BtoB comes full circle

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Founded in 2000 with the boldest of visions,—a would-be b-to-b e-commerce play built from the publishing properties of Miller Freeman and CMP Media—is now retrenching as a diversified information company. But the company’s experience in the wild world of b-to-b exchanges, tech-driven venture capital and rapidly changing business models may enable it to develop a stronger next-generation b-to-b information strategy than many of its publishing rivals.

It hasn’t been an easy road for Paperloop.

The company was created as a joint venture between Miller Freeman (now owned by CMP, which still holds roughly a third of Paperloop) and venture capital firm Pegasus Capital Advisers. The goal was to leverage Miller Freeman’s paper industry publications, led by Pulp & Paper, into a broad b-to-b play that would include e-commerce storefronts, hosted applications such as order management and warehouse control, and online recruiting services.

Grand e-commerce plans

Paperloop CEO Ian Johnston said the company never intended to be a pure buy-and-sell exchange trafficking in paper commodities. But the e-commerce plan was grandiose nonetheless.

"Where we did see a lot of e-commerce opportunities was in building storefronts into an online community," Johnston said. "We had the Miller Freeman pubs and trade shows to build on, and upwards of 250,000 [subscriber] names. The view was to drive those people to our site to do business with our storefronts, which would grow from being a two-dimensional, glorified ad to be truly transactional storefronts."

The plan, Johnston said, was to charge companies to build the transactional storefronts, rather than to take a percentage of deals as a typical exchange would.

But the storefront vision didn’t take off. Companies in the paper industry preferred to build their own private extranets and e-commerce sites. As for selling hosted e-commerce applications, that market dried up as well, Johnston said.

"The paper industry is extremely reluctant to embrace e-commerce," Johnston said. "Likewise, on the transactional storefront model, they are very reluctant to go through a third party."

Last March, Paperloop officially abandoned its e-commerce ambitions, absorbing its e-business division into its more traditional editorial, publishing and operations divisions. It also cut 15 workers, or about 10% of its staff, mostly e-business employees. The new strategy, Johnston said, was to become a pure information provider, but with technology and Internet capabilities to drive the company well beyond print publishing.

Indeed, although exchanges and b-to-b e-commerce sites have gone through tough times, b-to-b survivors generally have real value to provide for savvy customers, according to analysts.

"The irony is that this is the perfect time for companies to be paying attention to how [b-to-b sites] can deliver them substantial savings relative to their investment," said Pierre Mitchell, an analyst with AMR Research.

Paperloop’s Johnston aims to create just such a company. As part of the reorganization earlier this year, the company expanded the role of its economic forecasting division, RISI (formerly Resource Information Systems Inc.), which it acquired in late 2000. More acquisitions are on the way, Johnston said, including a planned deal this month to acquire an industry benchmarking vendor.

The new strategic direction, which Johnston dubs "stretching the vertical," aims to leverage the massive customer and pricing/product databases Paperloop owns to become the standard for industry data, forecasting and benchmarking. While that falls short of the e-commerce vision of the company’s early years, it still represents a major step away from its print publishing and advertising roots.

"A lot of people use our products to glean information and plan a route to market today," said Johnston, who noted that for contracts on some grades of paper about 60% of pricing is driven by Paperloop-owned indices. "What we’re looking to do is fill the gaps in our portfolio and drive even more of the market."

Dealing with exchanges

Ironically, at least part of the strategy is being accomplished through deals with paper exchanges. But rather than try to deliver pure e-commerce to customers, the new Paperloop is focused on delivering information, recently cutting agreements with PaperExchange and

Paperloop’s larger goal is to leverage its growing database and information provider deals to launch more publications and trade shows, especially in niche markets. For instance, it recently debuted new publications and shows aimed at the tissue industry.

Indeed, Paperloop’s ambitions have, if anything, grown larger. Johnston’s aim is to extend Paperloop’s data-driven and brand extension strategy to other industries.

"We think we can be deeper and wider than any other b-to-b publishing group," he said.

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