Information Today, Inc. Corporate Site KMWorld CRM Media Streaming Media Faulkner Speech Technology Unisphere/DBTA
Other ITI Websites
American Library Directory Boardwalk Empire Database Trends and Applications DestinationCRM Faulkner Information Services Fulltext Sources Online InfoToday Europe KMWorld Literary Market Place Plexus Publishing Smart Customer Service Speech Technology Streaming Media Streaming Media Europe Streaming Media Producer Unisphere Research

News & Events > NewsBreaks
Back Index Forward
Threads bluesky LinkedIn FaceBook RSS Feed

IIA’s 30th Annual Conference
Posted On November 30, 1998
The 30th anniversary meeting of the Information Industry Association (IIA) attracted over 300 publishers, database providers, entrepreneurs, and financiers for networking and discussion at the Willard Intercontinental Hotel, November 8-10 in Washington, DC. The Deal-Making Session and evening receptions set the tone and provided opportunities to develop connections and partnerships crucial to the growth of new companies and the transition of established organizations.

During the conference, the members voted in a private session to approve the proposed merger with the larger Software Publishers Association (SPA) into a new entity to be called the Software and Information Industry Association (SIIA). There is little overlap between the 550 IIA members and the nearly 1,200 SPA members, and the SPA will bring an emphasis on piracy control to the public policy and government relations activities. The marriage of these two organizations reflects the growing convergence of technology and content.

The New Century and the Old
Walter Isaacson, managing editor of Time magazine, delivered the keynote address, sharing observations and offering some projections. The industrial era resulted in mass-produced goods, a time when Henry Ford was remembered as saying, "You can have any color you want, as long as it's black." This contrasts with the current digital era with the option of individually customized products. With this new environment, Isaacson sees the publisher's role as providing a common ground, ensuring quality control and putting things into a context by "telling the story."

Isaacson predicted that in the next 20 years, bandwidth will become nearly free, voice recognition will make technology accessible to the average person, and artificial intelligence will serve us wherever we go in our networked world. Having reread Brave New World and 1984 in preparation for the millennium, Isaacson noted that, rather than disempowering the individual, technology provides information that is producing the opposite effect. The caveat is that organizations must guard against misusing the information collected on customers.

In response to questions, Isaacson pointed out that privacy is a huge issue and companies must protect individuals' rights. Ironically it has only been in the last 50 years that privacy has been equated with anonymity. In small towns, he pointed out, everyone knew what was happening. Companies must be self regulating, with responsible policies about their treatment of customer data.

Keys to Success
Attendees were next treated to a preview of a recent study conducted by Andersen Consulting on Shareholder Value Analysis that was presented by Sheila Zelinger, an Andersen associate partner. Of the 32 publicly held companies, each with revenues in excess of $200 million, examined in the study, approximately 30 percent performed significantly above the S&P average for the last 5 years (1992-1997). Ten consistent winners succeeded in balancing operational excellence and strategic positioning.
It was apparent that the key to operational excellence lies in the adjectives. "Profitable" revenue included acquiring market leaders, avoiding buying growth that drives down margins, developing customer-centric products, and leveraging partnerships for international expansion. "Sustained" cost management over the 5 years included the use of technology to leverage content across multiple media and to reduce labor involved in manual reprocessing. "Effective" capital management reflected a surprisingly heavy investment in retooling.

Zelinger noted that the key to strategic positioning involved a strong electronic presence. Focused acquisitions enabled companies to penetrate markets and exploit technology. Logical diversification leveraged the content across multiple segments. Media independence resulted from capturing the emerging electronic market. To sustain leadership, companies must rewrite the rules, Zelinger pointed out, and create markets, not just information.

Focus on the Customer
In addition to the two lead speakers and two luncheon speakers (see below: Compuserve, and U.S. vs. Microsoft), there were eight panels moderated by members who focused on the many changes taking place in the industry. Highlights of their remarks collectively focused on the customer, the product, the financial and political aspects of the "information business." Certain sentiments summarized here were reiterated across more than one session.

One of the points made that I strongly agree with is that, in the Web environment, it is essential to know who your customers are and what they want, something that was not as necessary in the print world. Web sites enable information providers to understand their customers' preferences and behavior and communicate with them easily. When users really like a product and share it with their friends spontaneously, a phenomenon is occurring that Jared Sandberg, senior writer from Newsweek, dubbed "viral marketing."

Charles Lax, general partner with Softbank Holdings, noted that Yahoo! is reaching 20 million people a day. They have created content and will gain market share at the expense of the traditional content publishers, he said. Lax pointed out that the old way of marketing with rate cards is being replaced by more focused marketing, since much more information is known about each the customer.

According to Charles Terry, president and CEO of Comtex, "Nothing is more important than the customer, including content." Customers will pay for the right content, at the right time, when the access is easy. Jerry Stead, chairman and CEO of Ingram-Micro, Inc., agreed that there is no supply chain. The industry is demand-driven, he said, and customers want products from multiple vendors, which is why aggregation is so important.

