Magazine article Information Today

Let's Get Reciprocal (Not); Will Reuters' Denial of Contract Renewals Spark a Trade War of Sorts?

Magazine article Information Today

Let's Get Reciprocal (Not); Will Reuters' Denial of Contract Renewals Spark a Trade War of Sorts?

Article excerpt

A new word has entered the vocabulary of the online industry. The word is reciprocity, and it could spark a trade war among online providers and lead to anger and confusion for users. The villain of the piece is Reuters, which in June decided it would not renew the contracts it had with LEXIS-NEXIS and MAID to distribute its Textline database -- a move that has upset both providers.

Disregarding, for the moment, the oddity of a company turning away revenue at a time when it has just posted a 3 percent drop in pre-tax profits and a fall in sales, I had to ask Reuters' director of business information services Michael Foster, "Why have these two services been singled out?"

"The file has been withdrawn from LEXIS-NEXIS and MAID following a regular process of review," he replied, adding: "It was not felt that these providers were able to offer us reciprocity. However, we continue to provide Textline to other information services where we have reciprocal arrangements."

Where does this leave the other Textline distributors? For DataStar and DIALOG, the story is equally bleak. "In October 1997, at the request of Reuters, Textline will discontinue daily updating and become an archival file on DIALOG and DataStar," Knight-Ridder Information's European marketing manager Jackie Silvester explained. "In April 1998 this file will then be removed, and we will no longer offer any Reuters databases."

The situation for FT Profile, however, seems more rosy. "We have a long-term contract for Textline," said Donal Smith, managing director of electronic business information at FT Information. "And we are very pleased to be able to continue selling it to our customers."

Looking for the Logic

So what do we make of reciprocity? The consensus in Europe is that Reuters has simply decided to use the Textline contract as a lever with which to negotiate better content distribution rights for itself. Advocates of this view argue that vendors like FT Profile, which can deliver content that Reuters is keen to distribute (in particular, the Financial Times), can expect to have their Textline contract renewed as a matter of course. Whereas vendors who have no intellectual property to barter with, like MAID and Knight-Ridder Information, are having their distribution fights withdrawn as their Textline contracts come up for renewal.

But this explanation lacks an internal logic. In the wake of its acquisition by content-rich Reed Elsevier, it is hard to see how LEXIS-NEXIS can be accused of falling short on reciprocity? Moreover, as the number of Textline distribution contracts drops off, the costs of maintaining the database will become increasingly onerous for Reuters. Is it believable that the company will be happy to continue bearing the costs of maintaining the database solely in order to keep FT Profile sweet -- which by April 1998 looks set to be the only Textline distributor?

Interestingly, during its London relaunch of Business Briefing in June, Reuters made great play of the service as a single business information solution for the intranet, offering something for everyone from the unsophisticated end user to the experienced information professional -- a functionality enabled through customized channels and embedded "push" features. Thus, the same product using the same interface now offers a continuum of information services, from a simple headline facility to the ability to drill down into Reuters' archive of historical information. "We are the only company currently able to offer this combination of services as one integrated package," boasted Foster. [See this month's Online Insights column by Paul Blake, page 18, for more on this.]

But if Business Briefing is now being positioned as a product for information professionals as well as end users, what role remains for Textline? None, it would seem -- leading to the inevitable conclusion that, in the long run, Reuters is probably looking for reciprocity for Business Briefing, not Textline. …

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