Gale Reaches for More End Users With Questia Acquisition
Paula J. Hane
Posted On February 1, 2010
In December 2008, Gale (www.gale.com), a part of Cengage Learning (www.cengage.com), acquired the HighBeam Library and Encyclopedia.com, thus expanding its userbase beyond libraries to general web users (http://newsbreaks.infotoday.com/NewsBreaks/Gale-Acquires-HighBeam-Research-to-Connect-With-End-Users-51979.asp). At the time, John Barnes, executive vice president, strategic marketing and business development of Gale, said, "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." Gale is continuing down this path in its just announced acquisition of Questia Media, Inc., a provider of information and educational resources to high school and college students through its Questia.com and QuestiaSchool.com products. Questia provides an affordable premium subscription service that gives users access to more than 76,000 books from 300-plus publishers in the humanities and social sciences, plus about 3 million articles from journals, magazines, and newspapers. The companies see considerable potential for the combination of their resources and tools.
"Questia has developed excellent products for learners and educators, with quality content and unique technologies created specifically for college students, professors, and high school students," said Patrick C. Sommers, president, Gale. "The business has a solid subscription base and is developing unique applications to extend its reach to users around the world."
Questia's book content is a clear attraction for Gale, adding scholarly content from leading publishers to support learning in high school and college-a great complement to Gale's extensive reference content. As for the articles, they are mostly licensed from Gale, a longtime partner. In Questia's early days, it licensed and loaded content directly from publishers, but after a few years, it saw the benefit of licensing content from Gale. So the two companies have a long and cordial working relationship.
Barnes says that Gale is also impressed with the Questia tools for the education community. Questia School is a teacher/student resource center that incorporates the digital library content with K-12 class instruction and is designed for use by educators and students to enhance curricula. Sommers says Questia "will enhance Gale's offerings with new research and productivity tools, lesson plans, and professional development for the classroom."
Tim Harris, president and CEO, Questia Media, Inc., says, "By joining with Gale, Questia believes its customers will benefit from Gale's financial strength, complementary content resources, and innovative approach to product development. Gale has an outstanding reputation for serving users with quality information products, and we are confident that the combination of resources and talent will ensure ongoing innovation for users."
Harris says that Questia's relationships with its book publishers are strong, and the publishers are also excited about the acquisition by Gale. As for any channel conflicts for the publishers, with Questia's prices being so much lower than those for ebooks through Amazon and other vendors, Harris says these are different markets-and its publishers want multiple access models for their ebooks. Questia enables publishers to capture customers and revenue they would otherwise miss. "Questia's users don't want to purchase an ebook and keep it. They just want access to the contents for research."
Questia sells access to its digital collections for $19.95 per month. The company also offers access to select subjects such as history for $9.95 a month. A subscription to Questia also includes digital productivity tools for highlighting text, taking notes, and generating footnotes and bibliographies in seven different styles.
Ned May, industry analyst with Outsell, Inc., says, "I think this is a smart move by Gale. It's a quick build-out of their customer base and content collection while eliminating a competitor. I'd expect we'll continue to see this type of market consolidation in response to a combination of structural market pressures and low cyclical valuations. It also speaks to Gale's renewed strength and vitality following its separation from what was at the time Thomson Corp. In short, they got what they needed in the HighBeam deal, and they are back for more."
Barnes says that HighBeam is doing very well, and with Questia, the services will reach some 30 million visitors per month. In addition to the synergies of HighBeam and Encyclopedia.com with Questia, Gale will look to integrate Questia with its AccessMyLibrary service (www.accessmylibrary.com), which connects users through web services to their local libraries for access to more than 30 million articles from premium sources. In December, Gale announced a free AccessMyLibrary mobile application for the iPhone.
Last fall, Questia introduced an iPhone application that provides mobile access to Questia's library. According to Harris, the app will work with Apple's new iPad tablet when it becomes available later this spring. (Whether students can afford an iPad is another question.) Questia Library is available from the App Store in iTunes for 99 cents, giving users permanent access to 5,000 public domain books and 1 week of access to every publication in Questia Library. After 1 week, users may purchase additional access to the full library through iTunes for 2 weeks at a time for $9.95.
Houston-based Questia was founded in 1998 and launched its service in 2001-a challenging time to be entering the market (its venture funding dried up in September 2001). But over the years, the company persevered with its subscription model despite the challenge of free web alternatives, and it now claims more than 400,000 paid customers in total over the years. The Questia.com site has some 5 million unique visitors per month. Anyone can search the collection for free but must subscribe to access the content. The company has sold 250,000 seats for its schools product worldwide.
Harris says that most of the team from the early days of the company is still there-there are currently 26 employees. He's been there since 1999, serving as chief operating officer before becoming president and CEO in 2007. Harris will stay on as the company works out an effective transition plan. Customer service and technical support contacts will remain unchanged for customers at this time. Financial terms of the acquisition were not disclosed.