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Monday, January 31, 2005

Content Industry Outlook 2005 : Success Models

The Shore group has come with an excellent report on the outlook for the year 2005 for the content industry.As the year 2005 starts the rubble of old business models that began to come tumbling down in 2004 is being pushed aside to make room for new business models that span old categories and define highly profitable niches where profits werenever imagined before. Shore sees four key areas where the rapidly shifting action willunfold in creating and expanding these new models: cooperation, commercialization, containerization and consolidation. Excerpts with edits:

In 2004 we watched the "walls come tumbling down" as new and reconfigured players asserted themselves in professionally-oriented content.Barriers crumbled between publishers and the content and technology partners that are succeeding where many traditional providers have stumbled or stalled, creating opportunities for new and more potent business models to assert themselves far more aggressively than ever before.

Cooperation : As so many new models for success have migrated from the control of major publishers and aggregators to new suppliers of content value, pure power plays are going to be few and far between in 2005. Content value is increasingly unchained from specific platforms and technologies in most instances. This makes specific technology alliances very fluid instruments in a greater model.

Commercialisation: Consideration of new and additional monetization models is a must for these vendors in 2005. The wary stance taken by many publishers contrasts with outlets such as Google that pushed head-on in 2004 with fearless new ways of monetizing content. This underscores the need for content suppliers of all kinds to leave no money on the table in 2005 – a concept that applies not only to premium content

Containerization: With content flowing into more types of user venues than ever before, having content that is not locked into specific venues is more important than ever. Peer-to-peer networks, RSS feeds, XML-based Web services, eBooks and portal-driven intranets are successful venues in which the formats provided for content allow it to flow easily from venue to venue at the behest of subject experts, content enthusiasts and content technologies.

Consolidation: While innovative content and content technology companies are proliferating again, key parts of the content story in 2005 will be written by companies that are able to absorb and convert content from behind-the-times suppliers into more efficient and profitable services and venues. Many journal, newspaper, database and magazine publishers failed to anticipate the rise of online production and delivery in 2004 as the irrevocable center of future profits.

Rights management: This area will escalate into a full scale free-for-all between authors, producers, publishers, libraries, distributors and technology players,accelerated by Google initiatives in expanding the realm of searchable content, from books to scientific publications and video. From a technical viewpoint, search engines open up access to a much broader breadth of content, but the bigger issues are the ownership and monetization of that content. Creating content costs money, so the owners rightly expect compensation for their labor, but this reality blurs in the digital world. “Free” access to content for marketing and advertising purposes (the Amazon model) is hard to distinguish from checking out a purchased eBook from a library.Even with purchases, monetization in the form of royalties takes on new aspects. In the traditional publishing world, subsidiary rights pay lower royalties to authors than hardback book rights, but in fact may be more valuable in an electronic world.

Importance of policy: Organizations, particularly businesses, will be forced to set explicit policies governing use of the easy to use technology for creating blogs and RSS feeds. The issues are very different, depending on the context. The most visible form has been citizen journalism which has the same feel as the earlier Free Speech movement in Berkeley, celebrating the individual and their right to freely express an opinion.

Existing business models are not going to disappear in 2005, but 2005 may be the last year in which vendors can capitalize on new revenue flows based on the rapid growth of contextual online advertising, rich data and technology-oriented product and services sales in time to stave off future revenue crises. Many of the more advanced content vendors have counted on smart workflow integration products to get their content value propositions back in line in the institutional space, for example, which has helped to steady sales and cement relationships. But 2005 will be a year in which the question, "What business are we in, anyway?" will call successful workflow products and rich data offerings from content vendors into stronger question as a long-term solution to more fundamental revenue issues surrounding licensed content and traditional delivery services.

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