MediaMedia BuyingPeak or Valley?

Peak or Valley?

Despite spectacular failures, undaunted entrepreneurs persevere. Can Louis Borders' KeepMedia succeed where others have failed?

George Mallory. Edmund Hillary. Louis Borders. The first two are renowned for their attempts to scale Mt. Everest, the last for the book chain that bears his name and Webvan, a spectacular dot-com misadventure.

Great mountaineers and pioneering entrepreneurs share many traits. They strive to accomplish what’s never been done before. They are undaunted by difficulties, adapt to adversity, and persist to success, glory, defeat, or death.

Mallory is a well-known mountaineer. He led the first attempts to climb the world’s highest point. Asked why, he trenchantly replied, “Because it’s there.” In several daring attempts, he climbed higher than anyone before him. He was last seen in 1924, a dot in the clouds at 27,750 feet. Mallory’s body, clad in tweeds, was found high on the mountain in 1999. We don’t know if he reached the summit.

In 1953, Hillary and his partner, Tenzing Norgay, were first to reach the summit and survive. They succeeded through military-style planning, an army of support people, learnings about altitude and equipment, and a route almost completed by an earlier expedition. Hillary may not have been as skilled as Mallory, but he’s known as the man who conquered Everest.

Borders is known for creating book “superstores.” From a small shop, he designed software to manage inventories of huge stores he later opened. Borders Books sold for over $200 million.

His next venture was Webvan, through which consumers could have groceries delivered. Venture capitalists loved the concept, giving Borders some $850 million. Webvan consumed it before collapsing.

Borders’ new venture is an endeavor in paid online content, KeepMedia. The online newsstand gives consumers access to back issues of periodicals for a flat $4.95 per month, far lower than other archived content aggregators, such as LexisNexis ($60 to $1,000 per month) and Factiva ($69 per year, plus $2.95 per article).

Like Hillary, Borders is following a path almost completed earlier. In 2000, media entrepreneur Steven Brill founded Contentville, which charged consumers a few dollars to download articles from books, doctoral dissertations, and over 600 magazines. Contentville spent $6 million before closing down after a year.

Brill still thinks there’s demand for an online aggregation service that lets consumers search periodicals. “The Internet and electronic delivery is far and away the best way to do it,” he recently told The Wall Street Journal. “Someone will get this right.”

Will it be Louis Borders? I worry KeepMedia’s price and execution aren’t on the route to success.

KeepMedia’s $4.95 monthly rate is nearly on target for a successful consumer content aggregation service. It’s toward the top of what consumers say they’d pay for access to periodical content. But those consumers mean a single periodical’s current content, not an aggregation of many periodicals’ archives.

The specific magazines and newspapers with which KeepMedia launched are a problem. Last week, Borders told me companies have been enthusiastic about selling on KeepMedia. Perhaps trade publishers are, but many consumer magazine publishers aren’t. KeepMedia launched with 28 consumer publications and 109 trades. If you’re looking for previously published articles from Geonomics & Proteomics or National Hog Farmer, KeepMedia is for you. The service also offers back articles from BusinessWeek, Esquire, Fast Company, Forbes, and U.S. News & World Report, but the breadth isn’t quite satisfying.

A search of the 137 periodicals for Canary Islands vacation ideas yielded 27 matches, none specifically about Canary Islands’ vacations. Results included U.S. News & World Report stories about Florida, Norway, Guam, Robert Maxwell, Larry Flynt, and whale biology; a BusinessWeek article about the Euro; a commercial weaving trade journal story about local T-shirt manufacturers; Rough Guides articles about Cuban towns founded by natives of those islands. There were newspaper stories about Canarian astronomers searching for Dark Matter and that George Bernard Shaw’s “Major Barbara” mentions the islands. The closest mismatch was a HOTELS magazine (trade journal) piece about management changes at a Canary Islands hotel chain.

A search for information about Minolta’s Dimage digital cameras yielded BusinessWeek’s and Kiplinger’s articles about the industry, but none about those cameras.

Batting zero, I tried a search on hormone replacement treatments because the KeepMedia home page was promoting availability of stories on the subject. The search yielded 13 stories, but only two (from U.S. News & World Report and Forbes) were actually about hormone treatment. The other 11 were general articles about the pharmaceutical industry, menopause, direct marketing, and prostate and ovarian cancer.

Perhaps the mismatches could be eliminated with better search algorithms. But the core problem is a dearth of real consumer content.

I asked Borders about that. “We’re just pleased to have 140 periodicals online at launch. We believe that we’re going to get most of the other consumer magazines once they see that we’ve got a viable and popular service.” Attracting publishers is often is a chicken-or-egg dilemma. But how many consumers will popularize a service that so far has so little consumer content?

Will consumers spend $4.95 per month only for back-issue content? In the offline world, there’s not a lot of apparent demand for back magazine articles. Borders believes that’s because consumers never had easy access to it. “We see this as an untapped resource. Magazine publishers have really been doing nothing with their archives. This gives them a chance to monetize their archives.”

There’s a need for an online archive of magazine content, but it’s more a publisher need than a consumer one. Should KeepMedia offer current and back articles to consumers for $4.95 per month, the service would surmount expectations.

KeepMedia needs a more comprehensive selection of consumer magazines and more newspaper content. It offers only six Knight Ridder newspapers plus Variety, the entertainment industry trade journal. The latest Veronis Suhler Stevenson statistics show consumers last year spent $53 million (30 percent) on newspapers, $45 million (25 percent) on magazines, and $80 million (45 percent) on books. They spent 192 hours (44 percent) reading newspapers, 125 hours (28 percent) on magazines, and 123 hours (28 percent) on books. KeepMedia needs more newspaper content.

Borders agrees but says consumers won’t pay for it. “It’s too much of a commodity. But consumers might be willing to pay for newspaper feature articles and editorial and opinion pieces.” That’s KeepMedia’s next goal, in addition to adding more consumer magazines.

Borders also believes the obstacles in getting consumers to pay for online content are the same as those getting them to pay for online shopping:

I don’t know if there is a trend towards consumers paying for online content. But I do think it will follow the same path as e-commerce did. Consumers were initially afraid to use their credit cards to buy merchandise online. They worried about the security of their purchases and whether buying online was a good experience. Once they tried it, they liked it. Online shopping is now an everyday experience. Consumers now are reluctant to pay for online content, but once they try it, they will like it and it will become an everyday thing.

Louis Borders climbs on. Will he be a Mallory, pioneering where no one’s gone before, only to have his efforts fail? Or will he be a Hillary, building on experience to surmount challenges? KeepMedia is a daring effort to watch.

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