Friday, March 2, 2001

Digital Archives Represent $6.3 Billion Market Opportunity

Jupiter Media Metrix today reports that while archived content delivered over the Internet has the potential to become a $6.3 billion dollar market by 2006 - up from $2.2 billion in 2001 - only 73 percent of those dollars will be captured. The overwhelming obstacle to realizing revenues will come from content owners' false assumption that they can single-handedly market and distribute their archives directly to consumers via paid and ad-supported services, rather than through third-party audience aggregators. A Jupiter Executive Survey revealed that 66 percent of content owners wish to market content on their own, while only 34 percent plan to market their archives to consumers through third parties.

"The owners of archives just can't do it alone," said Robert Hertzberg, Jupiter analyst. "They must align with partners who already have sizable online audiences or who are taking steps to develop unique new content services online."

According to Jupiter analysts, the next big hurdle preventing companies from profiting via their archives is mastering the three-pronged challenge of "discovery": Getting a handle on what content exists, where that content is located, and who owns the rights to it. The primary challenge for news and information companies is identifying what content exists and where it can be retrieved. On the other hand, entertainment companies frequently are stymied by identifying who owns the rights to archives.

Jupiter forecasts that non-linear archives-content created by news and information companies-will drive the greatest amount of secondary market revenue through the Internet. Filmed entertainment archives have a smaller opportunity in Internet distribution-reversing the trend that exists in the offline world.

eBusiness: Start with an Agreed Upon Plan
For those thinking about integrating e-business into their entire enterprise, the CEOs of America's fastest growing companies have an important suggestion... start with an agreed-upon plan. Compared to those lacking such a roadmap, companies with one are growing faster, are more productive, and are generally satisfied with their progress to date. These are highlights from PricewaterhouseCoopers' latest "Trendsetter Barometer," released today.

Rather than taking a breather in today's post- dot-com environment, CEOs of the nation's fastest growing companies are moving aggressively to bring e-business into all their operations, betting this is the way most business soon will be transacted. About half (48 percent) can boast their business has an agreed-upon plan for this changeover; 50 percent acknowledge not having such a plan; and the remaining two percent are uncertain.

"The good news is the majority of those with an agreed-upon plan are satisfied with progress toward becoming an e-business," said Steve Hamm, managing partner of middle market advisory services for PricewaterhouseCoopers. "And a quick look at their revenues could be a good gauge of just how happy they really are. Those with such a plan expect the Net will account for 33.7 percent of their total revenues over the next 12 months, including 13.4 percent through direct sales, and 20.3 percent through indirect sales, where the transaction is completed off-line. Compare this to the norm for all 'Trendsetter' companies. Overall expectations are for the Net to generate just 14.1 percent of total revenues in the year ahead-5.2 percent through direct sales, and 8.9 percent through indirect sales. In sum, those with an agreed-upon plan expect to do nearly 2½ times better than the norm for all 'Trendsetter' companies.

"Those with an agreed-upon plan are the high flyers, the cream of the crop," added Mr. Hamm. "They tend to be mostly service companies (70 percent; 22 points above the norm). And they are producing amazing outcomes:

- They are slightly behind the norm in number of employees (243; or 6½ percent smaller), but they are larger in revenue size ($42.9 million; or 20 percent larger). The net result is greater productivity, averaging $176,500 in revenue per employee, or 25 percent above the norm.
- Over the past 5 years, those with such a plan have averaged 2,728 percent revenue growth, or over twice the norm for all 'Trendsetter' companies.
- Moreover, in the next 12 months they expect to grow 50 percent faster: 36.7 percent, versus a norm of 24.4 percent.

"When it comes to having a plan for transition to an e-business, emphasis should definitely be placed on the words 'agreed-upon,'" said Mr. Hamm. "With agreement, there are mutually acknowledged mileposts for tracking achievement of success. With buy-in throughout the organization and tracking by senior management, it's hard for a business to get lost on the way. We found that for those without an agreed-upon plan, only eight percent are satisfied with how their e-business transition is going; seven percent are not satisfied; and, the large majority say they are uncertain or can't evaluate their own company's progress, or lack thereof."

PricewaterhouseCoopers' "Trendsetter Barometer" is developed and compiled with assistance from the opinion and economic research firm of BSI Global Research, Inc.

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