Changing Channels: The Importance of Identifying The Best Content Distribution Channels

Nov 01, 2002

November 2002 Issue

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In their book Blown to Bits: How the New Economics of Information Transforms Strategy, Boston Consulting Group executives Philip Evans and Thomas Wurster describe how Encarta, the Microsoft encyclopedia given away with new computers—containing content from the Funk & Wagnalls encyclopedias once given away in supermarkets—devastated sales of the print-base Encyclopedia Britannica, distributed largely through a direct sales force.

Evans and Wurster point out several morals of the story, including "new information technologies can come from nowhere and demolish brands and businesses that have been established for decades, even centuries." There is, however, an even simpler and more obvious moral: Choosing the right distribution channel is crucial to the success or failure of a content product.

Blown to Bits was written before the downturn in the economy and the dotcom crash dimmed the seemingly limitless potential of information technology to make the traditional business environment obsolete, but the ability to identify the best distribution channels has never been more critical.

Bill Burger, vice president and lead analyst for the information-industry research firm Outsell Inc., points out that "the many licensing opportunities that existed two to three years ago are gone, and many content creators are seeing their licensing royalties decline. They're declining both from their existing outlets and from outlets that have disappeared in the dotcom crash, so there certainly is a lot of pressure for companies trying to match their earlier licensing revenues and even grow that business."

"They're under tremendous pressure," Burger added, "and I think that's requiring content owners to think more creatively and more flexibly about possible outlets for their content, and perhaps to look more closely at the licensing deals they have or the ones proposed to them, in terms of their terms and conditions."

So does that mean you should seek deals with a syndicator, an aggregator, or some other type of infomediary? Should you partner with a portal or create your own pay-per-view or subscription-based service? Should you focus on the enterprise market or brave the open Web?

Of course, finding the answers to such questions depends to a great extent on the type of content you want to distribute. Here's a look at some possible answers for three specific content types: news, market research, and internal corporate information that may have some value to a larger, external audience. Of course, many of the considerations that go into choosing channels for those content sets are applicable to other types of information, too.

Choosing a News Channel
News is probably the most ubiquitous type of online content, and opportunities for new news-based products in any distribution channel are especially limited in the current climate.

"There are still opportunities for name-brand publishers," says Elizabeth Karolczak, president of the syndicated content broker OSKAR Consulting. "There are not many opportunities at the moment for 'nice-to-have' rather than 'must-have' content. Everybody has tightened their belts, and the general news category, which was selling two or three years ago because so many companies wanted to create employee news portals, isn't a very easy sell now."

But there still may be opportunities for topical news in niche markets. You may be able to hook up news centered on a specific topic with a relevant portal. That market "definitely is significantly smaller than it used to be," Karolczak said, "but it is still there to some extent. It's a matter of putting the right content together with the right Web site, so what the site has is really relevant to its readers. I do think there are sells to be made in that area."

Karolczak said OSKAR Consulting's Content Finder service— designed to help people who need third-party content search for providers by topic, content type, language, demographic audience, or publisher—has received "quite a few inquiries from people who are putting together Web sites and want a certain category of content, but it's a matter of fitting the right piece into the puzzle."

"We recently did some analysis of what kind of searches are done on our site," she added, "and one of the top ways people search is by demographic audience, so they're saying, 'I want to see the content you have that would be appropriate for IT professionals or for advertising agencies.' It's not searching for content by topic, it's 'What do you have that would suit my audience.' That's really key."

According to Karolczak, the handheld market also offers opportunities for providers of news and related products, especially if the content is focused on a specific geographic area. "For those who have location-based content, providers of, say, event information or restaurant databases, those types of things do have a chance, especially if it is non-U.S. content. I'm getting inquiries for it, but people don't seem to know where to get it."

Though it can be a tough sell, there also still may be opportunities to partner a news product with an infomediary such as COMTEX News Network, where, according to CEO Charles Terry, business has recently picked up.

"New deals are being signed," Terry said, "which is nice change from six months ago. It was pretty much dead from July [of 2001] to probably February. Everybody was just sitting back and watching, but we're starting to see new deals come in. So, based on various demands from prospects and customers that are growing, we are looking at opportunities for real-time news."

"If content focuses on business and finance, we have a built in market for it," he said, "and it might matter if it's geographic coverage. We've got almost 80 real-time news sources from all over the world, and sometimes they're successful because they offer different perspectives on world events or the financial markets as opposed to just providing what the U.S. dominated news services have to say."

