Paper giant makes Web waves

Summary:CommentaryYou know, it's easy to get excited about computer and software manufacturers out there that generate $8 billion a year in sales -- Microsoft fell into that category as recently as 1996 -- but you don't hear a lot about $8 billion publishing companies. Well, start paying attention to one, Reed-Elsevier.

Commentary

You know, it's easy to get excited about computer and software manufacturers out there that generate $8 billion a year in sales -- Microsoft fell into that category as recently as 1996 -- but you don't hear a lot about $8 billion publishing companies. Well, start paying attention to one, Reed-Elsevier. It's aiming for the online market in a big way.

Reed-Elsevier this week scooped up Wolters Kluwer NV, a Dutch publisher of legal and tax information, in a deal valued at $8.7 billion. The deal put the combined company in the rarefied heights of publishing concerns that generate $8 billion or more a year in revenue. And, already, Reed-Elsevier, a combination of English and Dutch companies merged in 1993, earns 16 percent of its revenue from electronic publishing.

All by its lonesome, Reed-Elsevier could account for as much as 25 percent of the $38 billion business-information market by the year 2000, according to a report released by the investment banking firm of Veronis, Suhler & Associates.

Business information is the low-hanging fruit for Internet publishing. Market share, regulatory information, statistics and industry-specific content have palpable value. Content changes often, and archival data never loses its value for historical research purposes. In short, it's the only market that enjoys both a high ratio of time-sensitive information and long-lasting value for archived material.

This is not the stuff of the consumer market, where, once Cheap Trick has played its revival concert, the value of information about the show falls to zero.

Reed-Eslevier has assembled an impressive portfolio of content since 1993, when it was formed. It owns Cahners Publishing, a leading trade publishing company, the Congressional Information Service, and Lexis-Nexis, which it acquired for $1.5 billion in 1994. It owns trade shows, producing Telecom on behalf of the International Telecommunications Union. I've been reading its Manufacturing.net service (www.manufacturing.net) to keep abreast of component pricing for months. It also owns definitive sources of medical and scientific articles, including the Lancet medical journal.

In short, Reed-Elsevier makes Softbank (the publisher of ZDNet News), IDG and CMP, the behemoths of information technology publishing, look like miniature poodles. And, as a result, it looks like an ideal content partner for companies and Web sites wanting to provide broad context and support for emerging online markets for traditional goods and services.

Imagine, for example, that you are a Big Six accounting company that wants to provide an authoritative site on global currency trading. Reed-Elsevier's tax and legal resources make an ideal archival source for fleshing out your new site with background information. Third-party content mongers will assemble pieces of the past in the form of news stories, statistics and reports in order to authenticate their conclusions. Reed-Elsevier, in the meantime, can produce new content which it will sell to readers who want to measure the reporting by third-parties against the Reed-Eslevier party line.

Here's the thing: The mistake most publishers make is in their assumption that they will sell their content to the same end-user they have served through paper. In fact, they may simply become objective third-party sources of information used by the industries they covered in the paper days.

Reed-Elsevier, owning a vast chunk of the history of many industries, can make its money lending credibility to third-party research. That revenue stream, alone, is enough to support ongoing development of new industry-specific content, which it will be able to sell again and again.

Mitch Ratcliffe is president of Internet/Media Strategies Inc. (www.ratcliffe.com), a Tacoma, Wash., consultancy. He can be E-mailed at godsdog@ratcliffe.com.

Topics: Microsoft

About

Mitch Ratcliffe is a veteran journalist, media executive and entrepreneur. He was editor of the ground-breaking Digital Media newsletter in the 1990s and a frequent contributor to ZDNet over the years. He led development of the first Web audio/video news network at ON24, sat on the board of Electric Classifieds Inc. and Match.com, and wor... Full Bio

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