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  Beyond access IBM Global Business Services Media and entertainment Raising the value of information in a cluttered environment IBM Institute for Business Value   IBM Institute for Business Value IBM Global Business Services, through the IBM Institute for Business Value, develops fact-based strategic insights for senior business executives around critical industry-specific and cross-industry issues. This executive brief is based on an in-depth study by the Institute’s research team. It is part of an ongoing commitment by IBM Global Business Services to provide analysis and viewpoints that help companies realize business value. You may contact the authors or send an e-mail to iibv@us.ibm.com for more information.  Beyond access Raising the value of information in a cluttered environment  Executive summary From carrier pigeons to the advent of mass communica-tions, the business information industry has successfully adapted to many changes in its long and storied history. Today, however, the US$70 billion industry 1  may face its toughest transition yet: competing in a digital world with a digitally savvy user.New online information providers and free services – including online newspapers, expert blogs, targeted search engines, low-cost research sites and niche providers – have begun to pull audiences from incumbents. With knowledge seekers atomizing and loyalties shifting, new competitive and substitution risks may be driving the industry toward an inflection point. Industry players need to adapt swiftly or risk losing ground in key areas.Near term, the industry’s two historical barriers to entry – proprietary content and proprietary analysis – are expected to hold. But longer term, the “opening” of source information will likely drive heightened competition and erosion of barriers. If these trends continue, future competitive advantage will go to firms that provide value-added services and expert insights, not access.Despite a risk-laden outlook, incumbent players may be well positioned to leverage user intimacy to deliver compelling next generation services and solutions. The following strategies can help them compete in this emerging environment: 1. Protect the core business by providing solutions.  As access is commoditized, information providers can protect and grow margins by focusing on solutions that deliver greater relevancy and expertise, including workflow integration, ecosystem partnerships and ontology development. 2. Grow beyond the core business with value-added services.  Analytical capabilities can be expanded into new service realms such as predictive analysis, consulting services, alerts and time-saving customized analysis. 3. Drive a customer-centric culture.  Information providers can adapt to a demand-driven market by coinvesting with clients, creating a compelling user experience, implementing usage and preference analytics engines and marrying market and customer insights. 4. Evolve business and pricing models.  Each service within a company’s portfolio can audit its unique competitive advantages in terms of proprietary analysis and proprietary content and cross-leverage learning from other areas within the parent company. Pursuing partnerships and adopting dynamic segmentation and pricing strategies will likely be important aspects of success as the marketplace evolves. 5. Be digital with streamlined delivery.  To deliver the right information to the right user on the right device at the right cost, information providers can focus on rolling out industry standards and driving device and platform agility. 6. Leverage your brand.  In the effort to cut through content “overchoice,” a brand that stands for expertise, trust and experience is an invaluable asset. To be effective, the brand should position the provider as a stalwart in the overflowing information marketplace.These recommendations allow information providers to move “beyond access” and focus on delivering expertise and insights. 1 Future competitive advantage will go to firms that provide value-added services and expert insights, not access.  2IBM Global Business Services A pedigreed legacy The information provider industry has weathered many changes in its long and storied history. In the 19th century, Reuters used carrier pigeons to disseminate stock quotes, and the Associated Press created a collective of rowboat reporters to “scoop” news from incoming ships. Later came decades of industrialization and the advent of the telephone, radio and television. Through each successive wave of fundamental change, business information providers have managed to adapt successfully. A digital world drives fundamental change Today, however, the US$70 billion industry 2  may be facing its greatest challenge yet: competing in a digital world populated by digitally savvy users. The explosion of the Internet has given rise to multiple new sources of information, including free online newspapers, expert blogs, targeted search engines, low-cost research sites and niche providers seeking specialized audiences. Many of these sources are technologically innovative and often available without fees for the user.   The Internet has also made it possible for primary information suppliers – from news outlets to law courts to manufacturers – to go directly to consumers, creating an additional new layer of de facto   competition. In the past, these suppliers would provide srcinal source information to journals or information services. Now that it is possible to offer supplier information directly online, some information providers face the very real prospect of disintermediation.The wave of change engulfing information providers includes another distinctive element: digitally savvy end users. Broadband adoption continues its rapid growth in major markets around the world (see Figure 1), driving users’ appetites for new, online content and services. Incumbents are often behind the curve in terms of adopting new technologies for compelling and robust information services. In most cases, nontraditional players have simply been quicker to innovate and are more agile in leveraging new technology for the benefit of users. News and newswire services face new competition as suppliers go direct Today, some segments of the information industry face the threat of disintermediation more acutely than others. In the news and newswire segment, for example, traditional information services are feeling the bite of commoditization as users gain direct access to myriad digital alternatives. Internet distribution is making it possible for brands to reach their constituencies easily, cost-effectively and directly. In an effort to capture incremental advertising revenue (and, to a lesser degree, online subscription charges and archive access fees), more than 5,000 newspapers and 2,000 trades magazines are now available on the Internet. 3 This explosion of content availability is also giving rise to a new breed of aggregators intent on competing in a space once reserved for traditional, fee-based information providers. A prominent example of this new form of aggregator is Google News, which offers access to 4,500 daily global news sources – as a free user service updated every 15 minutes and customizable by the user. With competitors able to reach audiences as never before, fee-based business models that rely primarily on aggregation services are most susceptible to competitive pressure.These dual trends – open supplier information and the emergence of new aggregation points – are conspiring to suppress business performance in the newswire category. For example, Dow Jones Newswires revenues were down US$22 million, or 9.3 percent, over the last two years, while PR Newswire saw its revenues decline 7.1 percent between 2002 and 2003. 4  Even as the economy recovery helped push subscription news services back into positive territory in 2004, growth remained slow to moderate. Subscription growth for the top ten services was estimated at 3.9 percent between 2003 and 2004. 5 But even the new class of aggregators is not free of the competitive threats posed by technological change. New tools like Really Simple Syndication (RSS) are allowing users to create their own services – in effect disintermediating the aggregators. RSS feeds allow a user to go directly to the sources filtered by an aggregator – be it Google News or a traditional provider – to create their personalized news services from the pubic Internet.
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