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Outsell study predicts bumpy ride for b-to-b publishers

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In a new MarketView report released today, research company Outsell predicts a "bumpy ride" for b-to-b publishers as they face competition from alternative information providers such as search companies and content aggregators.

The study, which was based on an online survey of more than 4,000 business purchasers of information, found a significant drop in spending on news and trade information over the past four years as people find alternative sources.

This year, spending on news and trade information will make up only 12% of business users' total information purchases, down from 28% in 2001, the study found.

Spending on scientific, medical and technical (SMT) information jumped from 11% of total information purchases in 2001 to 17% in 2005, and spending on education and training materials increased from 7% in 2001 to 15% of total information purchases in 2005.

Other information sources seeing increased spending over the past four years are reference materials (up from 10% in 2001 to 14% in 2005), legal information (up from 7% in 2001 to 8% in 2005) and market research (up from 17% in 2001 to 19% in 2005).

The report also tracked the revenue growth of different groups of information providers, including b-to-b publishers; content aggregators, such as Google and Factiva; and scientific, medical and technical information providers.

In 2004, content aggregators had average revenue growth of 20% over 2003. B-to-b publishers had average revenue growth of 10%.

The total market size of the news and trade industry in 2004 was $89.5 billion, according to Outsell. The company projected revenue growth in the low single digits in 2005 and 2006 for the sector as users turn to more free sources of information.

"Audiences have moved ahead of the business models," said Chuck Richard, VP and lead analyst at Outsell. "They have alternate sources of information, driven largely by the search providers." He added, "The risk is that b-to-b revenue growth will be impacted In a new MarketView report released today, research company Outsell predicts a "bumpy ride" for b-to-b publishers as they face competition from alternative information providers such as search companies and content aggregators.

The study, which was based on an online survey of more than 4,000 business purchasers of information, found a significant drop in spending on news and trade information over the past four years as people find alternative sources.

This year, spending on news and trade information will make up only 12% of business users' total information purchases, down from 28% in 2001, the study found.

Spending on scientific, medical and technical (SMT) information jumped from 11% of total information purchases in 2001 to 17% in 2005, and spending on education and training materials increased from 7% in 2001 to 15% of total information purchases in 2005.

Other information sources seeing increased spending over the past four years are reference materials (up from 10% in 2001 to 14% in 2005), legal information (up from 7% in 2001 to 8% in 2005) and market research (up from 17% in 2001 to 19% in 2005).

The report also tracked the revenue growth of different groups of information providersincluding b-to-b publishers; content aggregators, such as Google and Factiva; and scientific, medical and technical information providers.

In 2004, content aggregators had average revenue growth of 20% over 2003. B-to-b publishers had average revenue growth of 10%.

The total market size of the news and trade industry in 2004 was $89.5 billion, according to Outsell. The company projected revenue growth in the low single digits in 2005 and 2006 for the sector as users turn to more free sources of information.

"Audiences have moved ahead of the business models," said Chuck Richard, VP and lead analyst at Outsell. "They have alternate sources of information, driven largely by the search providers." He added, "The risk is that b-to-b revenue growth will be impacted negatively."

In the report, Outsell provides a list of essential actions that news and information providers should take in order to maintain and grow market share, including indexing and tagging, blogging and offering RSS feeds.

It also identifies five "rising stars" in the news and trade industry: Hearst Business Media, Moreover Technologies, Jupitermedia, TechTarget and Yahoo! News. These companies were selected for their innovation in developing new media models, integrated content, financial performance and customer focus.

The report also noted recent mergers and acquisitions activity in the news and trade industry, particularly with traditional publishers purchasing online content providers.

M&A activity in 2004 and 2005 included the New York Times Co.'s acquisition of About.com for $410 million; Dow Jones & Co.'s purchase of MarketWatch for $435 million; Gannett Co.'s acquisition of PointRoll for $100 million; the Washington Post Co.'s acquisition of Slate magazine; and a partnership of Gannett, Tribune Co. and Knight Ridder that acquired 75% of Topix.net.

Outsell also discussed some of the key trends that are reshaping the news and trade industry, including free news on sites such as Google and Yahoo! News; self-aggregators and bloggers; and the distribution of news to mobile devices, such as cell phones and PDAs.

"Done properly, there is definitely an upside in taking advantage of the reach that the Internet and search provide to develop new readers outside of the core subscriber base," Richard said.

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