It's officially a gold rush, with everyone now stampeding to mine the allegedly huge dollars to be found in the local search market. Let's not be bothered with whether or not what's being sold is what the market needs -- that would spoil all the fun.

Google and Yahoo now have beta versions of their answers to local search open for inspection. My quick review: they're better than I would have expected, but a long way from what's needed. AskJeeves has partnered with CitySearch so that its local restaurant and nightclub listings will appear prominently in applicable search results. In the yellow pages area, FindWhat has announced that Canada' s Yellow Pages Group will be grafting FindWhat pay per click auction technology onto its site, perhaps more evidence of a mini-trend in this area. Every other yellow pages publisher is out with their own local search initiatives, all fervently hoping that local retailers will deliver the online riches that have eluded them to date.

As Janice McCallum of Shore Communications points out, local newspapers are the group best positioned to benefit from local search, but they continue to sit around as more nimble competitors rip the guts out of their businesses. Just as newspapers saw their classified advertising business decimated, local search may ultimately start to cut into newspaper display advertising, which might finally spur them into some sort of coherent reaction. Newspapers have always jealously watched the yellow page business. Indeed, most major newspapers have at one time or another owned yellow pages publishing companies, only to divest them after concluding they just didn't "get" the directory business. Now with the Internet, there actually would be some great synergies between newspapers and yellow pages, but newspapers still feel burned by their earlier yellow pages experiences.

So who's going to win in the local search game? Here are my predictions:

I agree with Janice McCallum that newspapers are the best positioned to be the winners in local search, but they've got to overcome their own inertia, previous bad experiences with directory publishing, fighting a multi-front war over their classified advertising, and the surprising continued strength of the print yellow pages business, which limits their openings. I just don't see newspapers pulling it off, especially since they need to overcome the biggest obstacle of them all: themselves.

As to the big search engines, I personally believe the cracks are starting to show as they push to be all things to all people. The future of search -- yes you heard it here first -- is two-tier searching, where the big general search engines hand off certain types of searches to specialist search engines/directories/yellow pages.

Local yellow pages publishers have always dreamt of being national yellow pages publishers. The Web let them indulge that dream, and indulge they did. Of course, while these publishers raced to build out national content, they never built out their regional sales forces. Is it any surprise they aren't drowning in ads? For several years, I've been urging yellow pages publishers to play to their local strengths. I'm currently estimating it will take 2-4 years for them to get up enough courage to try, and then they'll be contenders.

Long-shot possibilities? Think about Comcast, or even AOL, both of whom have unique capabilities to target content geographically, and a still significant "home page advantage." Stretch your imagination a little further and you might come up with InterActive Corporation, a powerhouse in local listings with holdings such as Citysearch, TripAdvisor, Evite, ServiceMaster, but seemingly more interested (for now) in the rich transaction revenues generated by its Ticketmaster, Hotels.com and Expedia units.

Bottom line: local search will happen, and it will be big, but it's going to be a big, sloppy, crazy competitive mess for 2-4 years before yellow pages publishers realize they should focus on selling ads where they actually have salesforces. Then we'll have our winner.

I want to elaborate on last week's message that we are moving towards two-tier searching, with general search engines "handing off" searches to more specialized search engines and databases.

This prediction is based on my belief that general search engines are not and never can be the single best way to access all information. That's especially true when you don't have access to all information anyway, and the information you do have is highly inconsistent in structure, depth and currency. Layer on top of that the technological limits on full-text searching, and you can start to see why I say this. Interestingly, the hot new search engine start-up of the week, Kozoru, reportedly raised $3 million in venture capital based on the concept of introducing taxonomies into search. This says to me that others are seeing the limits of keyword searching.

