Magazine article Information Today

Companies Deal with Tough Times through Diversification

Magazine article Information Today

Companies Deal with Tough Times through Diversification

Article excerpt

The other day I was watching the movie Gold Diggers of 1933 (for the umpteenth time).The first scene is a full-scale production number staged as only director Busby Berkeley could.

In the middle of the Great Depression, Ginger Rogers is singing away, and coinclad chorus girls are dancing and prancing to the song "We're in the Money," with the lyrics, "We're in the money/Come on, my honey/Let's spend it, lend it/Send it rolling around." The song even mentions the villain of the piece by name, "Old Man Depression, you are through/You done us wrong." Oddly enough, the Great Depression was a pretty good time for the movie industry. It must have been since theater owners had the money and motivation to upgrade to sound for the new "talkies."

In today's tough times, we can see some information-industry players hunkering down, cutting staff, and, perhaps, reducing data quality, while others are gearing up for changes in their markets and products. However, organizations that still have funds available are taking advantage of the downturn to pick up some bargains, and internet newbies living on the "free-Free-FREE"-business models so praised by Wired editor-in-chief Chris Anderson may find themselves scrambling for operating funds. If a newbie has a good idea, a good product team, and a growing base of internet users, it could find itself being snapped up quickly.

Even Anderson warned about balancing free with fee business models in a Wall Street Journal article titled "The Economics of Giving It Away," published Feb. 2 (http://online.wsj.com/article/SB 123335678420235003.html). In the article, Anderson recommends a diversified business strategy, such as the "freemium" model, which lets most users have free but limited services, while paying subscribers contribute the money that supports the operation and receive extended content or expanded features. You can test what that strategy gives you by entering the URL for Anderson's article into your browser. The Wall Street Journal is supposed to have a combination of free content and fee content. I actually pay for my access.

Strange Bedfellows

Acquiring outside services or companies is another way to diversify. It's interesting to examine how recent acquisitions by traditional information-industry firms reflect changing strategies. For example, Gale, a part of Cengage Learning, bought HighBeam Research late last year (http://newsbreaks.infotoday.com/nb Reader.asp?ArticleId=51979). It seems quite logical, as the companies often cooperated with HighBeam supplying Gale content to a community its other outlets either didn't reach or didn't reach as well.

But in January, Dow Jones VentureSource snatched Library House, a U.K. company specializing in venture capital (VC) information, from a watery grave under a sea of red ink (http://newsbreaks .infotoday.com/nbReader.asp?ArticleId= 52208). With the VC industry at a low ebb, this might seem to be more of a controversial acquisition. But think about it: Which company would know better than Dow Jones that the economy,Wall Street, and investors will rise again? And which company would want--nay, need--to be more on top of the moment when that rise begins? And wouldn't the return of VC be a prime indicator of such a rise?

Other traditionals are taking an interesting turn into content and sources that are new to them. …

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