Vendors rethink approaches to online in Canada.
Vendors Rethink Approaches to Online in Canada
1991 has already delivered some surprises in the Canadian Online information industry. Strategic moves by major players have changed the competitive nature of the news and business information segment. Two vendors have decided to be information providers only, while the leader in the Canadian industry has shifted from an emphasis on sales to service.
All of these moves were necessitated by the Canadian market which appears to be much smaller than it was first thought to be, and the fewer dollars available for online research.
The first and most surprising move occurred in December 1990, when Infomart Online, the electronic publishing venture of Southam Business Communications and FP Online, announced an agreement that gave Infomart exclusive rights to distribute The Financial Post newspaper.
This agreement was not simply a content acquisition. It meant that FP Online, the number three vendor in the Canadian news and business information industry, was opting out, "abandoning the market" as one player commented, to leave the provision of electronic information to two communications giants in the country, Thomson and Southam.
On the content side, however, it gave Southam what it did not have among its seventeen dailies, a well-respected national business newspaper to add to the electronic service. The Financial Post has a formidable reputation, acquired during more than eighty years of reporting on the Canadian scene. Its major competitor, the Report on Business produced by The Globe and Mail, enjoys an equally formidable reputation. The agreement to allow Infomart to distribute The Financial Post electronically polarizes the Canadian information industry around the two major business papers.
As Glenn Keeling, formerly general manager of FP Online and instrumental in forging the agreement, said, "It is a good marriage." The reason why they were prepared to consider such a union is simple, he says: "We were not making money. The cost side had escalated disproportionately and we weren't seeing the growth. We chose not to go the route of pouring more money into it. Our number one motive was financial."
When FP Online began to look for alternatives to being a vendor, they decided that all the components they wanted in an agreement had to be there. "The best all round deal," said Keeling, "was one that would not put anyone out of work. The principal motivation was our people."
Although there were discussions with three organizations and three offers to consider, two Canadian, one U.S., they had "the best feeling" about the Infomart Online arrangement. Southam was committed to accepting their staff of seven people; moreover, Keeling feels that tremendous career opportunities have been opened up for them. Ironically, Southam laid off 100 people from the same division in November 1990.
The agreement with Southam's Infomart Online for exclusive rights to distribute The Financial Post is long term. Keeling will not specify the number of years, but there is "automatic renewal" for the newspaper content itself. Every edition of The Financial Post published since January 1985 is available in the electronic version. Infomart Online has non-exclusive rights to the balance of the content from FP Online, the Directory of Directors, and the FP Corporate Survey. McLean's, Canada's weekly newsmagazine, has been available since 1988 on Infomart Online and elsewhere, including American services.
The electronic edition of the Directory of Directors provides names, titles, corporate affiliations and contact information for the 16,000 key people in control of Canada's 2,200 major corporations. The FP Corporate Survey database combines the contents of the Financial Post Survey of Industrials and Survey of Mines and Energy Resources.
Jonathan Hobbs, director of Infomart Online, described the agreement between the two companies as "a strategic alliance." FP Online is more than an information provider, since they have an agreement to do joint advertising, and they brought a client base with them, as well as all of their staff.
The "fit" between the two groups was perfect according to Hobbs. "The Financial Post, as a national business newspaper, fills in a big gap in our product line. We never really were in competition, since people looked to Infomart Online to meet their regional news needs." Infomart's databases include nine newspapers from Canadian cities in five provinces.
Although FP Online subscribers benefitted from access to the additional Canadian content, and also to Infomart's gateway to DataTimes and through them to Dow Jones News/Retrieval, Keeling said their users have gone from "one of the best platforms, Wisdom, to one of the most inferior, Basis." His staff has discovered, however, that there are many things that Basis can do that Wisdom could not. EP Online's level of indexing, reputed to be the best in the industry, will be maintained.
Beverley Watters, of Halupka-Watters Information Brokers in Toronto, and a co-editor of Database Canada, subscribed to both services. Watters interjected that the amalgamation of the two services is "a jewel from our perspective" and the movement from two different services to one, "painless." "All of the subject access and enhancements have been kept," she said. "The transition has been very smooth."