The opportunity in second-tier search is to take a specific subject area and cover it deeper and better than a general search engine ever could. This could be expressed as a vertical search engine (take a look at GlobalSpec), a vertical buying guide (look at Hanley-Wood's ebuild.com or Martindale-Hubbell's lawyers.com) or a vertical portal (look at West's findlaw.com). The commonality in all three of these sites is a tight vertical coverage area, proprietary content (if only because the content is stored in such a way that it's invisible to the major search engines), and lots of structure to speed searching and provide precise and consistently presented results.

I suggest that the major search engines will increasingly "hand off" searches to second-tier information sources. That's not to imply that these hand-offs will be free. I suspect second-tier information sources will assume that role through aggressive and expensive pay-per-click programs, and we're already seeing some very expensive exclusivity deals between search engines and specialty buying guides.

This game will get more expensive and competitive before it's over, and the rules of engagement are likely to change over time. Indeed, the general search engines may choose not to explicitly acknowledge that they can't be all things to all people, but this evolution will be hard to stop, because it's logical, natural and the revenue the general search engine might be forgoing is revenue that might never have been theirs anyway.

Is what I am describing the same as what is now being called "vertical search"? Yes and no. Two-tier search includes buying guides and directories, whereas vertical search generally refers to vertical versions of Google. Further, the word "vertical" still sends shivers down many spines, due to such things as vertical portals (ahead of their time) and VerticalNet (out of their minds). Two-tier searching is here already and working quite nicely. What's evolving is the relationship between these specialty search resources and the big general search engines. The better that relationship, the better the prospects for the second-tier search engine.

In posts past, I've dissed the newspaper industry for not harnessing the Web to build local buying guides and shopping sites, given what I see are built-in advantages to dominate local search. That's why it was with great anticipation that I went to take a look at ShopLocal.com, the newly announced local shopping site from CrossMedia Services, a company jointly owned by newspaper giants Gannett, Knight-Ridder, and Tribune Company.

Rather than a series of local micro-sites, the newspaper giants are thinking big and have built a national site to drive local shopping. But you quickly get to local offers by entering your city name or zip code on the opening screen. Any indications that the site was affiliated with my local newspaper were conspicuously absent, and there wasn't much in the way of explanatory text to position the site to users or even describe its contents and purpose.

I entered a zip code for Philadelphia and got a search results page split into three sections: categories, stores and brands. The category section of the screen gave me a list of yellow pages-like headings from which I could search. The stores section of the screen lists local stores (currently all national chains, buy hey, they're just getting started), and the brands section showed me a list of national brands. For fun, I clicked on "outdoor playsets," and found three offers: CVS offering not playsets, but rather a storewide discount, and two offers from Home Depot for playsets. Under each item was the option to "add to list," which creates a printable list that consumers can take shopping with them to remember what to buy. Under one Home Depot item was the option to "buy online," which didn't sound much like local shopping to me. I clicked on it and found that I could indeed order my playset online. Why do I already feel that ShopLocal may be missing the point?

The other thing I quickly learned about ShopLocal is that it is focused on special offers. Click on a category and you'll be presented with an eclectic list of whatever the various merchants in the category happen to be featuring at that moment -- sort of a giant electronic yard sale. Maybe you want these things, maybe you don't. The classification taxonomy appears to be a work in progress. Under the general heading of "automotive accessories" were only four sub-categories, one highly specific one for "power inverters," two much more general ones and one for "miscellaneous." It's not fatal, but if the site grows, this could quickly become a mess. What's really surprising is that the site doesn't allow users to print coupons to build involvement and help retailers track response -- it merely generates a simple shopping list.

One thing I liked about ShopLocal is that you can attach your email address to any store, brand or category and receive weekly emails with current specials. That's smart marketing, pushing special offers to targeted consumers, but in a way, the power of this feature really makes the rest of the site seem unnecessary.

