While Gale (www.gale.com), part of Cengage Learning, is a well-known provider of databases and content to libraries, it has also tested various distribution models for its content for some years—including licensing content to other services, selling content directly via Amazon’s eDocs program, and even offering a new online marketplace for content licensing called AcquireContent.com (see the Sept. 22, 2008, NewsBreak at http://newsbreaks.infotoday.com/nbReader.asp?ArticleId=50850). In a move designed to further expand its userbase to general web users, the company has just announced it has acquired HighBeam Research, Inc. The deal involves the subscription-based HighBeam Library service for individuals (www.highbeam.com) and HighBeam Reference (www.encyclopedia.com), which offers free reference content from Columbia University, Britannica, Oxford University Press, and others. Financial terms of the acquisition were not disclosed.
Gale has been a content provider for HighBeam for many years, so a close relationship was already in place. "HighBeam is highly regarded for bringing users credible, high-quality information on the open web," says Patrick C. Sommers, president, Gale. "As a partner and content provider, Gale has worked closely with HighBeam for many years. We’ve been impressed with their reach, extensive knowledge of users, and their ability to introduce new consumers to authoritative information." In addition, Sommers stressed that with the added expertise of HighBeam, Gale would be able to "learn more about user behavior and research trends."
HighBeam has an interesting and fairly complicated history. In August 2002, Patrick Spain, the co-founder of Hoover’s, and a group of individual investors purchased eLibrary and Encyclopedia.com from Tucows, Inc. and formed Alacritude (http://newsbreaks.infotoday.com/nbreader.asp?ArticleID=17104), with the goal of providing "Tiffany-quality" search results at "Wal-Mart prices." In October 2002, Alacritude acquired Researchville.com and worked to enhance its web metasearching technology. Then, in January 2004, Alacritude changed its company name to HighBeam Research, LLC, completely retooled its various services, and launched a new flagship service called HighBeam Research (http://newsbreaks.infotoday.com/nbreader.asp?ArticleID=16528). HighBeam positioned itself between free web resources and the costly, high-end online subscription services.
Barry Graubart, writing on the Alacra blog, noted how Spain and his team carefully built and positioned the company and adjusted it over the years to meet the shifting needs of the market. "Throughout its existence, HighBeam has experimented with various technologies, processes, business models, and methods, tweaking until it found the right mix. Congratulations to Patrick Spain and the HighBeam team. Patrick has long been an innovator in the content industry. Excluded from the transaction is the Newser site, which Patrick and his team will continue to run. I look forward to continued innovation on Newser and to see what markets Patrick tackles next."
Spain says, "Gale’s financial strength, vast content repositories, and market presence will allow HighBeam to expand more rapidly and broadly, while HighBeam’s employees will benefit from being part of a large, sophisticated global organization. The HighBeam team is excited about becoming part of the Gale family."
About 35 people from HighBeam will join Gale and continue to be based in the Chicago office. Spain will aid in the transition but will then focus his energies on the free Newser service (www.newser.com), which was not sold to Gale. Spain and Michael Wolff created Newser in October 2007 as an extension of HighBeam’s existing businesses. Newser uses the HighBeam technology platform to access and filter millions of news and reference articles, photos, and videos. Newser combines human and machine intelligence to present news from across the internet in a visually attractive and easily accessible format. Spain says Newser will continue to tap HighBeam content for background, but he stresses that Newser is about current news while HighBeam is about breadth and research. About 10 full-time employees plus part-timers and freelancers remain with Newser, which Spain describes as very much a virtual company.
John Barnes, executive vice president of Gale, says, "A central element of Gale’s market strategy is to connect more closely with end-users of information, whether they are in a library, classroom, or on the web. HighBeam provides us with proven expertise in reaching users on the web and we look forward to the opportunities that the combined business will have to develop innovative new products."
HighBeam currently charges $199.95 a year or $29.95 a month for subscriptions. It recently started to test offering licenses for small businesses. HighBeam offers research articles and archives from more than 3,500 publications. Interestingly, ProQuest is the other large content supplier. Barnes says he called ProQuest before announcing the acquisition, and he is happy to report the ProQuest content will stay and the companies are working to extend the agreement.
Spain says HighBeam has "somewhere between 30,000 and 40,000 individual subscribers." The business has been growing rapidly and is running well and profitably; last month, traffic was up more than 100% over the same time a year ago.
Barnes says Gale is especially excited about the acquisition of Encyclopedia.com. "The domain has inherent value just in its name." He would like to see it expanded with additional content. The site is free now, and Barnes says much of it will remain free and will continue to drive users to HighBeam for subscriptions. He also says there could be options to link users back to libraries.
Berkery, Noyes & Co., LLC (www.berkerynoyes.com), an independent investment bank serving the media, information, and technology markets, represented HighBeam in its sale to Gale. "This transaction reflects the high value the market places on growing subscription-based businesses," says Mary Jo Zandy, managing director of Berkery Noyes. "High Beam is a unique company and an ideal acquisition for Gale with its world class resources."
Spain says HighBeam was quietly offered for sale earlier this year. Several companies were "logical buyers," he says, but "Gale emerged as the leading contender. We fit perfectly with them."
Sue Polanka, head of reference in the library at Wright State University, comments in her blog (www.libraries.wright.edu/noshelfrequired/?p=151), "This is a very interesting acquisition to me. I anticipate many publishers will begin (or pump up) services direct to the end user or smaller organizations. Makes sense since most research is done on the open web rather than via a library database trapped in the invisible web."
Ned May, analyst with Outsell, Inc., says the acquisition is "nothing but good news for HighBeam," but that "questions remain over whether Gale can extract the value it needs from the deal." He points to shrinking library budgets, consolidation in the information industry, and the challenges of selling into the middle-ground market. "Bottom line: the wisdom of this deal for Gale remains in doubt. If they make the most of it, it will likely help them grow but if they do not we may see yet more consolidation."
Gale says it is still very committed to its library market. By reaching out and establishing Gale as a dominant brand, the company hopes to build credibility around such services as AccessMyLibrary (www.accessmylibrary.com), Gale’s library advocacy initiative to increase the visibility of library content on the internet and in search engines. The website allows consumers to have full access to the entire suite of Gale databases and full text that their libraries have licensed on their behalf. Barnes says the site has more than 3 million unique visitors every month. He says Gale has plans to expand it in the next year.
Goliath (http://goliath.ecnext.com) is Gale’s business content service that has been around for a few years, providing global company and industry intelligence to business executives. Gale partnered with ECNext (www.ecnext.com) to produce the service (and for AccessMyLibrary as well). Goliath provides immediate online access to more than 5 million records, including business articles, industry reports, company profiles, and executive contacts, pulled from business data resources maintained by Gale. Goliath offers various subscription options and pay-per-view access. Barnes says Goliath serves different needs and users and will make a nice complement to the HighBeam service.
Gale also licenses its proprietary content for integration within other web-based information services. Nearly 100 organizations—including Looksmart, AllBusiness.com, Dow Jones, and Thomson Financial—have strategic business distribution partnerships with Gale. Gale is based in Farmington Hills, Mich., with additional offices elsewhere in the U.S. and in the U.K., Australia, Germany, Switzerland, and Malaysia. Gale and Cengage Learning (then Thomson Learning) were acquired by Apax Partners and OMERS Capital Partners from The Thomson Corp. in 2007 (http://newsbreaks.infotoday.com/nbReader.asp?ArticleId=36230).