NFAIS "Whatís Ahead 2001"
Scoring Year 2000: Bronze Swords 0, Cannoneers 3
Note: this article was written in December 2000 and appeared in the first NFAIS newsletter published in 2001.
The "year in review" article is a bit like the English 101 essay assignment: "my favorite summer vacation" or "my favorite historical era." Letís go with history.
It is the Middle Ages. Our combatants were Italian warriors with bronze swords. Bronze swords were a technological leap over rocks and sticks. On one side is Italy. The Italians resisted the evil king of France, Charles VIII.. He was by most accounts good-natured, romantic, and sickly. Charles also understood the concept of the cannon. His troops did not know much about bibliometrics, but they knew how to wreak havoc with the technology.
From my vantage point (a very limited one since I spend most of my time deep underground in a computer bunker in rural Kentucky), three battles in 2000 strike me as significant. Let me say that I am knowingly committing intellectual sins by reducing the efforts of thousands of companies to just three clusters of developments, a few examples, and a handful of observations. The downside is a distortion of 12 months of business activity. The upside is focus.
Year 2000 echoed with the sounds of battle between warriors with bronze swords and larrikins with cannons.
These were, of course, old line information companies whose troops are tucked safely behind the impregnable walls of their organization. Their invaders are Net-centric, disorganized, and lacked seasoning, their platoons are ripe with 20-somethings, lean of loin and bursting with confidence.
Now flash forward to 1993: in our world of Internet time, the clumsy Web has changed from a crude device into an efficient information "cannon." In 2000, Web technology emerged as one of the enablers of information innovation. Year 2000 was the first during which the battles between the old guard and the 20-somethings left visible gouges in Information landscape and shredded some balance sheets.
These rapidly improving Internet information cannons devastated adversaries armed with bronze swords and archaic backends. Because the old guard sat in monolithic organizations or marched slowly in rectangular phalanxes, it was easy for the invaders to aim their cannons. Yes, there are many "dot com" dead, but there seems to be an inexhaustible supply of youthful warriors focused on the old guard. Surveying the outcomes of battles in 2000, three overall trends characterize the direction the war is moving.
Mindshare on the DownsideSlope
The first event was the continued decline in traditional abstracting and indexing services. By decline I mean a loss of momentum in libraries and among researchers as well as among what I call next-generation users. These are young students whose primary research tool is "the Internet," not ABI/INFORM, Pharmaceutical News Index, Engineering Index, or the touchstones of my formative years. Letís look at four actions in 2000.
A&I services continued to build their brands to insiders; that is, people who thought they knew that Dow Jones News Retrieval was Factiva or that InfoTrac was Information Access. Sorry, I meant Gale Research. The marketing effort is defensive and focused on a very narrow slice of the ever-expanding online world. I think of it as the makers of bronze swords selling their wares to customers who have not heard about these new fangled cannons. Many of the information companies continued to eke out larger revenues and profits through acquisition and price increases. But little of the gain comes from organic growth in new markets through "game over" products. (A game-over product is one that leaves competitors no market share; for example, the Napster peer-to-peer MP3 index. But the optimal way to understand game over is to ask a record executive about Napster.)
The hottest search-and-retrieval services are ones combining human editorial acumen with some type of automated service. The deliverable for the researcher is a Web site or an information object. For many researchers, information in Adobe Portable Document Format or a dynamic Web page was the payoff. For others, the query linked and then launched the download of a binary object, non-text object. Until 2000, music industry executives did not know a binary file from a blintz. They understand binary now.
The principal signpost of a steady downward slope is the continued consolidation of smaller, cash-starved A&I services into larger, customer and revenue-starved larger firms. Cambridge Scientific Abstracts has gobbled a number of quasi-scientific properties in an effort to build "gravitational pull." In venture capital speak, gravity means pulling revenue and customers to a product or service. Can Cambridge turn their winnings into gold to buy gunpowder and cannons? Perhaps we will know in 2001.
Thomson and Reed-Elsevier carried the inorganic growth to a new level in 2000. They quasi-jointly acquired the Harcourt property and divvied it up in a way that kept regulatory agencies happy. The Harcourt dismembering pointed to Thomsonís focus on professional information and Reed-Elsevierís on scientific and technical information. The coming year will allow this trend to amplify itself. Since Thomsonís president said the organization was becoming a services firm, the strategic direction of this army of defenders may have been revealed.
A&I remains important. Yahoo!, Microsoft Network, America Online, and the newcomer iWon.com are essentially Y2K versions of an index. Interestingly, the end of 2000 for A&I services was presaged by Forbesí Magazine in January 2000. Seth Lubove opined:
"Among the internetís victims, few have been as hard hit as the outfits that once charged huge fees for information. Reed Elsevierís Lexis-Nexis, Bell & Howellís CD-ROM-and paper-based businesses, and Disclosureís SEC document service are just a handful of the outfits that are struggling."
