Guest Column: Outsell Outlook
Along with the explosion of social media and user-generated content, the information industry continues to grow. Outsell predicts that the information industry will reach $448 billion in revenues by 2010, with a compound annual growth rate (CAGR) of 5.6% from 2007 to 2010.
Our research found that the information industry had aggregate revenues of $362 billion in 2006 and grew by 6% during 2005. The largest segment of the market, News Providers & Publishers (the only segment to experience flat growth), accounted for 37% of total revenue. Education & Training; Credit & Financial Information; and Search, Aggregation & Syndication were the next largest sectors, comprising 11%, 10%, and 9% of total revenue, respectively.
The overall growth rate of the information industry fell slightly from 6.3% in 2005 to 6.0% in 2006. This resulted in a CAGR of 6.2% for 2002 to 2006, compared to a CAGR of 8% for 2001 to 2005.
Despite overall growth within the industry, however, segments showed widely ranging revenue performance results. In 2006, growth of the industry was driven by Search, Aggregation & Syndication on the strength of online ad revenues. The HR Information segment was the only other segment to achieve double-digit growth. All other areas, with the exception of News Publishers & Providers, grew at rates ranging from 5% to 9%.
While the industry is experiencing growth now, we at Outsell expect slower industry growth through 2010, predicting a CAGR of 5.5% for the forecast period. There are a variety of macroeconomic drivers affecting our forecast, including the international GDP, which has served as a reliable bellwether for industry growth in the past several years. The lack of global cooperation on geopolitical and trade issues will continue to foster instability. (This has been a consistent trend, and as such its impact on economic growth and information industry revenues is lessened.) Growth in Asia will continue to be stable, despite questions surrounding the Chinese internal economy and manufacturing industry. However, we expect that its impact on world GDP and the information industry will be negligible during the forecast period. High energy prices and war in the Middle East will continue to create uncertainty for world economies. While depreciation of the dollar is expected to continue against some currencies, it should not have a significant impact on the information market in the next few years.
Publishers are using a variety of strategies to stimulate growth. We are seeing the following:
Diversification into niches: As online tools become more complex, publishers across a variety of sectors are finding success in choosing discrete areas of specialization, rather than trying to provide broad service ranges for large end-user groups.
Geographic expansion: Not only can new geographic markets offer opportunities to serve a new customer base with existing content, but content created within these markets can also be used to serve existing customers.
Integration of content into workflow: Creating and delivering software and tools that are tightly integrated with content and embed the information provider deeply in its customers’ workflow is the Holy Grail for publishers in a range of information segments from B2B to C&F to STM publishing.
Delivery of content to mobile platforms: The desire to access content via mobile devices will prove important in some sectors, particularly for financial information providers and for educational publishers serving an increasingly mobile student body. Content delivery will evolve over the next few years to encompass mobile platforms more comprehensively.
Extension of service offerings along the value chain: Rather than launch a new product in a new market, publishers across a range of market segments have been trying to gradually expand their range of services so as to provide offerings to customers that align to different sections of their value chain.
Ultimately, we believe the “meta-issue” for 2008 will be what we call “The Agility Imperative.” Essentially, information industry executives today are dealing with fundamental shifts in product creation, distribution, and business models driven by disruptive new technologies and nimble competitors born with e-DNA. The challenge for “traditional” publishers and media companies is to maximize productivity while investing in people and processes that will drive growth in the shift to digital. Success lies in publishers transforming themselves into highly adaptive, agile solution-providers, with the new mind-set and processes essential to meet today’s need for speed. Agility is a must for publishers to achieve and maintain velocity in an industry undergoing such rapid change.