What I saw with ShopLocal was a national site, utterly devoid of local personality and in no way leveraging or complementing the local paper. The fact that ShopLocal had no local merchants (at least in Philadelphia) I will attribute to its recent launch. However, this is a trap that's befallen other putative local shopping sites --- bringing on true local merchants is a pain compared to selling the big national chains, so guess what: they don't. So ShopLocal's commitment to local shopping will need to be proven over the next few months.

The press release for ShopLocal notes that its mission is to marry online research to offline shopping, making its many convenient links to online ordering a bit mysterious. The press releases also positions ShopLocal as saving the consumer from having to go to numerous different Web sites to find the best deals. But since ShopLocal only lists sale items, it will be a very long time before it has enough mass to present a real comparative shopping experience to consumers.

Another failed online venture by the newspaper industry? Perhaps not. The most interesting thing about the launch of ShopLocal was the sentence in the press release stating "...in the coming months, we expect to announce additional network partners such as portals, online directories, and other newspaper publishers." Will ShopLocal soon be sporting local yellow pages listings? Maybe the newspapers do get it after all.

There's lots of room to disagree when it comes to contextual advertising -- and that's what make the decision on whether or not to participate in programs such as Google AdSense so challenging for publishers right now. What I'm seeing in the market are the first steps towards refining and improving the whole concept, and that, as with all things Internet, will mean even more confusion before we get to anything approaching clarity.

One company that's getting some buzz right now is Quigo. By mixing technology with a new model that combines contextual ad placement with categories such as travel, it claims it is creating an even higher level of relevancy. The underlying logic seems good. For example, if you are a cruise ship operator, do you want your ad on a recipe site where there is mention of a recipe found during someone's travels to Spain , or a travel site talking about all the wonderful things one can do if one travels to Spain? Neither site is a bad place to advertise, but from a clickthrough perspective, the cruise ship company is likely to do better on the travel site.

Some theorists are going further, suggesting that advertisers could place their ads at a central location, and publishers would select what ads to place on their sites. Presumably, they would select the ads most relevant to their audiences in order to maximize clickthroughs, and thus their own revenue. A nice side benefit is that publishers would have complete control over what appears on their sites.

That's an interesting peek into the future, but what about today? My contention is that publishers can't come out winners in the current game of contextual advertising. Here's my reasoning, excerpted from my June speech at the Canadian Business Press annual conference:

Some of us are already engaged in a form of self-abuse by allowing contextual advertising on our sites. The rationale for a publisher to accept advertising from a search engine is simple and seductive: some money from advertisers you'd never sell anyway is better than no money. Some publishers are already reporting nice monthly checks rolling in -- with no work at all. What's not to like? After all, aren't you the clever one for turning the search engines into ad sales reps for you?

Yet what would you say if an independent sales rep came to you and made this proposition:

I want you to give me space in your publication, and by the way, I'm looking for good positions, maybe even your home page

I'll sell ads into that space, and keep the lion's share of the revenue

I won't specifically chase your advertisers, but if they should come to me, tough on you

I'll sell using a whole different pricing approach than you use, which may turn out to be a cheaper rate than you offer your advertisers

I'll essentially be the judge of who advertises what on your site, without regard to your brand or your market position

I'll be building a huge syndicate, so you'll always need me more than I need you

I will be telling the advertising community, day in and day out, that my approach to advertising is far superior to yours

How long would that rep be in your office? Probably just long enough for you to stop laughing. Yet when Google talks, we listen.

Contextual advertising may in fact be clever and beneficial if most of your revenue doesn't come from advertising. But if you generate the bulk of your revenue from advertising, you need to be afraid -- very afraid -- of contextual advertising. Let's go back to that rationale I mentioned earlier: you're getting some money from advertisers you'd never sell anyway. Actually, that was the rationale for going with some of the old syndicated advertising services like DoubleClick. They sold massive traffic in broad categories to marketers of broad-appeal consumer products. That is indeed free money for any specialized publication. But if you publish a magazine for, say, the machine tool industry, and a contextual ad appears on your site based on the keywords "NC simulation," that's your advertiser -- or it should be -- meaning the search engine supplying that ad is competing with you and you're helping them do it. Let me say it another way: by definition and design, contextual advertising is competitive with your own advertising sales efforts.