Marketing Market Research
Market research and reports may have a better chance than news in the enterprise market and other channels because it is appropriate for decision-based applications.

"It's targeted and someone is going to make a decision based on it," Terry says. "It gets back to where are people spending money today: They're spending money where they can save money, where they can be smarter, where they can make better investments, and where they can respond better to customer service."

Karolczak says she also sees opportunities for market research products. "We've had quite a bit of success with hooking our market research providers up with sites that have an audience that would buy them, having the sites act as resellers for documents, and doing electronic document delivery. There's a Canadian company called Info Tech Research Group that offers IT white papers, and we've been able to hook them up with sites that serve IT professionals that resell the white papers alongside other products.

"That's different than putting them into an archival service like LexisNexis where searchers can't differentiate between a market research report and a simple news article," says Karolczak. "Both cost the same, and the people with expensive white papers or market research reports don't want to get paid fifty cents for a view of that. So I think doing some creative partnerships to make resellers out of portals is the best way to go for those folks, along with specialized places that are trying to be aggregators of market research, but I personally see more opportunities with portals that have traffic of the kind of people for which the market research is important."

Another strategy in marketing research reports is to make samples of them widely available with the hopes of enticing people to read the full report. "You need to give people a taste to encourage them to consume it," said Darryl Gehly, vice president of corporate development at the Internet services and content management company Molecular. "So a big distribution model for market research is— as low-tech as this might sound—email distribution, the targeted direct email list."

Another option, Gehly said, is an online environment offering users specific bits of information from an aggregation of reports. "Cahners, now Reed Business Information, has been very successful in aggregating market research from various sources and putting it in front of an audience of a certain demographic. And you can slice and dice market research so that each piece is grouped with other various pieces that are targeted to an individual consumer. So you can pull out those little pieces, combine it into one area, and push that to individuals who have specifically requested it."

Capitalizing on Corporate Info
Companies that create large databases of internal information sometimes consider making them available outside the company to others who might find they have value.

"I think there is opportunity for that," Karolczak said "It's a newer area, but there may be some money to be made if the content is in a format that's harmonized. That's probably the biggest problem. When you gather content from bits and pieces around the company, it may not all be in the same format or the same data structure, and one of the biggest problems in selling content to anybody is that the database itself or the article structure isn't uniform. Then there's a lot of work involved in making it clean before it can be integrated into another system."

After you create a uniform collection of content, "the question is how do you get that into the right channels," said Burger at Outsell. "A broad-based distribution market is probably not right for that, so you might look for specialty sites that are very vertically focused, whatever that might be. Internal content is going external and has value in the marketplace, but it has value in certain niche areas, so people really need to be on the lookout for those. In some cases, they're creating them themselves by taking internal content and making it external in their own environment, maybe just as content around the products they're creating."

Gehly said Molecular has done content management work for companies wanting to either "feed their customer base or even to distribute to other groups for their consumption."

"An example is Fidelity Investments," he said, "which publishes a lot of information on their mutual funds. Different funds that participate in the Fidelity's Funds Network are providing data to Fidelity, which collects it, sorts it, and publishes it not only to consumers, retail investors, and institutional investors, but also to the companies that provided the data to begin with."

Whatever type of content you have, said Molecular's user experience manager Theresa Regli, there are several basic questions you need to address when you're trying to decide which channel is best for it. "The first thing you have to think about is 'Who is the end consumer of the content?'" she said. "How do they want to consume it? How do they want it organized?"

A key to success, according to COMTEX CEO Terry, is "getting the right content to the right person in the right application. We're finding the people that value content the most are those in what we call task-based applications—end-users doing their jobs at their businesses and getting content integrated into their applications. A good example would be a CRM system," he says. "You're calling a prospect, but you have to do some homework first, and you need to know everything you can about that customer and that industry. That's what companies are thinking about and worrying about."

The primary thesis of the book Blown to Bits is that companies have always had to create strategy around the tradeoff between "richness" and "reach." You could focus on providing customized products to a niche audience or reach out to a larger market with watered-down information that sacrificed richness for broad appeal. According to the authors, information technology and the economics surrounding it, can eliminate that tradeoff. Though the Internet may not have lived up to the promise it held at the time the book was written, if you choose the right channel and the right applications for your content, you might reap the rewards of both richness and reach.