Brian Kardon, senior vice president of marketing for Cahners Business Information, saw customer service as an avenue to improve delivery while lowering costs. Consider the popularity of ATM machines in banking, which enable customers to be self-sufficient. And in publishing, electronic newsletters save printing costs and arrive sooner. Kardon pointed out that there is usually insufficient linkage between customer service, sales, and product development. Customer-initiated contacts, he advised, should be followed up with a thank you and an offer to upgrade or renew the service.

I observed that information products and services define communities of interest, and the marriage of the two represent vertical market segments. was cited as an example of this approach, bringing together buyers and sellers around an advertising-based Web site that hosts a journal focused on a particular industry.

Branding the Product/Company/Channel
Branding came up repeatedly as the single biggest issue on the Web. In contrast to hype, branding is defined in terms of performance and quality, both of which offer value to the customer and a competitive edge for the producer/distributor. While expensive to establish, the brand can contribute to customer confidence and increase loyalty. Branding works for content regardless of the distribution channel. Look, for example, at the 86 million PCs sold in the world with no brand on the outside but an Intel chip and Microsoft software on the inside.

Softbank's Lax noted that the Internet offers companies with brand awareness the opportunity to extend sales nationally at very little cost—as do the Wall Street Journal and The New York Times. For example, it costs virtually nothing for the Miami Herald to sell to Boston Globe customers.

It is obvious that the way that technology is applied to content determines its value. Mark McNeely, founder of Qpass, Inc., noted that we're in new territory, beyond content and aggregation, where presentation makes the difference, as demonstrated by Yahoo! and AOL. Others agreed that people want to have fun on the Internet. It's more than just the data and applications. It's a different design model.

Several panelists remarked on three models for selling information as they apply to the Web: 1) advertising, 2) subscriptions, and 3) transactions. Yahoo! and AOL were cited as examples of the ad-based model that attracts "eyeballs." The Interactive Edition of the Wall Street Journal was referenced as the only well-known subscription-based publication, and its success is attributed to its having an established brand prior to entering the Web. The transaction based e-commerce model is being tested by new entrants utilizing credit cards and smart cards. McNeely noted that it's not economical to maintain relationships with everyone who needs your product, so different models will accommodate various levels of consumers.

Listening to the various models described, it struck me that the Web is likely to resemble television, with an aggregator offering advertising-based content from various sources targeted to a specific group of customers. Look at the evolution of public television, which offers ad-based programming free on network channels while premium channels are collectively offered via cable along with transaction-based events to smaller audiences.

Several speakers noted that new entrants to the market utilize technology and partnerships in order to be the low-cost provider. Given the need to implement new technology, established companies often seek to acquire solutions by buying companies and then face the challenge of integrating them into the culture.

Robert Lessin, CEO of Wit Capital, described capital in general as binary: It is either plentiful or nonexistent. Companies need to ensure that their burn rate allows them to make mistakes and survive until the revenue is sufficient. The key is "branding on the front end and outsourcing on the back end."

Watch for Compuserve
The first luncheon speaker, Audrey Weil, the new chief operating officer of Compuserve Interactive Services, repositioned Compuserve (since it was bought by AOL) as increasingly focused on an upscale market. Weil distinguishes Compuserve users as readers of The New York Times, in contrast to AOL users as readers of USA Today.

Sizing up the growing business and home office market, Weil noted, "If you don't cannibalize your market, someone else will." New brands usually take the lead in emerging markets, because established brands are focused on protecting existing markets. Compuserve's new interface offers channels, news, and custom options.

Weil offered several ideas for gaining incremental revenue from a Web site: Make it easy, and make it relevant. You have 10 seconds for users to determine what they want to do, and 40 seconds to actually deliver it. Mixing free services with paid services (such as Businessweek on AOL) is a good idea. Create sticky applications that generate repeat business such as a gift minder service, which also serves as a barrier to entry. Find the right partner and the right mix of products.

U.S. vs. Microsoft
Robert Litan, director of economic studies at the Brookings Institution, offered an assessment of the three issues in the current case by the Justice Department against Microsoft. 1) Is Microsoft guilty of exclusive dealing in pressuring AOL not to use Netscape? 2) Will the Justice Department determine if the browser and the operating system are part of the same system or two different products tied together? 3) Is Microsoft guilty of carving up the market with Intel and Apple? If Microsoft is judged guilty, said Litan, then the debate centers on the level of damage and the extent of the relief. A key witness is Frank Fisher, economist from MIT, whose testimony will address the level of damage—influencing the amount of relief determined by the judge.

Industry Perspective
At this IIA meeting, the transition occurring in the industry resulting from Web access and technological innovations placed newcomers of startups on panels next to representatives of established companies that are redefining their businesses. There is no "business as usual," as everyone is working on the question of how to make money on the Web, how to increase shareholder value, and how to improve delivery of information services to an audience that wants customized interactive products that are fun to use. SIIA meetings next year will surely reflect the consolidation taking place in the industry and the entrepreneurial spirit so evident at this meeting.

Judy Luther, president of Informed Strategies (, is a consultant in the area of market development.

Email Judy Luther
Comments Add A Comment

              Back to top