It is now a chilly December 2000. Many old-line warriors are outside in worn fur knickers clutching bronze weapons with their bare hands.
Indexing Utilities Grow Bolder
In the context of warriors with broad swords and bronze-tipped pikes, invaders with information cannon staked out an area the size of Gobi for themselves.
Ask an information professional to name a major Internet indexing and abstracting service, and the response is likely to be "Northern Light." Northern Light has Reutersí and other "smart money" behind it. (Smart money, of course, is cash provided by enlightened and informed investment bankers and venture capitalists who are in a position to make the most wise of business decisions.)
For certain: Northern Light has a strong brand among information professionals who have seen the firmís banner fluttering over the Internet World venues. Northern Light also has a nifty graphic of a clipper ship. But Northern Light offers Dialog-like features with one twist. Northern Light offers a decidedly un-Dialog price scheme. (Investext content, by the way, costs about the same on Dialog as it does on Northern Light. Thomsonís acquisition of Dialog makes it a tad easier to keep the fees lined up like soldiers armed with shiny bronze swords. Pricing is a bit more tricky for the free Gale research content on http://www.findarticles.com. Some content is available for a fee from Dialog as well as directly from the Find Articles venture with Look Smart.)
Winners in what I call the search utility space or spider-driven indexing have precious little to do with the traditional A&I service. Inktomi, Google, FAST (alltheweb.com), and, if one is particularly lenient with the definition of a utility, Lycos and Alta Vista, might be included in this list of key players.
The potential of these operations is substantial. To cite one example, Inktomiís information cannon blasts out "content" in the form of indexes and autogenerated abstracts for America Online, corporate Intranets, and Yahoo! Unlike the traditional abstracting and indexing companies armed with limited revenue weapons, Inktomi generates cash from license fees, network services, and customization of Intranet services for corporations. Inktomi has become a multi-revenue stream entity with annuity revenue coming from license fees for value-adds the client can grasp. Inktomi company gets money from custom indexing to client specifications and from licensing its network technologies. On the public relations front, Inktomi blasted through the U.S. federal governmentís 22,000 servers and delivered a nasty wound to Northern Lightís government information index with the Inktomi fast-cycle www.firstgov.gov service.
Google has emerged as one of the leading if not the leading Web indexing service. Unlike Inktomi, Google has not developed multiple revenue streams, but the companyís recent foray into advertising is promising. Google has targeted WAP, multimedia, and non-English Web sites as new service areas. The company has introduced a powerful toolbar that makes searching easier than Autonomyís Kenjin add-in. Google landed the Yahoo! search service as a client; however, Yahoo! and Inktomi are working cooperatively to attack the potentially lucrative Intranet opportunities. Only FAST, which received an infusion of capital from Dell Computer, does a job comparable to Googleís in handling non-U.S. content. Lycos, under new ownership, implemented a strategy to build country-specific search portals. Alta Vista has copied Inktomiís Intranet strategy and Lycosís country-specific strategy. As a former president of General Motors said, "Two objectives is no objective." Alta Vista may want to consider this truism in 2001.
A slightly different twist to on top content delivery was evident in the robust business that Screaming Media has generated. In addition to aggregating content and working out the deviltries of reselling third-party content, Screaming Media will index a clientís content, normalize it, and send it back to the client ready for use on the corporate Intranet. SageMaker (Fairfield, Connecticut) took a different approach in 2000, and it paid off handsomely with General Electricís decision to obtain Web and branded content via SageMaker. Strong interest in blending content created by employees with content from third-party resellers triggered some companies to realign its troops. By the end of 2000, virtually all online and information services companies claimed to be in knowledge management, content management, personalization, Intranet indexing, and other specialities created by combining a couple of buzz words.
The flashy, intelligent search engines largely faded from the field of battle. These bold efforts to provide value-added search and retrieval require too much bandwidth, computational horsepower, and effort on the part of the online users. Ask Jeeves, a firm that has been given considerable praise in the media, is a look up table. As long as a query matches a question in the look up table, the system works. Ask a question not in the look up table, and the system performs in ways both amusing and of limited use. Ask Jeevesís stock price late in December 2000 was not amusing.
The big story for Intranets and public Internet access is that none of the established A&I services have a substantial presence. For the next generation of online users, established firms may have lost mindshare. The hooks in the minds of young online users are these: Inktomi is the "essential element of the Internet." Google is the search engine of choice for Web and WAP (wireless application protocol), and FAST is just fast. Say "PROMT" or "General Business File" and the youngster responds, "What? Who? Spell that, please."
The Quiet Warriors with Big Cannons
In my bunker in rural America, the clash of real and make-believe titans rarely shakes my foundations. The third event of interest in 2000 was the continued growth of OCLC and Ebsco Electronic Publishing. Two of the old guard for certain. But these firms have figured out who sells cannons and purchased enough to cause some serious excitement on the A&I front.
