Michelle: In identifying these key strategic issues, I think it is perhaps important to first identify the customer. So, I'd like to know who the customer is for each of you.
Charlie: As an infomediary, our customers are those companies that have identified niches or communities, and applications for those communities where they know that community and how to market to it. They have the product managers who understand hospitals or sales forces, if they are selling into that arena. They understand Wall Street if they are selling into that community. Those are the people we look for. Those are the people who can maximize content into those communities. So COMTEX's value proposition back to the publisher is one. We are capitalists so we want to get the most we can for your content. The way I'm doing it is finding people who have built successful applications where my content plays an integral role. We focus on real-time newswires exclusively at this point because that has its own distinct value. It is about finding those people who understand the end-users and their needs.
Flip: I'm in a position to piggyback on these ideas, though I may say it in a different way. Our customers are specifically those who are building business systems that, for the first time, are not being used by their employees. We're in a category we think of as new growth in the information technology space called the extended enterprise, in which the real end-users instead of being in the 99th percentile employees of the company are, in fact, members of a community in the value chain made up of suppliers and customers. What our customers are trying to do is blend free information, proprietary or purchased information, with their own knowledge that may be contained within their own company. We work to find that magical formula by which they can present that information as an elixir to the communities they want to attract. Unlike internal systems where employees really don't have a choice and they can't complain that it doesn't entertain or doesn't provide value for them, because they'd get fired if they did that. Whereas a customer might complain and that would be a lost customer. And so what we try to do is provide not only access to the content, but the blend—the ability to combine all kinds of internal information that the enterprise has with the external information so that they can, in their unique way, create this special sauce that, when applied to their business systems, is the honey that draws the bee. They need loyal customers and can't get it any other way than by providing very valuable content
It is analogous to the fact that content can become the next advertising medium, in a way. The idea of an ad in the middle of content (like television) has lost its meaning. And we have an opportunity in this next generation to use content in an informational, entertaining way where the content itself becomes the glue. It's as if you made the commercial the glue as opposed to the TV show.
Don: So it's like a trade magazine, thinking back to the old days of PC Magazine or PC Computing. They were primarily composed of ads with a few articles interspersed, people then read the magazines to find out who was touting what kind of product and what kind of capability and even found it more interesting to read the ads than the articles…
Flip: I suppose to some degree there was enough interest in those early days where those ads did in fact carry some content value that may have overshadowed the articles. It is interesting that, in today's world, you find certain kinds of outreach mechanisms, entertaining advertising that does grab the attention. I think where the publishers are misinterpreting the statistics. Say you have a magazine, and I don't want to pick on anyone in particular, but let's say Business Week. Then say, that magazine's volume of subscriptions is going down and the blame they give is that it is because maybe that Business Week is immediately available online, basically for free. I think that misses the point entirely. It is not the reason. The reason why is that there are so many ways to get that information today. I think that whether it is online or in print may be irrelevant. Neither case may get the attention. It is not a replacement of one with the other. It is how much volume, and how do I get, in context, the pieces that I want. If you are going to get it from Yahoo! or some other purchased, in-context-delivered mechanism, it negates whether the Business Week itself is online or not. It no longer has the relevance compared to the aggregated, deciphered, in-context information.
Charlie: It's no more relevant than if it came via Fed Ex or if it came via the mail. If you just want the physical magazine…its really just about getting to the right person at the right time. If they like online and you're not there, or they like paper…
Flip: I don't like, in fact I think it is dangerous, as a publishing strategy to think, "oh gee, I made the blunder of putting my magazine online and that is what's causing the downturn in subscriptions." I would argue that is an absolutely minimal factor.
Charlie: We have that discussion quite a bit. We have one company that is in the newsletter business. My argument to them was that I reach personal and professional investors and I reach the enterprise market. I can get your stories, with your name on it, out to them. Their first response was that I was giving out their information for free. And my response was, no one is going to find and get all of the information provided in that newsletter. But making it part of our other products, like an M&A newsletter, where there happened to be an item about a merger between healthcare companies. Somebody in the healthcare industry just got a very good story with a lot more depth than a newswire story. That struck them [the newsletter client]. They'd created a brand. What they did originally, they gave us the lead story from each newsletter, but after two years they turned on all of the stories because it wasn't cannibalizing their other products.