Changing Ownership Patterns in the Information Industry

by Marjorie M.K. Hlava
Originally published October 1996

Note: The information gathered for this paper comes from many sources. The information presented that references the works of Dr. Martha Williams is drawn from the papers she has published in the Proceedings of the National Online Meeting. Please see those papers as referenced in the bibliography for the actual data. Dr. Williams has asked me not to present those numbers as they are published and copyrighted and she is awaiting clearance from Gale Publishers to post them on her own web site at a future date.

Definitions

What is the Information Industry?

Definition 1

Information Services

• generate, process, distribute DATA
• assist others in developing systems
• produce software
• employ 1,000,000 people in the US
• 25,000 information services establishments in the US

Information Services 1994

Information Services
growing at the rate of 12% per year;
$135.9 billion dollars in 1994

Electronic Information Services
growing at 15% per year;
$15.6 billion in 1994;
35% of revenue from abroad
online services had 2.8 million business subscribers;
3.4 million consumer subscribers

Data Processing and Network Services
15% growth rate;
53.6 billion;
25% of revenue from abroad

Computer and Professional Services
(consulting, training, systems integration and custom programming)
9% growth rate;
$66.6 billion; 4100 firms

Telecommunications
???

Publishing
???

Definition 2

Text or content based digital information related businesses and industries

• Electronic Information Services
• Online
• CDROM
• Multimedia

Consumer? Trade? Cable? TV? Internet?

Components of the Information Industry

*HOST is a named server with an accompanying machine address and may or may not have a machine which responds to it.
**DOMAINS are associated with an organization, e.g. accessinn.com.
***Replied to PING is a way to measure the number of machines actually connected to the net by pinging and getting a response.

*ALTA VISTA states “words” — I assume 5 characters/word

From: The New Information Paradigm–Threat or Opportunity(or Both?),
Roger Summit, Miles Conrad Memorial Lecture, 1996NFAIS, Philadelphia

Current Situation:

• Alliances come and go
• Corporate priorities change
• Percentage of growth is attractive to investors
• Customers are global
• Much mergers and acquisitions activity
• Consolidation
• Grass is greener
• Thomson abandons advertising and newspaper
• Knight Ridder embraces advertising and increases newspaper holdings
• Thomson increases electronic information holdings
• Knight Ridder sells KR Financial

Players to Watch

• French Telecom – Questal
• Sony – Publishers Data Service Corp.
• TBG Thyssen Borgamisa Group Inc.
• Information Handling Services
• B.H. Blackwell Ltd
• Adonis 25%

• All the phone and cable companies
• Ameritech – Dynix
• MCI
• British Telecom
• INTELSTAT

Revenue Growth From Acquired Entities 1995
Company Size Planned Acquisitions [$Million]
$500 + 37.1%
100+ 22.1 %
$25 + 37.8 %
>$25 19.9 %
Total 29.5 %

From Broadview Associates 1995.

Revenue
Publishing / Information Company Financials 1995
Company………………Sales……………………………..GrossProfit…………Assets
Softbank………………..$49,172,000…………………..$2,488,800
OCLC……………………$138,320,900………………….$7,112,600………….$69,751,200
ACS………………………$260,014,000………………….$13,488,000………..$698,579,000
Primark Corp……….$617,310,000…………………..$18,850,000………..$802,399,000
Bell & Howell……….$ 820,000,000
VNU BV………………..$1,793,573,600………………..$268,981,000……..$620,497,000
Wolters Kluwer……$1,902,211,840………………………………………………$570,506,300
Knight-Ridder……..$2,751,834,000…………………$240,284,000……..$3,005,710
McGraw-Hill…………$2,900,000,000………………………………………………$3,104,400,000
Dun & Bradstreet..$5,415,100,000…………………$320,800,000……..$5,515,800,000
Reed Elsevier……..$5,818,330,500………………..$1,324,800,000…..$8,768,155,500
Thomson Corp……$7,225,000,000………………..$932,000,000………$9,981,000,000
News Corp Ltd……$8,993,000,000………………..$1,008,000,000……$21,525,000,000
Bertelsmann AG…$12,858,939,400………………$480,000,000……….$5,206,000,000
Sony………………….$43,326,085,000………………$511,811,000……….$23,811,198,000
Totals………………… $94,868,891,240………………$5,128,615,400…….$80,676,291,710

Revenue from Electronic Sources

16% of Reed Elsevier $5,818,330,500 x 16% = $930,932,880
30% of Thomson $7,225,000,000 x 30% = $2,167,500,000
12% of Knight Ridder Revenue $2,751,834,000 x 18.5% = 501,652,000
15% of VNU $3,051,982,000 x 15% = $457,797,300
12 % of Bertelsmann $7,662,000,000 x 12% = $919,440,000
These figures are from the Annual reports of each of those named. About $5 billion (33%) of the total electronic revenue estimated by Digital Report is $15.6 billion in 1995.

Growth Trends

General Review

• 1996 Internet related companies stay domestic and go public
• Content continues foreign investment
• 1995 Dialog not in top three vendors
• much merger activity in vendors
• 1994 FSU fails – more database owners
• 1994 OCLC expands the marketplace
• 1992 Internet becomes an alternative
• 1992 Online stops growing in % of market share
• 1991 Beginning of internal database mounting at corps and universities
• 1982 – 1985 Pricing models change due to baud rates

Trends for the Year 2000

• Corp. mergers and joint ventures increase
• Less profit
• Narrower margins
• Fewer government databases
• Less government dollars available
• Fewer players
• Content consolidation
• Fewer exclusives
• More distribution media
• Publishers become distributors
• Distributors become publishers
• Document delivery integrate
• Local distribution
• Internet nodes for each producer
• Natural language front ends
• Multilingual front ends
• Tape sales increase
• Fewer librarians – more information scientists
• Return to local and corp. financing of libraries
• Complex regulations
• Security changes
• Intellectual rights police
• Legislatively slowed growth
• Global marketplace
• Limited investment opportunities abroad
• More foreign investment

Summary

Hold on… lots of change ahead!

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