OCLCís Web indexing, Webification of cataloging, and Web-savvy approach to its business opened new opportunities for the organization. Not only are member libraries benefiting from the OCLCís efforts to deliver Web and branded content. OCLC has positioned itself to forge interesting new partnerships. Among the potential candidates are some strong Web players (for example, Amazon).
For a number of years, the mainstream A&I firms viewed OCLC as a peculiar blend of catalogers and content packagers. In 2000, OCLC demonstrated on a much larger scale that it has the technical savvy to recognize Internet value-adds. Furthermore OCLC has incorporated them into its cataloging and resource sharing services. OCLC emerged as a service provider. Offering access to databases is just one weapon in the firmís arsenal.
Ebsco Electronic Publishing also continued to distinguish itself. The firm has followed its own path, but it has an uncanny ability to provide content to new distribution channels, develop useful new collections for its traditional library market, and offer its content in a Web-centric environment. Other traditional "library" companies remained unaware of competition in their own backyards. For example, Data Research Associates (DRA) lost a high-profile job to an little known St. Louis-based systems integrator, Solutech, Inc.
Ebsco watches its backyards, and backyards in which Internet 2, hybrid services, and customization are practiced. Ebscoís interfaces are fresh, on point with the age and context of the user, and backed by a wealth of content, abstracts, and indexes.
Are OCLC and Ebsco the only two winners among the hundreds of traditional companies. No. However, both have demonstrated that folks without gunpowder can take a hard look at their bronze spears and conclude, "We need to get some cannons too."
Unlike Gale Research which has taken tentative steps into Webification with its interesting free content deal with LookSmart, OCLC and Ebsco have been bold. Unlike Bell + Howell Information & Learning (nť UMI nť University Microfilm) XanEdu, OCLC and Ebsco have been sure-footed. Old warriors with bronze daggers and new logos are not likely to fare much better against cannon than colleagues with old logos. Logos are important. But, logos are not cannons.
The good news is that traditional companies can compete and assume leadership positions in what many might see as a constrained market space. The bad news is that only a handful of firms have what it takes to adapt to gunpowder.
What is the outlook for 2001? The developments of the past year seem to support four trends.
First, accelerating consolidation seems inevitable. The large firms will get larger by buying smaller firms. This may be bad news for libraries who want options, but consolidation is good news for investment bankers. Large organizations have demonstrated clearly in 2000 their inability to innovate in meaningful ways. Perhaps the new competitor to PsycInfo will prove me wrong, but I think new versions of old databases will be increasingly marginal wins for users and those who fund the me-too products. Canada, Britain, France, and other countries have major government online initiatives. Consolidation in one interface of government-generated information and data is good news for users. Consolidation of commercial data in the hands of two or three global enterprises is not such good news.
Second, pricing will become more difficult to nail down. The marketers, not the technologists, will keep their hand on the hilts of their bronze swords. Price lists will be starting points. Negotiations--tedious and frustrating as they may beówill be necessary. Consortia and centralized purchasing will be spurred by the bazaar market mechanisms.
Third, free and subsidized Web services will continue to come and go. Despite the instability in some information centric Web sites, the Internet will continue to drive information innovation, particularly in non-text objects. The sword-wielding companies have yet to discover multimedia, Web cams, streaming and archived video and even the ubiquitous audio files.
Fourth, the information landscape will be populated by new online information players. The MSNBCs, the Bloombergs and the Factivas will remain on the scene. These operations are probably going to be subsidized by non-Internet revenue sources from their parent firms. Substantial cash is needed to keep these operationsí information arsenals operating at full capacity. Joining them will be enhanced services from Yahoo!, who is open about providing a television-like experience combined with its user-pleasing point-and-click interface. For a glimpse of the broadband search-and-retrieval future, point a browser connected to a high-speed line to http://financevision.yahoo.com, AOL, MSN, and the other high-traffic sites will not be far behind.
Of course, whither the users go, the practical, survival-oriented commercial online companies must go as well. One interesting fact offered at Internet World in New York in October 2000 was that more executives in Manhattan use Yahoo! for news than use any other online service. Maybe the comment is true. Maybe itís not. But just making the statement at Internet World speaks volumes about where the center of attention for directory, summary, and full-text information is.
There's a message here for the abstracting-and-indexing community. To decipher it, one must abandon the old means of warfare and look to the actions that increase the likelihood of survival.
The information in this article is taken from Mr. Arnoldís new book, The New Trajectory of the Internet: Umbrellas, Traction, Lift, and Other Phenomena. The publisher is Infonortics, Ltd., Tetbury, Gloustershire, England. Copies may be ordered by sending an electronic message to firstname.lastname@example.org
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