity in legal markets are moving away from many of LexisNexis' core database strengths, which would benefit from more integration with other platforms.

There's always the possibility that Engstrom may decide to go for short-term gains and shuffle the Reed Elsevier portfolio just enough to tweak out a year or two of decent earnings. Here's hoping that he finds the courage to make some very tough decisions as to what is likely to provide the best returns for Reed Elsevier investors in both the short run and the long run. Moving on a sale of LexisNexis, by far the most attractive disposable asset available from Reed Elsevier, will enable them to take advantage of its value while it still has some attractiveness in the enterprise information marketplace. Without further integration of their information with financial market information and successful media operations, LexisNexis is not likely to contribute significantly to Reed Elsevier growth for some time to come. We'll see how Engstrom decides to cut his losses, but here's hoping that his moves help to strengthen both Reed Elsevier and enterprise information markets overall.