Defeating the Downturn: Syndicators Turn to the Enterprise


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We didn't have a crystal ball, but I think one of the important things we did right at the end of 1999 and early 2000 was to start reshaping our offerings, our products, and our services towards the marketplace that was looking for enterprise-wide content syndication technology and service," said Kevin Clark, CEO of ScreamingMedia.

"And that's the reason we survived the utter collapse of dot com customers. Much sooner than our competitors and a lot of other companies, we saw that the small, dot com customer was not a reliable business model, and we started transforming our customer base. Now we have 900 companies we do business with, and three quarters of them are large enterprises."

Of course, the downturn in the dot com market did hurt some companies syndicating content to Web sites. For example, last April, iSyndicate laid off nearly half its staff. In May, iSyndicate Europe pulled out of the to deal to acquire nFactory, and the French company filed for bankruptcy.

iSyndicate tried focusing on its infrastructure products (a strategy used by other syndicators, too, including ScreamingMedia), but rumors began circulating that iSyndicate itself would go under. Ultimately, it was acquired by YellowBrix.

"So one trend is consolidation," noted David Curle, director and lead analyst for Outsell Inc., "another is syndication companies turning themselves into infrastructure companies."

And there is a third trend, as exemplified by Clark's comments: many syndication companies are now focusing their efforts on enterprise clients instead of the risky dot coms.

The Writing on the Wall
Clark said ScreamingMedia saw the need to focus on enterprise clients even before the dot com bubble burst for several reasons: "Certainly there was a lot of writing on the wall. Even before there were a lot of dot com failures, just being a sensible businessperson you would look at these customers and see they had what I would call an inverted business model. The inversion was 'the more money I spend, the more money I lose. The more money I raise, the more valuable my business is.' That just doesn't make sense. It's not a long-term fundamental business strategy that has ever worked.

"We were looking at that in early '99 and were, in some cases, appalled by the business models and the organizations we were doing business with. We said, 'Hey, we want to do business with companies that will be here ten years from now, like IBM and AT&T.'

"We wanted a customer base with a large annual contract value associated with it, and the sales cycle oftentimes isn't a whole lot longer to sell into large enterprise than it is to small- and medium-sized enterprises. We also wanted customers we could grow into various business units and create longer-term relationships with.

"One of the fastest-growing segments of our business now is intranets. The publishers, the information service providers we do business with, are trying to reach into the enterprise with our technology and our distribution systems to syndicate their content. The publishers want to be in the marketplace of the intranets and extranets."

YellowBrix also recognized the value in enterprise customers early on, according to CEO Randy Lampert. "We've been involved in the enterprise market as long as we've been providing content to the dot coms," he said. "Our approach has been to understand what enterprises need to provide to their users in terms of information and then provide the technology and content that would enable them to effectively and efficiently transform the content into actionable business information. That has been our mandate over the past year.

"We have two sets of products. Our content services are a highly targeted, categorized, and branded content approach meeting the needs of organizations for timely, relevant information. In addition, we have a whole suite of software products and services designed to enable enterprises to automatically capture disparate information regardless of its source, totally package it, and then be able to direct that information to the most appropriate users. But we've always tried to provide content services and highly targeted content to whoever needed it, regardless of whether they were dot com companies or enterprises."

Enterprise Strategies, New and Old
A new player in the online syndication space is FluentMedia, a unit of Tribune Media Services, which is the syndication arm of Tribune Company. FluentMedia started operations just a few months ago with a focus on enterprise clients. "We weren't there for the whole dot com boom and bust," said Mark Miller, the company's editorial director, "so we started out with a blank sheet of paper and looked at where the attractive markets are and felt from the very beginning that the enterprise market was the more appropriate spot for us to focus on.

"Our proposition here is aggregating premier media brands—and premier brands only—into this service. As we've gone around recruiting publishers, we've talked about the focus on the corporate market, not only because it's where the business is, but also because there's a certain comfort level for these publishers who don't really want to see their content going into dot com sites that they see as almost directly competitive with their own online initiatives. Take for example a newspaper's public Web site. It doesn't want to wake up one day and see another site on the Internet with exactly the same content. So we're able to get very high caliber content into the service partly because of who we're serving and where we're not going as well."

FluentMedia plans to supply corporate Web sites with news, commentary, and analysis from major newspapers, trade publications, and other media sources. Using information-filtering software, the company will offer clients customized content feeds for use on their intranets, extranets, and direct-to-consumer marketing sites.

A company that has been around longer than any of the other syndicators is COMTEX News Network. "It's still going strong and has been profitable for a long time," noted Outsell's Curle. The company's success, he said, can be attributed to two strategies. First, it has spent less money on marketing than its competitors. Second, it has focused on high-demand financial and business content instead of a variety of consumer-oriented information.

The strategy at Kinecta, a company founded in 1998, included launching a new product for the enterprise market last year: the Kinecta Content Directory. It's a remotely hosted online service that helps companies build a searchable, categorized listing of such information as business documents, sales and marketing materials, manufacturing drawings, news, or multimedia files. The service is designed to reduce the cost of maintaining a content network by automating many interactions usually associated with it. For example, a user can activate a subscription automatically so the provider doesn't have to do it manually.

The company also offers the Kinecta Syndication Server, which provides end-to-end integration and control over the movement of online content, as well as Kinecta Content Metrics, a hosted service that lets companies using the Syndication Server collect usage statistics.

Competition?
Of course, there are a number of content companies that have been focusing on serving enterprise clients for several decades. Dialog, Factiva, and LexisNexis, for example, are well-established in the space with aggregated content products, but will the aggregators face competition from the syndication companies?

