Issues of "coopetition" policy will continue to challenge the new company. Not only do their parents continue to compete in other areas—e.g. news wires and real-time financial information—but Reuters supplies Yahoo! as part of its consumer operation. Andrews indicated that Corporate Yahoo!, a new push for the desktop from the Internet firm, is just "one of many competitors we have to face." Reuters also supplies data to LEXIS-NEXIS and Dialog, among others. In October, Reuters began to supply Dow Jones Newswire reports through most of its dedicated computer terminals worldwide.
When asked about the duration of those commitments, Andrews indicated that "the joint venture will decide whether or not to distribute with third parties. We hope to be able to extend our relationships when they make sense; when they don't, then we'll deal with the problem. Our big concern is to make sure customers get what they want."
Customer-driven policies may also challenge past policies, particularly by Reuters, in pricing and marketing. Andrews indicated that the new company will "manage policies centrally and set pricing for all the products. Initially the pricing will be the same as today. DJI will still offer enterprise pricing and pay-per-view and Reuters Business Briefing its global hour blocks. When the new product suite comes out, new pricing will look more like DJI pricing, which is what we expect most corporations want. People are not interested in minimum charges or per-hour charging, and our goal is to make certain our customers are happy with a consistent pricing policy."
The new company is conscious of the need to persuade its information providers of the benefits of the link up. To this end, said Michele Lally, director of global marketing at the new company, letters were sent out to them yesterday. "We've already started to talk to some and they have all been very positive so far," she said, adding that the new company is very good news for content providers. "We are going to have an expanded sales and marketing resource, which means we can be very confident that we will be able to boost sales, and increase revenue for our information providers."
Negotiating with some of the two companies' existing partners may prove more challenging. For instance, the Financial Times Group, a competing online provider—and publisher of the London Financial Times—is currently the only third-party distributor licensed to sell Reuters Textline—through the FT Profile service run by FT Information. FT Information and FT.com are both part of FT Electronic Publishing. FTEP is also one of the partners in the production of the World Reporter database—initially a joint venture between Dow Jones, Knight-Ridder Information, and the FT to create an alternative to Textline. "Reuters will continue to meet its obligations under the current contract with the FT," said Lally. "And we hope that the FT will want to work with the joint venture."
When asked for its response to the news of the new merger, the Financial Times group didn't give much away. "We are encouraged by the commitment the new joint venture demonstrates to the growing business information market, and we welcome the competition it will bring," said Paul Waddington, marketing communications director at FT.com. "We will continue to distribute the Textline database under our existing agreement, and the World Reporter database will continue to provide an excellent source of international publications online."
It is hard not to conclude that before being able to offer World Reporter on the new service there will also need to be some delicate discussions with Dialog Corporation CEO Dan Wagner. In purchasing Knight-Ridder Information and Dialog, Wagner inherited Knight-Ridder's seat at the World Reporter table.
Speaking of the Competition
Dow Jones Reuters Business Interactive has already garnered the attention of its competitors. Within hours of the inaugural press conference, Dialog issued a press release commenting on the new venture:
"Today's announcement by Dow Jones and Reuters demonstrates the extent to which The Dialog Corporation has been a force of change in the online information market since the merger of M.A.I.D plc and Knight-Ridder Information Inc. in 1997 ….
"Both Reuters and Dow Jones are comparatively smaller players in the online information market, who have found that they cannot exploit the opportunities of this market on their own. To compete, they have been forced to come together.
"What is interesting to note is that this new service will be comprised mainly of news. As we have said many times before, news is increasingly a commodity, available for free on numerous Internet sites. In this context, news-only services are more and more difficult to sell on a standalone basis ...."
Figures from Simba, according to Reuters' Thomas, show that LEXIS-NEXIS currently has about 30 percent of the business information market, Dialog has about 26 percent, Dow Jones Interactive around 15 percent, and Reuters Business Briefing about 10 percent. "The combined resources and assets of the new company, therefore, will put it very much in the top three, and make it a player in the same division as Dialog and LEXIS-NEXIS," said Thomas.
Responding to Dialog's claims that the new service will be comprised mainly of news information, which is rapidly becoming a commodity, Thomas responded: "The point Dan Wagner seems to have missed is that one of the differences between our organization and his is that Dialog is just an aggregator of sources. We are aggregators too, but in addition to offering 7,000 publications, of very different sorts, our new product will provide access to two very major news organizations and their products including—on an archival basis—a leading financial newspaper."