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Investing in Users: 2006 Forecast
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26 December 2005 |
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Content crystal ball-gazers, rejoice: the best is yet to
come in 2006 as publishers and technology companies vie for
the hearts of publishing-savvy users looking for personal
and professional content. Shore sees investing in users for
2006 revolving around four trendy "Ps" shaping content
today: packaging, platform, premium
and personalization. Watch the cash flowing into
these investment area quickly as both established and new
players in publishing get very, very serious about who is
going to be on top when realigning business models settle
down. You'll need real-time tea leaves to keep up
with the content deals in 2006, but fear not - we'll be
with you every step of the way. |
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Whatever adjectives you could
come up with for describing the happenings of 2005 in the
content industry I don't think that "dull" would be likely to
make the list. 2005 saw growth returning to the content
industry, but it was growth that most favored those who were
ready to move quickly to embrace the full potential of online
publishing's promise:
- We went from an era in which many people were still
trying to figure out what a weblog was to weblogs and other
forms of user-generated media springing up at an overwhelming
rate and becoming valuable key media properties in content
aggregation plays.
- We went from Silicon Valley being a has-been place for
investors to being the center of Web 2.0 frenzy as
self-funded and VC-backed startups dream up new ways to add
value to content through inexpensive publishing technologies.
- We went from premium publications restoring print
products to profitability and experimenting delicately with
exposing content online to a surging thrust into new content
streams, new business models and new content packaging to
spearhead future revenue growth.
- And heaven help the newspaper industry and other
traditional outlets in the face of Craigslist, weblogs,
online video and online buyers who don’t bother looking at
print; will the last one in yesterday's newsroom please turn
out the lights?
At the center of it all in 2005 was one company: Google.
Google’s unprecedented growth continues to tilt the universe of
content ever further towards one seamless fabric of information
that can be harvested and monetized at will. Google’s
agnosticism as to who owns content in this mix ruffled more
than a few feathers in 2005 as its Google Print book scanning
project came under fire. The key beneficiary of anti-Google
sentiment was Yahoo, which has penned deals left and right with
major online content suppliers and user-generated media tools
while corralling its own herd of book publishers, archivists
and technology companies into its Open Content Alliance – none
of which have yet to stem a gradual loss of audience. Microsoft
also continues to see a gradual decline in their position in
online media as both content and platforms proliferate away
from the Microsoft brand. Thanks, portal providers, we’ll find
it ourselves where we want to find it, the world seems to say.
In the midst of all of this change many database-oriented
publishers continue to churn out profitable if less-flashy
products that bring search query results into more useful
contexts. Incorporating user-generated content and content
harvested from the Web and enterprise resources is changing the
definition of quality database content rapidly, even as
search-oriented technologies provide greatly improved indexing
tools and navigation structures that oftentimes eliminate
reliance on traditional database technologies. With the dawn of
Google Base late in 2005 and the surging interest in wikis and
other forms of user-generated databases we moving rapidly
towards an era in which all the world is becoming a database,
challenging database publishers to define the quality of their
content in a much more user-oriented context than ever before.
Hence our theme for 2006: Investing in Users.
While user-generated content outlets and tools will certainly
continue to heat up as media properties, publishers across the
board will be pouring funding and innovative thinking into
developing products that leverage their relationships with
their audiences in a wealth of highly focused venues. Those
relationships will be built on an exploding array of virtual
and physical platforms that intertwine personal and
professional needs for content, complicating both licensing and
relationship management issues. We'll expand on our theme
in our upcoming annual Outlook 2006 report, but for now here
are a few key items for tracking investments in users that
we'll be following in 2006 - the "four Ps" that
will consume much of our attention:
- Packaging. Packaging content for optimal search
engine placement and performance was an important key to
profitable electronic publishing in the early 2000s, but 2006
will find publishers and content technology companies moving
towards more effective contexts in which to organize and
monetize content usefully. The advent of Google Base as a way
for publishers to push metadata and content to Google rather
than to have to make a search engine go looking for fresh
content points to the emerging importance of packaging
quality content for greater "findability" in an "always on"
publishing environment. This means greater investments in
indexing and metadata to make the value of content clearly
understood by users in whatever environment it appears - and
more investment in value-add services that provide effective
aggregation and answers rather than mere search results. If
every page is a home page on the Web then every object that
can be found on the Web must be ready to be packaged for
consumption via whatever platform or service the user wants
it.
- Platform. The platforms emerging for
publishing and using content in 2006 will be both far more
diverse and far more focused on what individuals and
institutions need to do as both publishers and users of
content. Software as a Service (SaaS) components and easily
configured Web services and feeds will make their way into
more environments in 2006 used by individuals and
institutions. We'll see less investment in the
general-purpose PC and more investment in open and portable
standards-based virtual platforms that can easily adapt to a
wider array of user content appliances. Browsers and
browser-based components offering sophisticated and
productive user experiences will flourish while the PC will
start to become a graphics and storage engine with fewer and
fewer native publishing tools. The raw streams of content
flowing from weblogs and other user-generated media will be
absorbed rapidly into major portals and supplemented by more
sophisticated affordable publishing platforms that will allow
both individuals and institutions to be more effective and
profitable publishers with or without major publishing
partners.
- Premium. Even as a proliferation of user-generated
media and open archives of books and other newly digitized
materials challenges the value of content produced by
mainstream publishers there will be greater investment in
2006 in ways to accommodate both open access to content and
value-add levels of content that require subscriptions or
other premium access schemes. The legal and convenient
downloading, sharing and repurposing of digital content by
users will challenge publishers and distributors in 2006 to
protect both their licensing rights and valuable
relationships with empowered users in personal and
professional environments. As Microsoft's Vista operating
system is released more premium publishers will begin to
think seriously about how they are going to define and manage
premium content properties via digital rights management -
and recognize that platform-independent DRM solutions are
going to be a must if they are to avoid having their margins
choked out by technology companies with their own interests
in mind.
- Personalization. 2006 will see an explosion of
services aimed at capitalizing on more personalized and
localized publications and publishing for users. Rising
demand for online ads will raise rates significantly, placing
more pressure on advertisers to maximize return on ad
investments from each potential client via highly targeted
pitches, placements and ecommerce. Localizing the value of
content will be a key part of personalization. Google's
ad-driven wireless broadband network that will serve up ads
based on both a user's profile and physical location will be
but one example of understanding what your users need in
their current real-world context. Localizing content
for more international markets through increased use of
multi-lingual content and more market-specific content
packaging and editorial focus will become high priorities for
many major publishers. Print publications and the book trades
will explore new avenues to profitability, focusing on highly
targeted and personalized distribution to ever more elite
audiences.
If the wheeling and dealing of content companies in 2005
left you wondering what could happen next, hang on to your
hats. In chasing the virtues in the four "Ps" of 2006
corporations and venture capitalists are going to be having a
great time throwing money at a rapidly changing marketplace.
But unlike 2005 the deals of 2006 are far more likely to result
in radical realignments of publishing resources than many of
the high-flying portfolio balancing acts witnessed earlier this
year. Networking and technology companies will be chasing
aggregators that are chasing independent publishers, with each
vying to see who can realign their business models most
effectively. In the battle to invest in these realignments
investors need to focus on what's creating real value in the
eyes of users and not get too trigger-happy about every little
twist that might look hot for a moment or two. There will be a
lot of misdirected investing in content in 2006, but by
focusing on the four "Ps" with the user in mind many large,
small and micro investors will be raising their glasses quite
high by this time next year.
-
John Blossom
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