Vortal Content: Eyes on the Emarketplace Prize

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Vertical industry portals and marketplaces are built on the three Cs that are supposed to spell success for Web sites and their users: commerce, community, and content. They connect buyers and sellers. They help players in a specific industry forge new relationships and strengthen old ones. But what type of content do they offer? The answer to that question varies greatly from portal to portal and marketplace to marketplace. A few offer large collections of in-depth information. IndustryClick, for example, builds vertical communities (TelecomClick, DigitalMediaClick, and others) around articles from leading trade journals published by Primedia, information syndicated through NewsEdge, and original Web-only content (see "A Leap of Faith: Factiva to IndustryClick" in the February/March 2001 issue of EContent.)

Other players in the vortal marketspace offer reports, market research, press releases, or even user-contributed content. Some offer only a few news feeds. All have their eyes on a future when the demand for emarketplace services is expected to grow significantly. The research firm IDC has predicted that worldwide demand will reach $15 billion by 2004. But during the last few years, the vortal marketspace has undergone several dramatic changes, and many players have struggled to define not just the role of content in their business models, but also the overall role their companies should play.

"If you go back about two years ago, there was the idea in people's minds that the vertical information hubs, as we called them then, would proliferate on the Internet," said Andrew Bartels, vice president at Giga Information Group. "These hubs were supposed to provide all the information you need to know about trends and events and companies in a specific industry. The sites were analogous to the specialty publications model in the print world and also to what was happening on television—the fragmenting of television into specialized cable channels.

"The thinking was, ‘It's already happening in print; it's already happened on TV; it's going to happen immediately in the Internet space, and there will be plenty of advertising for the specialist content sites.' VerticalNet was one of the companies that played in that space. It focused on providing information about trends in a couple of dozen different industries.

"Then what happened was the realization that there was a role for these sites to play—not just as content sites funded by advertising, but as an intermediary between buyers and sellers. So, we saw all these new startup companies wanting to play the role of the broker. They also had content, but their offerings were smaller and more related to transactions. At times, there were efforts to try to bring the two [types of sites] together. I'm thinking, for example, of the merger between Healtheon, which was set up as a transactional site in the healthcare industry, and WebMD, which was an informational healthcare site.

"We [at Giga] felt at the time, and I think we were correct, that the underlying dynamics between these two models suggested they primarily would be transactional with some content or primarily content with some transactions. You tended to have a weighting to one side or the other, and that had a lot to do with issues of neutrality versus sponsorship or advertiser bias.

"In other words, the informational sites would tend to derive their most revenues from sponsors—companies that would get privileged positions—but it was incumbent upon the transactional sites to be partly neutral; to not be seen as being biased toward any buyer or seller. So, you had in a sense these parallel, somewhat converging worlds of the transactional hub sites and informational hub sites. Then what happened in 2000 were two separate developments: Advertising revenues dried up and transactional hub sites were quickly over- taken by industry consortia."

"The consortia took over the transactional hub market for obvious reasons," Bartels said. "If the transactional hub sites succeeded, they would become natural monopolies. In any given industry there would be one or two of these sites that would do most of the business, because buyers would go where the sellers were and sellers would go where the buyers were.

"The big buyers and, to a lesser degree, the big sellers in those industries got nervous about the dot com startups that were going to play the intermediary role, so they said, ‘Look, if there's going to be this intermediary, we want to own it.' So they quickly formed consortia. It started last March or so with Covisint trying to become a major marketplace for the auto industry, and there's a whole flood of other ones."

Covisint is an independent ebusiness exchange developed by DaimlerChrysler, Ford, General Motors, Nissan, Renault, Commerce One, and Oracle to help original equipment manufacturers and suppliers reduce costs and increase efficien- cies. According to a Covisint public relations representative, the organization's Web site will eventually include a great deal of content, but the managers are still evaluating "myriad choices" and declined to specify what type of information they will offer.

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