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Content Syndication Germany: No Lessons To be Learnt
The market could not support so many startups, writes
Marco Versace 26 Sept 2001
The market could not support so many startups, writes
Marco Versace
26 Sept 2001
Content syndication business is going through some harsh times, and Germany offers several good examples of how things can go from bad to
worse.
In 1999, a handful of startups with a vision of content syndication in the German online media market were founded.
The first were 4Content, Tanto and Contonomy, later others followed, like CH850, Contara and InstantContent.
The initial prospects were good, given little competition, a hype for content and the lack of speed of traditional publishers in pursuing internet
based business models.
The business models of the 'new' online syndication companies were pretty
much the same though, different only in slight details .
Shortly thereafter, large publishing houses like Bertelsmann and Axel
Springer Verlag started operations with similar targets, focusing their
online content sales in new taskforces or subsidiaries aimed at leveraging
the value of the internet for both their own proprietary content, as well as making their services available to others.
Investments in the startups tallied between €500.000 and the "low single digit" €-millions, but when the impetus of venture capital funding receded, the lifeline of startups was abruptly cut, and the content syndication dream for Germany started the freefall.
The hype is now gone pretty much throughout the industry, advertising
sales as a content revenue stream has vanished and VCs have become cautios,
if not suspicious, of 'new business models' .The startups have all gone.
The fact sheet:
Contonomy in Munich has filed for bankruptcy and closed offices the two founders ended up working with Screaming Media.
Tanto, also in Munich, has filed for bankruptcy, and got purchased by Xipolis.de.
4Content in Hamburg has filed for bankruptcy, and sold its business activities to Cocomore, a content broker in Frankfurt with participation
from Bertelsmann.
iSyndicates joint venture deal with Bertelsmann didn't get signed at the last minute, and got purchased by competitor YellowBrix , so there is no clear focus at the moment as to what their German plans are.
Yournews has also closed their German offices, and Screamingmedia are rather
quiet.
What went wrong?
Why did they fail? There is nothing new to be learnt from this group of startups. A certain arrogance towards the traditional and big media
companies was a natural limit of their reach.
There has been a great deal of misjudging the market, which suddenly and
unexpectedly disappeared, creating massive financial tension among startups. Most of their revenue was supposed to be generated by percentages of content sales for the service.
Inexperienced management and big egos did not help either.
A few players are currently operating in the Germany,
What’s next?
Those companies who have the stamina to survive the current (content-) business slowdown will enjoy a consolidated market with fewer players.
A German content market of the future can sustain one or two independent national content syndicators, maybe in a European network and
also one or two international content syndicators. But not twenty national syndicator, as it happened in 2000.
The surviving companies will have to leverage, in addition to straightforward content syndication 'services' , their technology expertise with new tools and content exchange protocols like XML and ICE and will have to create added value for the content they re-sell by offering personalisation,
filtering and other technology based services.
Marco Versace is an ex-Founder 4Content-The Content Broker
Now at www.letscross.de, an online game startup
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