While Glenn Keeling expects being an information provider to be a lot more profitable ("FP paid heavily," he said, "with three years of losses"), Infomart Online faces the challenge of turning the combination service into a profitable operation. Although Infomart Online was launched in 1986, it is not yet profitable. According to Jonathan Hobbs, they are looking for "a much-reduced loss" in 1991, and aim to break even in 1992.
In the Canadian market, which Hobbs claims is 1/100th the size of the U.S. market, achieving profitability is an uphill battle. Infomart will do this in two ways, "by continuing to add content and services, and by reaching different niche markets." Redistribution of the FP Online content ("several U.S. vendors are interested") is another potential money-maker.
While subscribers like Beverley Watters are pleased with the combination service so far, she is "sad to see one less player in the market." The whole market has really matured, she said. "The user is more sophisticated, discerning, and efficient. Also, it's difficult to identify the end user. And that's where the growth really is."
The market leader, Info Globe, the first and most successful commercial information service in Canada, responded to a maturing market differently. At the end of 1990 they closed regional offices in Vancouver and Ottawa, maintaining a sales office only in Montreal. Michael Ryan, general manager of Info Globe, said that "business has contracted over the last two years. But that is a natural process."
"We have grown our client services group, and focused our sales effort in Toronto." The larger client services group will cover extended hours, from 9 a.m. to 8 p.m. for the west coast business day. The sales staff will also serve in what Ryan calls "senior client service roles."
Ryan continued "that 1990 was a difficult year for Info Globe, with growing pains, and a lot of internal change, not to mention the recession." Ryan himself is new to the job, having been in it for just four months.
As for competition in the Canadian arena, he commented that "we are still fighting over a very small pie." Although there is not a rapid growth in the market, "people will access Info Globe for the reasons they always have." Info Globe's business has become more diverse. Although they continue to be focused in business information, their print products, specifically, the Canadian Periodicals Index, have become a major thrust of their product line. So have the fax products.
Info Globe's Fax Summary, a four page synopsis of the news which can be customized for clients, was launched in 1990. It operates on the five business days, and is faxed to clients at 11 p.m. the night before the paper appears.
In 1991, Info Globe will continue to fulfill its commitment to the existing client base, enhancing the products it provides to them. Its new directions will be in moving towards "decision support services," in markets they haven't played in before. "We will rely on the association with The Globe and Mail, and the power of its editorial and business analysis, but we will move into markets where those things are important. And we will find ways to re-market our information."
While Info Globe wrestles with the demands of a maturing market, another division within its parent company, Thomson, has acquired an electronic tax information service. On January 23, 1991, Thomson Professional Publishing announced that Canada Tax Online (CT Online) would join forces with Thomson's Toronto-based tax publisher, Richard de Boo to provide tax law and accounting information services.
"CT Online was a strategic acquisition," said Anne Foster, vice-president of the new electronic publishing unit launched in September 1990. "It gave us faster access to a market we were interested in. We plan to enhance the existing product."
CT Online was developed by the accounting firm Ernst and Young, and the Canadian Institute of Chartered Accountants (CICA) both of which will continue to be involved in developing and managing the databases.
According to Peter Hoult of CICA they "needed to get more people selling the database. We just couldn't maximize the potential. We're not in the business of making significant investments in marketing," he said.
With virtually no sales force in either of the organizations, they had always sold CT Online by direct mail. When it is a question of selling databases, direct mail is "not nearly as effective as demonstrations, training, and handholding," Hoult said. The decision to move out of the vendor role was based on the realization that CICA had gone as far as it could with the service.
Thomson is now setting up customer support for the service, which will have 8 a.m. to 8 p.m. "hotline" coverage.
Unlike FP Online, CICA and Ernst Young have sold Canadian Tax Online "clear and absolute, the entire business. But we will remain affiliated to identify new opportunities for the product," adds Hoult.
Expansion plans for CT Online may eventually extend to the U.S., according to Anne Foster. "We are exploring the possibilities of access to that data from the U.S. and of access to U.S. data for Canadian customers. Tax professionals in both countries need to understand the application of tax acts to their customers. We provide Canadian information, but there is a good deal of activity with free trade," she said.
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|Title Annotation:||Inside Canada|
|Date:||Apr 1, 1991|
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