Thursday, 28th February 2008
Tim Buckley Owen
Investors approved of Reed Elsevier’s announcement that it would be disposing of its trade magazines arm Reed Business Information (RBI) as soon as practicable. They responded by sending Reed Elsevier shares up 7.5%, reacting positively to the group’s move away from traditional print media.
At the same time http://www.reedelsevier.com/index.cfm?articleid=2199 Reed Elsevier also announced its £2.1 billion acquisition of risk data analytics specialist ChoicePoint Inc, anticipating ‘significant synergy benefits’ from the use of ChoicePoint data alongside LexisNexis’s own risk technology.
On the face of it, information professionals should regard the move from advertising-based print to the infinitely more flexible subscription-funded digital media with equanimity. But, as Pam Foster surmised in VIP 51 (February) http://www.vivavip.com/ the divestiture of RBI might actually have alarming implications for ‘free’ business information.
Until recently, trade magazines were seen as among the most promising advertising media, because they enabled brands to reach highly targeted audiences. But, as the FT commented a day or so after Reed’s news broke, http://digbig.com/4wmqs ‘a structural shift of advertising revenues to the internet has combined with cyclical fears that advertisers will cut budgets in a downturn’.
Worse, any advertising downturn could affect digital media too. The FT subsequently highlighted research from comScore http://digbig.com/4wmqt showing the number of clicks on paid advertising links on Google down sharply and sending the search engine's shares down 7.6%.
If both print and online advertising revenues come under threat, where does this leave advertising-funded information services?
‘Many information management professionals Outsell works with are exploring less expensive, free, or advertising-supported content sources as "good enough" for their end users,’ Outsell’s Kate Worlock told VIP. ‘This is largely in reaction to the rising costs of premium, subscription-based content which are outpacing increases in content budgets.’
‘While end users generally acknowledge that fee-based services provide higher-quality, more reliable information on which they are willing to base important decisions, only 16% require such services for their day to day information needs,’ she continued. End users are generally accepting of low-cost or ad-funded content options for routine research, and Outsell knows of several enterprises that are replacing their high-end subscriptions with alternatives such as Google News, Patents or Scholar, or with open access sources and consumer-oriented finance sites.
As Ms Worlock points out, it serves as a good reminder that users don't always need high-end sources, and presenting them with less costly solutions is often a good way for information managers to deal with reduced or stagnant content budgets. And she’s actually optimistic that an advertising downturn would not hit the business markets as much as consumer markets.
Nevertheless, this new uncertainty about advertising-funded content might just give information professionals who’ve come to rely on ‘good enough’ services pause for thought.
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