Outsell, the leading provider of market research and intelligence for the information industry, and The Jordan, Edmiston Group, Inc. (JEGI), the leading US-based investment bank for the media industry, collaborated on the fourth annual Outsell Signature Event “Driving Growth in the Age of Experience,” held September 29 to October 1 at the beautiful Ritz-Carlton, Key Biscayne, Florida.
The event is the only global conference convening CEOs, COOs, Presidents, and Managing Directors from across the information industry. Senior executives and thought-leaders presented case studies, practical strategies, and actionable advice, offering attendees an unparalleled opportunity to learn how the industry is successfully executing on business models, strategies, and growth. Nearly 150 c-level executives from around the world shared their views and explored the future of the information industry, a nearly $400 billion market.
Anthea Stratigos, Cofounder & CEO of Outsell Inc. provided a 2011 Information Industry Outlook:
In 2010, the information industry generated $366 billion of revenue, with 25%+ coming from news providers and publishers. Search (14.6% of the industry’s revenue), Education & Training (13.3%), and Credit & Financial Information (11.6%) are the other large producers of information industry revenue. Approximately 1,000 of the 7,000 information companies in Outsell’s database have revenue over $10 million – a highly fragmented marketplace. Of these 1,000, only 70 (7%) grew over 10% in 2010. These companies have one or more of the following key characteristics:
- Niche focused (Onvia, K12) or scale focused (Pearson, Thomson Reuters, Cengage);
- Acquisitive and aggressive managers of their product/service portfolios; and/or
- Heavily involved in interactive media, especially search and social media/crowd-sourcing (Huffington Post, Manta).
Outsell’s benchmarking analysis, which is derived from 60 companies, shows that revenue from new products launched in the past 18 months comprised 19% of total revenue, up from approximately 12% of total revenue in prior years. This could be a function of the recession, as new, less expensive or digital products grab market share and are indicative of the industry’s innovation. The key spending buckets – IT, Sales, and Marketing – were up 6%, 18%, and 5%, respectively, overall in 2010, with large company spending in those areas lagging behind.
Information Industry Performance: The information industry is expected to show little growth for 2010 compared to 2009. Revenue for the industry fell (8.4%) in 2009 versus 2008, and Outsell does not expect the industry to reach 2007 levels again ($391 billion in revenue) until 2013. News Publishers & Providers – the largest sector by revenue – is expected to decline at a compound annual growth rate (CAGR) of (3.8%), while the industry overall is forecast to grow at a CAGR of 1.8%. Search is projected to grow fastest, at an 8% CAGR from 2010 to 2013. Companies that service the healthcare and government markets are projected to continue doing well, as will those in the risk, compliance, and credit management markets.
The information industry is reliant on three primary revenue streams for growth: 1) enterprises – marketing and advertising budgets; 2) library/ institutional – the management of information; and 3) end users and their departments. As a result, the information industry is very reliant upon enterprise performance and budgets.
Rise of Digital and Technology: Digital products account for approximately 60% of information industry revenue; for the top 300 companies, digital accounts for 80%-90%. At the bottom are companies in the news, book, and magazine markets. New technologies have created a number of opportunities for information companies to reinvent themselves, but they are limited by the growth of the economy – this is the “push/pull” of the industry that causes frustration.
Key Trends: The growth of the economy is always of key concern to information industry executives. Emerging markets, especially in Asia, are growing faster than the US market, but investments there can take many years to bear revenue and profits. Certainly, all eyes are on mobile, and the tablet is already changing the way workflow is performed at the enterprise level. Source: JEGI Client Briefing October 2010
BIIA comment: The financial crisis had a significant impact on the information industry and has hastened the change from print to electronic publishing. BIIA dug into its archives to retrieve what Outsell had to say about the growth prospects of the information industry in 2007. Following the 2007 Outsell signature event BIIA published Outsell’s Industry forecast in its November 2007 Newsletter. Outsell’s estimate for 2007 was US$ 380bn and that the industry would reach US$448bn by 2010. According to the latest Outsell forecast the size of the information industry would reach US$366bn in 2010 and it commented that it did not expect the industry to reach the levels of 2007 again by 2013.
Of course in 2007 nobody had forecasted the severity of the recession that had just begun at that time as a result of the subprime credit crisis. In comparing the two charts the segment changes are clearly visible. Segments that lost out significantly are news providers & publishers; Yellow pages and B2B trade publishing. What a difference three years make!
BIIA Newsletter November II – 2010 Issue