NEWS ANALYSIS: ITEM

			Crystal Ball Redux: Looking Back on Shore's 2004 Forecast - and Peeking at 2005
			John Blossom
			27 December 2004
SUMMARY:			Last year at this time Shore's crystal ball was bringing into focus many trends in content that may have been hard to believe for some - yet the ol' sphere seems to have had a pretty good year of target practice. From the rise of the Publishing Organization and The New Aggregation to the monetization of Weblogs to the commercial success of DRM-managed content, many of the trends forecast last year unfolded on schedule, while some such as weblogs exploded with even more vengeance than even we had anticipated.   Join us as we look back on the progress of our predictions and take a gander at how these trends will fare next year.

It's that time of year when crystal ball gazers get to consider how their craft has fared over the past twelve months and to polish up their orbs for a good glance into the next round of events. While we at Shore may not be the content world's answer to Nostradamus, excuse us as we consider how well we fared in our forecast from last year. Our theme for 2004 was "The Walls Come Tumbling Down," one which seems to have captured the wide array of changes that enveloped content and technology providers in 2004 rather well. Content providers were confronted in 2004 with many barrier-crashers which were food for futuristic table talk during last December's holidays and that have come to full force in a mere year's time. Join us now as we take a wizened look at how our predictions for last year played out:

• The Publishing Organization comes into its own.  In last year's forecast we called for a year of refinement in enterprise portals in which major enterprises would begin to reap rewards from their investments. I don't think that we could have called this better. New-generation enterprise search engines and content management deployments have now formed the backbone for an increasingly ubiquitous and effective publishing environment for organizations that are posting out gains in development, sales and marketing efforts in many major sectors, as well as in governmental efficiency initiatives and Open Access publishing. Along with these I.T.-oriented efforts, though, has been the rise of disruptive technologies such as weblogs and wikis that are making it easier for individuals and institutions to communicate with audiences inside and outside of their organizations effectively. 2004 also saw the rise or the corporate weblogger, providing a new way for content to establish a personal voice in the midst of highly machined content. These two trends are likely to have an interesting confluence in 2005.
• Individual publishers start to focus on profits. We called 2003 the year of the "blogger" and claimed that 2004 would see weblogs taking center stage with breakthroughs in weblogging business models. Wow. It's hard to underestimate just how powerful commercial weblogs have become in one short year, going from a smirk in the corner of many a journalist's mouth to a jaw-dropping phenomenon that plays a significant role in institutional content as well as general news. Most significantly commercialization has become a key factor both for leading weblogs that can attract direct sponsorship and for everyday bloggers who can now tap into revenues from Google's AdSense program. At the same time major news organizations are learning how to play well at this game themselves in search of greater reader loyalty as the point of content aggregation shifts towards the user. Exactly where and how webloggers will evidence profits in The New Aggregation will be a key factor to watch in 2005.
• Workflows win, but raise key questions. We noted that workflow-oriented content solutions were all the rage in 2003 but that they weren't necessarily improving the long-term profitability of underlying content subscription products. 2004 turned out to be a lackluster year for most traditional aggregators, with most of the profits in workflow integration going to I.T. consultants and technology providers developing institutional infrastructure. Improved offerings from Reed Elsevier's LexisNexis, InfoUSA's OneSource, several Thomson divisions and other major players demonstrate that this was not a year where content providers stood still in their efforts to make premium content relevant in more contexts than ever, but it was not a year in which new business models from these sources wrote the headlines. We'll be watching this arena carefully in 2005 for signs of breakthrough models. 
• Print meets its match. We saw 2003 starting to hint that major publishers were acknowledging that the time for online profits had come and that 2004 was the year that the hint would come home to roost. Those publishers that had already invested heavily in that transition did very well in 2004, while print-oriented publishers from professional journals to local newspapers to book publishers took it on the chin from new agile suppliers not afraid to adapt new business models and techniques. If that weren't enough Google Scholar dealt a brutal blow to the realm of traditional print suppliers with its massive content scanning project. Print isn't dead, but many old business models for print had best make some funeral arrangements in 2005.
