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Dark Continent: How Factiva's Fairfax
Exclusive Signals Sharpened Competition for Aggregation |
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9 August 2004 |
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In the stroke of a pen a huge swath of Australia's premium
content has disappeared behind the firewall of Factiva's
exclusive distribution agreement with John Fairfax Holdings
Limited - a coup for the child of Dow Jones and Reuters and
a major blow to competitors such as LexisNexis and Thomson
Dialog. A continent-wide deal such as this is bound to have
major ramifications, but don't mistake exclusives as the
villain in this unfolding drama. The true culprit is a way
of doing business that in large part doesn't work anymore,
forcing Factiva and others to consider more focused
competitive tactics that mask the need for deeper changes
to the manner in which aggregators provide value. Expect
retaliatory exclusives to increase in the months ahead, but
look also for players with more visionary outlooks on
enabling premium content value to make significant strides. |
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This is
hardly a sleepy summer for content between Google's IPO, rapid
developments in the war for content desktops, the blogger
phenomenon going mainstream and other key developments. Yet
leave it to Factiva to drop one of the loudest bombshells to
have echoed through content-dom in recent weeks. As
noted in Information Today, as of early September this year
Factiva will have near-exclusive rights to the Australian
newspapers and business and finance journals of John
Fairfax Holdings Limited, one of Australia's leading
publishers. With major titles such as "The
Sydney Morning Herald" and Melbourne's "The
Age", an exclusive on JFHL content all of a sudden makes
Factiva a "must buy" for Southeast Asian markets, though
a prior ProQuest agreement with Factiva keeps them in the mix.
Not surprisingly InfoToday notes the not-too-pleased reactions
from other major aggregators to this move by Factiva and their
former Australian distribution partner (circa Dow Jones
Interactive days). When CEOs start bandying around words like
"evil" and "sanity" you know that trouble is brewing.
An aggressive move? Certainly. Unheard of? Hardly.
Aggregators are always jockeying for exclusives on various
content sets to give them a competitive edge. But the timing of
this move and its scope certainly opens it up to a lot of
scrutiny by competitors and clients alike. One of the key
factors that's a likely influence in this sharpening
competitive landscape is the increasing tendency of public and
institutional libraries to form purchasing cooperatives with
one another in order to lower content acquisition costs from
aggregators. Leave out a few journals here and there and you
can figure out some alternatives fairly simply. Leave out the
better portion of a continent's major publications and you
leave purchasing cooperatives in those local markets with few
alternatives and lock up country-wide market share more easily.
Throw in the pro-publisher Australian government trying to nail
down U.S. approval of a new trade agreement and you have the
makings of a very comfortable arrangement - for some. For
everyone else, the discomfort is rather overbearing.
While those on the receiving end of Factiva's sharp elbows
may not savor this move, it's as good a good a wake-up a call
as any to both aggregators and their clients. In the wake of
this agreement here are a few key opportunities for sellers and
buyers of content aggregation services to consider in the
months ahead:
- Forget the tech talk. It really IS about the
content licensing. In spite of a lot of noise these days
from major aggregators about their technology focus and their
ability to provide friendly front ends that integrate well
with client content delivery systems, most do not find
themselves on the "thick end" of this integration, having to
compete with enterprise and open Web search engine providers
and major software integration services that have a scope far
broader than collection-bound aggregators can accommodate.
With storage of premium content in centralized databases
waning in value and the front end of the business beyond most
aggregators to substantiate in the long run, what's left but
licensing as a revenue lever? The shape and scope of
licensing deals may change as aggregators begin to reshape
their role in the content marketplace but the need for
simplified content acquisition strategies will not go away.
The winners in this mix will be the ones who get good at
being able to jettison at will all but the most essential
elements required to secure those licensing agreements.
- Consider how the open Web can be a friend. It's no
accident that the by-the-drink content purchasing policies
for JFHL online content align pretty well with Factiva's
similar policies. JFHL has a very active and well-designed
online "consumer" content revenue strategy and Factiva has
become far more intelligent as of late in leveraging sales
and relationships with individual purchasers within their own
domain. The question for aggregators to answer in the months
ahead is how to marry these two approaches into one seamless
content purchasing and consumption experience for their
licensors and licensees. As content collections under the
aegis of aggregator agreements increasingly offer their own
sophisticated Web presences the ability of aggregators to
marry licensing capabilities and policies with their
suppliers' online revenue goals becomes an increasingly
important factor to consider.
ECNext's
approach of emphasizing enabling premium publishers directly
on the Web with common infrastructure is a general model for
premium content ecommerce success, though major aggregators
will have to consider more sophisticated approaches to
enabling premium content licensing, sales and support.
- Consider how technology can really work to provide
unique value independent of existing aggregator
infrastructure. Okay, so it isn't ALL about licensing.
But a lot of the activity that aggregators undertake in the
technology arena is so easily replicated by others more
efficiently that it's important to think about far more
radical approaches to the I.T. status quo than most
aggregators have considered to date. Aggregator technology
has to focus far less on providing more value to outdated
business models and far more on providing value in the places
that matter most to clients and suppliers, leaving behind
whatever technology functions don't make the cut for
providing value. Web services is an important step in the
direction towards more direct enablement of content value,
but in most instances Web services still work out from
outdated infrastructure. Take a look at
Mark
Logic for ways in which content technology value can be
built without having to presume too much about the where,
what and how of underlying content assets - and without a lot
of I.T. overhead.
Expect the push for exclusives to increase in this
scrum-by-scrum struggle, but they are neither a problem nor
a solution in their own right. Exclusives only highlight the
inherent weakness of many of today's aggregation business
models and amplify the need to consider alternatives as rapidly
as possible. Factiva has stirred the pot aggressively with this
move, but it's far from clear that they'll benefit from it in
the long run unless they're ready for equally aggressive
strategic follow-ups.
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John Blossom
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