========================================== Outsell's e-briefs September 26, 2003 A Weekly Analysis of Events and Issues Affecting the Information Content Industry ========================================== IN THE NEWS ----------- Speculation on Thomson/Wolters Kluwer At an investor conference in New York, Thomson CEO Richard Harrington said that Europe will be the target for much of Thomson's growth and acquisitions in coming years. He noted particularly that Thomson has ridden the waves of service industry growth and an expanding class of knowledge workers in North America, and that those same trends are taking root in Europe. Analysts at Delta Lloyd Securities seized on that news to bump up their recommendation on Wolters Kluwer stock, on the belief that Harrington's announcement signals an increased likelihood that Thomson will make a bid for Wolters Kluwer. Wolters Kluwer's share price is down more than 30 percent since a year ago after a weak first half, while Thomson's is up 20 percent, making potential acquisition funding more favorable for Thomson. Over 50 percent of Wolters Kluwer's revenues are from Europe vs. only 18 percent for Thomson, so an acquisition would achieve the goal of expanding Thomson's European presence. However, the regulatory issues around such an acquisition would be huge. There would likely be an uproar in the buying community and strong attempts to block any such transaction as anti-competitive. The Outsell 100(sm) Bottom 10: Nowhere You Want to Be Auditors for Comtex News Network have declared that recurring operating losses and deficient working capital raise substantial doubt about its ability to continue as a going concern. Comtex has been drastically implementing cost reductions and plans to continue reducing operating expenses by implementing a lower-cost technology infrastructure and reducing its workforce, but it has shown little inclination to change its basic business. In recent quarters, Comtex has been hanging out in the Bottom 10 of the Outsell 100, our index of Information Content (IC) Industry performance. Just as the overall industry's five consecutive quarters of growth make it a leading indicator for general economic growth, the Outsell 100 Bottom 10 list has become the place not to be. Four of its repeat members are so wrung out that they face takeover and/or stock exchange de-listing (Penton, IRI, and RWD Technologies are the others). On the other extreme, new data shows that the Outsell 100 Top 10 is clearly the winners' circle. This selection of 10 companies provides benchmarks and models for the industry, having grown 32 percent over same quarter 2002 and boasting a 33 percent operating margin. Paid Consumer Content Spending on the Rise - Or Is It? The Online Publishers Association, an industry association made up of the new media units of traditional media companies, released its most recent data on consumer spending for online content. The OPA's data shows that spending grew $748 million for the first half of the year, a 23 percent increase over the same period last year. A number of commentators have questioned the scope of what the OPA calls "content"; the $743 million includes spending categories such as greeting cards, streaming audio and video, games, and an astounding $214.3 million in the personals/dating category. We wonder why pornography was left out - that would give the OPA some really BIG numbers. The point is that defining content is a slippery business. The nature of the Internet makes the boundary between content and services blurry indeed. If the point of the study was to show that people are spending buckets of money online, it succeeds. If it was supposed to show a link between that spending and the success of the traditional media companies that are behind the OPA, the link is more tenuous. LexisNexis Beefs Up Company Dossier There's a small arms race going on among the company information products of the big aggregators. A few weeks ago, Dialog beefed up its Company Profiles product with new content from its sister company Gale, and new search interfaces. Now LexisNexis is enhancing the content in its Company Dossier service. A significant addition is the robust collection of legal and public records data that is finally being tied in to company records. The overall interface has been upgraded and comments from Outsell clients are positive. We're seeing heightened competition for business applications among the big aggregators Dialog, LexisNexis, and Factiva. At the same time, however, Web-only players such as Hoover's, EDGAROnline, and scores of free sites still provide great information for free or low cost. The challenge for the higher-end players is staking out the specific user applications where their more robust content is needed. INFORMATION BY THE NUMBERS -------------------------- Instant Messaging: Quicksand or Life Vest? A recent study by Blue Coat Systems highlighted some of the other challenges presented by Instant Messaging (IM) in the workplace. Thirty-two percent of the Brits and 15 percent of the Yanks who responded to the study said they spend a half hour or more per day using IM. Most revealing were the uses to which the technology is put: 78 percent have used it to gossip, 64 percent have used it to lodge their opinions about senior management, and 52 percent have found it a good medium for complaining about customers. Sexual advances, sharing music files, and pretending to be someone else were also popular IM applications. With all this foolishness going on over their networks, should companies be cracking down on IM? We've had a small internal debate of our own on the topic. Some see e-mail, IM, and other technologies as huge workplace time-wasters. As one Outsell colleague put it, why do we keep adopting technologies that seem to make communications faster and easier, but not better? On the other hand, IM has been adopted as a workplace tool, like it or not, and since time immemorial, employees have found ways to do personal stuff on the job. Certainly the telephone was originally seen as a huge potential time-waster. What's really going on today is that technology has enabled, and many companies encourage, 24/7 participation in their work, so the separation of work and private life has almost disappeared for many. Using IM for personal business is inevitable. The productivity issue is not so much around the personal business aspect, but the way these technologies encourage urgent, busy, reactive behaviors. Meanwhile, as with any new communication medium, there is a pot of gold for the company that can figure out how to mine those millions of IM messages and turn them into actionable knowledge management depositories. ============================================================ We want to hear your feedback, and we want to publish your comments on the events we cover in e-briefs (anonymously if you prefer). 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Founded in 1994, Outsell helps world-class content vendors, Global 2000 companies, government agencies, and leading educational institutions increase their understanding of users and end-markets, assess content quality and effectiveness, benchmark operations, hire and retain executives, and develop more successful internal and commercial content products and services. ============================================================ Outsell, Inc.'s information, analysis, opinion, and reports (the "Information") are based on qualitative and/or quantitative research methods and its staff's extensive professional expertise in the industry. Outsell, Inc. has used its best efforts and judgment in the compilation and presentation of the Information and believes the Information is accurate as of the date furnished, but the industry and the Information are subject to rapid change. 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