• Digital rights start to redefine content collections. We saw DRM making great strides in 2004 and on the consumer side it was indeed a banner year. Apple's DRM-equipped  iPod was the hit content phenomenon of 2004, sweeping DRM-protected content into a central profit-making role, while eBooks enjoyed a surge in popularity as lending systems for rights-protected titles rolled out at many major libraries. A major experiment by Duke University for course materials on iPods hinted at the future of DRM for institutions, but for the most part professionally-oriented publishers failed to move aggressively on the DRM front in 2004. Not so their clients, as major institutions implemented DRM widely as a control mechanism for internally generated content. DRM is just starting to heat up as an effective tool for publishers, one that can be expected to take on a wider role in professionally-oriented content in 2005.
• Everyone will be Googling, but not necessarily with Google. We called for 2004 to be the year of personalized search solutions, with both web-driven and desktop-driven technologies enabling individuals to have search "concierges" helping them to find content that's valuable to their context and the context of others who hold trusted opinions on content quality. With major search technology providers jockeying hard for position on the desktops of individuals in personal and professional settings, this was indeed one of the year's most important developments. Probably the biggest story in this area, though, is the remarkable resiliency of Google itself, invigorated by a controversial but ultimately highly successful IPO and pouring these funds into a galaxy of ground-breaking projects that hold out promise a continuing fast pace in search technology and business model development in 2005.
• Ad driven online content finds new homes. We said that 2004 would be the year in which ad-driven online content would begin to break into new markets, and we were pretty pleased with the results. The ad-driven business model of CBS MarketWatch drew underwriting from Thomson Financial to boost their core news offerings in professional financial circles - a model attractive enough to goad Dow Jones into purchasing MarketWatch - while Reuters.com got more savvy about driving ad revenues directly to their online portal and ThomasNet introduced sophisticated contextual advertising for industrial directories. The recently announced cooperative venture between enterprise search engine provider Verity and Yahoo!'s ad-supported search engine efforts underscores that the presence of ads behind the firewall of many major institutions is increasingly a given. Online ads is a model that's only begun to unfold in 2004, with increasing sophistication from new sources expected in 2005.
• Global content markets get local. We saw the trend towards content localization for global content being supplemented by regional content companies spreading local content to new marketplaces worldwide, which wound up being supported effectively by services such as Google News making it easier for local sources to be discovered. At the same time new localization initiatives by Yahoo! and Google and other major portal providers continued the repurposing of all-purpose content for local markets, while players such as eBay and Monster.com continued to drain local classified ad revenues away from newspapers. 2005 will see content become more contextual and local than ever before, with a greater emphasis on enabling local transactions.
• Web services go from lip service to full service. We warned people not to expect 2004 to be a breakout year for web services from publishers and aggregators and we can't say that we were surprised at the relatively modest gains made by sophisticated XML-based Web services infrastructures in helping to distribute premium content. Web services have become an established interface in Web portal environments and office automation environments for shoehorning in services from premium content suppliers, but for the most part Web services are more about supporting contextual queries than delivering contextual content objects with a multiplicity of functions. The success of DRM-enabled content objects in the consumer realm may inspire professionally-oriented publishers to move Web services to the next level for premium content in 2005.
• Content aggregation moves from a product to a service. 2004 certainly turned out to be a year in which The New Aggregation took hold with a vengeance, with more content companies than ever extending their models beyond content collection and licensing and towards a more selective and distributed array of services provided to their clients to provide content value. The explosion of weblog newsreading software to provide content aggregation services on the desktop, business-oriented multimedia networks and in Web portals as well as the rise of virtual aggregation services such as Google News underlined the redefinition of content aggregation away from its traditional roots. Expect 2005 to provide more turning of the tables as technology and network providers redefine the center of gravity in content aggregation services.  

All in all, it looks as if Shore had a pretty clear crystal ball for 2004, something which should reassure those who are concerned about exactly where the leading edge is to be found in the content industry. Ideas that sounded like pipe dreams to many only a year ago have advanced in many concrete and profitable ways to help change the face of premium content aimed at individuals and institutions. We'll be providing a new round of prognostications from our industry-leading team of analysts in January that we hope will point the way forward in another year or remarkable developments in the content industry. Until then, it's a pleasure to reflect on an eventful year.

For a minute.

- John Blossom

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