"Occasionally we will be pitching to the same decision-maker, but I think in terms of what we're offering, there are some differences," said Miller at FluentMedia. "LexisNexis and Factiva are very broad and very deep archival products with thousands of titles going back years. We're offering more of a current awareness product—30 days archiving—and while we certainly will have a full complement of relative publication titles, we're not looking to replicate the thousands and thousands of titles as part of our basic proposition. Whereas I think those guys tend to focus on intranets, our focus will be a little broader than that. We're not looking strictly at corporate intranets, we're also looking at the extranet market and some other corporate Internet site needs. So yes, I think we will compete in some cases, but there are some differences."

YellowBrix CEO Lampert offered a similar perspective: "I think we are addressing different segments of the enterprise market in terms of the ultimate user. [Traditional aggregators] are providing very specific knowledge workers with very specific archival databases of information. We're going to the enterprises and those users that require on-going real-time access to a broad array of information. I think when you compare us to some of the other companies, you'll find that while they go in-depth to specific subjects, we go both in-depth and in-breadth in terms of what we're providing.

Looking at the same type of situation from the other side, David Brown, senior vice president of content development at Dialog, said, "We have run into situations where the syndication players are interested in piping our content through a solution they offer for the purposes of making a sale because the solution they're providing is attractive, but the content isn't deep enough."

Many syndication companies are "becoming more of a solutions provider versus a content provider," he said. "Dialog certainly provides solutions, but I think that those solutions tend to be slightly different than the solutions offered by a ScreamingMedia, for example."

In the market segments where the two types of companies do compete, Brown said, "the reality is that traditional aggregators probably don't look at those companies as being significant threats, in part because the content sets they offer are designed for public Web site deployment, which, by definition, because of supplier rights, makes them less substantive collections than the collections that can be offered through an aggregated service like Dialog."

In an interesting twist, Thomson, Dialog's parent company, is now competing in the syndication and solutions market through its acquisition of NewsEdge. "One of the things we're excited about in working with NewsEdge," Brown said, "is that we've now directly brought in some of the tool capabilities as part of the Dialog/NewsEdge partnership, and that will allow us to populate some of these enterprises with much more in-depth content than might be expected from of the other syndicators because Dialog brings that depth of content and NewsEdge brings the ability to provide excellent current-awareness tools."

Another traditional aggregator, LexisNexis has been involved in syndicating content to business Web sites through its Web Publisher service (formerly called Veracity). Despite the downturn in the dot com market, the syndication service is "quite viable," said Joseph Schehr, vice president of knowledge management technology for LexisNexis.

"We certainly saw the downturn," he said. "It was hard to miss, and it affected some pieces of our motion, but we were actively engaged in delivering content into enterprises long before. Even with our ability to deliver information into public Web sites, our customer base there was always broader than the dot com market and obviously continues to be. We have offerings that allow us to place content on both internal corporate Web sites and external-facing sites."

Meeting enterprise needs
Schehr said one key to serving enterprise clients and retaining them as customers is sensitivity to pricing issues. "I don't think it takes an overly astute person to recognize that everyone is focused on costs," he said, "so we continue to work with our customers in that area. I also think a number of our customers are intensely focused on ensuring a return on investment. That's not a new thing, but there's an increased emphasis on it."

Miller at FluentMedia noted that enterprises are "looking for pricing that isn't punitive based on the numbers of users. I think companies are looking for flexibility in the way they deploy information across the enterprise and are looking for ways to do that so it's not painful on a price basis. That's one clear trend. Also, the idea of site licenses is getting to be somewhat outmoded because of notions such as personalization of content and the way the companies are filtering information to their own employees doesn't always align itself any longer to the idea of licensing it for, say, just strictly one particular Internet URL."

Lampert at YellowBrix noted another key to serving corporate customers: "The enterprise market is shifting from originally—five years ago—a single Web presence to a handful of Web sites to hundreds and hundreds of sites and portals. And what we're finding is there's a basic need to address their content needs across this broad array in a very efficient way. "One of the things we obtained when we acquired iSyndicate was access to a variety of software capabilities that allow both the distribution of content and applications across an enterprise portal network, and we see that as a critical element to assist enterprises in effectively and efficiently generating and using content across these broad networks."

Brown at Dialog noted that enterprise clients also want technologies that integrate content. "I think the universal trend of shifting things to XML probably will cause some change in strategy in that over time there's going to be more of a demand from customers to very specifically pull in data in a way that allows them to truly integrate it with other products they may be creating themselves or taking from third-party companies."

Schehr said, "I think we're seeing an increased desire to integrate the information and the services we provide into enterprises' general business processes. In other words, there's a lot of emphasis on what I would call an integrated solution that is business process-oriented."

Miller agreed: "I think there is a growing demand for tight integration of content into the client's own environment, so that content can be looked at side-by-side with internal information, and you even can have commentary interwoven into it, and internal and external content can be searched side-by-side, too."

To meet the technological needs of its clients, FluentMedia has licensed software from ScreamingMedia. It will aggregate, parse, normalize, and filter content and then deliver and integrate it directly into the platforms of FluentMedia's subscribers, where ScreamingMedia's client-side publishing software, SiteWare, will be installed.

"We did an extensive survey of the available syndication tools to serve the enterprise market and concluded that ScreamingMedia had a really world-class solution," Miller said. "We essentially outsourced that part of the job to them."

"To do this job well, there's a lot of detail and a lot of important technology you have to get right," he added. "It's not a simple thing to build a successful syndication network."