Individual Inc. Adjusts Focus
By Whit Andrews
Purchase of ClariNet, dropping of FreeLoader play to
strengths in feeding content to business
OK, running into your corporate offices you've got, let's see, a
water pipe, an electric line, a TV cable, a news feed.
News feed? Yep. You heard right.
As previous technologies have turned premium services into
commodities--try to find a waterseller along any street that
boasts a water main--so is the Internet converting news
distribution from newsstands into feeds like fluids in a pipe.
And Individual Inc. is standing in the trench like a plumber.
The company, which specializes in feeding online content to
businesses, has had its trials. The founding CEO, Yosi Amram,
resigned abruptly last year, and a stock and cash deal valued at
more than $30 million for "offline browser" pioneer FreeLoader
ended in that division's being eliminated earlier this year, shortly
after it had announced a new product. New CEO Michael
Kolowich, who closed the division, casts that decision as a
necessary refocusing on the company's strength, which he said
is supporting other people's technology with its content feed.
To that end, Individual, based in Burlington, Mass., last month
bought ClariNet for $7.5 million in stock, adding to its fold an
Internet pioneer in the news distribution business and a
seasoned development staff. "They are actually quite different
products that are very compatible with each other," said
Kolowich. "ClariNet is helping ISPs differentiate their products
in a market that is increasingly competitive. The role of
Individual's product is much more business-focused."
Almost simultaneously, Individual snapped up CompanyLink, a
much smaller concern that aggregates information about
companies, such as their public stock filings.
The deals have failed to impress Wall Street. Individual's
52-week high was $17.75 in July 1996. Late last month it had
dipped as low as $4, despite two of four analysts surveyed by
Zack's having given it "strong buy" ratings.
Both deals are intended to boost the capabilities of Individual's
NewsPage. The single-user business content service has about
500,000 registered users, about 90,000 of whom pay to get
more than the basics for prices starting at $7.95 a month plus
extra documents ^ la carte.
To fill NewsPage and First, its internal network product,
Individual--which now has 240 employees, including 40 from
ClariNet--aggregates articles from about 2,500 news sources,
including PR Newswire, trade magazines, and newspapers. A
content filter sifts the stories into broad and fine categories, and
an editorial staff checks the filter's work to make sure the stories
fit.
The result is a Yahoo-style tree directory in which news stories
can be read a category at a time or across disciplines with a
global search. With four-fifths of NewsPage readers not paying
a cent for the basic intelligence they're getting, Individual relies
heavily on advertising in the targeted areas at prices that can run
as high as 30 cents per impression, about 10 times standard
run-of-the-site rates.
ClariNet, on the other hand, aggregates broader-interest news
feeds and delivers them to servers maintained by ISPs,
businesses, and universities via the NNTP protocol, which is
what Usenet news servers depend on. The protocol allows for
regular updates driven by events, instead of on a timed
schedule, and has resulted in a Breaking News feature for
NewsPage.
The competitors Individual faces are legion, from stalwarts such
as Lexis-Nexis to aggressive youngsters like WavePhore's
news division, which recently acquired Paracel Online Systems.
Individual has spent heavily to beat them in the early stages of
this market, dropping $9 million on new-subscriber acquisition
costs in 1996--more than a third of total expenses-- and $2.7
million in the first quarter of 1997 alone.
Revenue also is rising, from $5.0 million in the first quarter of
1996 to $7.8 million in the same quarter this year, before
ClariNet's results are added.
But losses are growing as well. Not accounting for acquisition
costs, Individual lost $2.5 million, or 25 cents a share, in the first
quarter of 1996. Losses had reached $3 million in 1997's first
quarter, although the loss per share had been trimmed to 21
cents because of dilution.
Individual and its rivals all claim more than 2,000 news sources,
and then turn to other factors as ways to set themselves apart.
WavePhore trumpets Paracel's news filter, for instance, which
was designed to serve scientists picking at genetics problems
and is consequently intricate. Individual will deliver NewsPage
via a number of push products. Desktop Data points to its
capabilities to deliver news in context with internal information.
And so forth.
What's at stake, Forrester Research estimates, is an $815
million market for desktop information by the year 2001.
Individual needs to boost its technological edge to become that
market's leader, Forrester analyst Bill Doyle said.
"Between the fact that they've supported too many platforms
and the fact that they have to rebuild their smart filter, they need
some hard-core techies," he said. "They're not short of ideas or
ambition."
Buying ClariNet, with its stock in Internet experience, gives
Individual the opportunity to expand on technology and
distribution channels, Doyle said, especially when the companies
include the CompanyLink engineers and what remains of the
FreeLoader team. "We really were not running into the same
customers, and when we did, we were running into the same
customer," said former ClariNet chief Brad Templeton. "Our
[technologies] are going to work very well with Individual, and
theirs are going to work very well with us."
Although the sources of the news available are important,
Forrester's Doyle said--"thin- gruel content isn't going to cut
it"--what IT managers are desperate for, he said, is a way to
bring the news potential of the Web onto the network without
much effort.
"Their mantra is clear: 'Make this easy for me and my users,'"
Doyle said. "They want stuff that is easy to host or, better yet,
can be hosted somewhere else. They want it to be linkable to
internal content down the road."
New versions of Microsoft Internet Explorer and Netscape
Navigator make much of their corporate news feed
partnerships. Individual and several competitors have heavily
promoted their inclusion as optional news "channels" on IE 4.0.
"People are developing additional modes of consumption, and
our intention is to be agnostic and support the ones our
customers actually want to use, as opposed to trying to build
one ourselves and trying to compete," Kolowich said. "As soon
as we made the FreeLoader decision, conversations with most
of the push technology providers became easier--much more
friendly, much more cooperative."
Dave |