The future of contextual advertising might be a lot friendlier to publishers, but for now, fear and loathing appear to be the correct response.

Just weeks after noting the newspaper industry's on-again off-again love affair with yellow pages, I see an announcement by Hearst that it's acquiring White Directories, one of the nation’s largest independent yellow pages publishers, and that White will become part of the Hearst newspaper group.

Is this a case of another newspaper publisher getting an expensive and painful lesson that local ad sales expertise and local directory ad sales expertise are not synonymous? Perhaps not. I spent some time flipping between a list of markets served by White and markets served by the Hearst newspapers, and found very little overlap. What we probably have here is Hearst making an investment in a growing and dependable stream of profits, just like the bevy of private equity funds that have discovered the yellow pages industry over the past few years.

So why don’t newspapers and directories mix?

The primary problem is that directory salespeople aren’t like other salespeople, and I offer that observation as high praise. There was a time when it was widely believed that yellow pages salespeople, particularly those with the benefit of Donnelley sales training, were among the best salespeople in the media business. But that’s not the same as saying they could sell any medium equally well. Directory salespeople are indeed a breed apart, and the general experience to date is that they don’t do well selling other forms of media. It's not for lack of yellow pages publishers trying to make it so. Part of this is a natural salesperson’s tendency to focus on what they know best and are making money at today.

But the larger issue is that the directory sale is almost totally opposite to the sale of most other media. With yellow pages you sell retention, discovery, saturation distribution and response. Add in an annual frequency and rates so high they have to be expressed in terms of the monthly cost, and you can easily see the challenge. Yellow pages salespeople can't sell newspaper ads, and newspaper people can't sell yellow pages ads. That’s why the potential sales synergy that looks good on paper has never worked in reality.

Consider too the cultural divide. Newspapers provide important news and have a strong and proud journalistic tradition. They sell subscriptions and they sell advertising. Yellow pages sell advertising and give their publications away. In the yellow pages business, the advertising is the content. That’s simple to say, but hard to absorb, particularly if you grew up in the newspaper business. Add into the mix that yellow pages and newspapers have different pre-press needs, are manufactured differently and distributed differently, and you knock out loads more potential synergy.

Finally, there is the "grass is greener" issue. When newspapers look enviously at yellow pages, they look at the market leaders, the Verizons of the world. But when they finally take the plunge and buy yellow pages, they buy independents, the scrappy competitors, the "we try harder" publishers. Nothing wrong with that, as these independents can be both large and profitable. But what it does mean is even more emphasis on advertising sales in a highly competitive, take no prisoners environment. That can be a real eye-opener for newspapers, many of which operate with effectively no competition.

Does yellow pages make great media investment vehicles? Yes. Should they be acquired by newspapers to build "a highly synergistic, integrated local media advertising platform" (I just made this up, but doesn't it sound so ... plausible?). No.

ENUM, an initiative we first reported on in March 2001, seems to be finally picking up steam. Originally spearheaded by VeriSign and Telcordia Technologies , the initiative attempts to bridge the Internet, Phones, Fax and Wireless with a single contact address -- your phone number. The UK Government is seriously involved in efforts to stimulate the growth of ENUM in the United Kingdom , adding to a general endorsement of ENUM by the U.S. Department of Commerce last year.
In essence, ENUM is a distributed database that translates telephone numbers to IP addresses, which means that phone numbers could be used in place of, or in addition to, domain names. Currently, when you enter www.infocommercereport.com into your browser, Domain Name Servers (DNS) perform a lookup up on that name, find that it is associated with a specific IP address, and take your browser there. ENUM works identically, and is actually integrated into the existing DNS infrastructure.

Interestingly, ENUM can do more than a one-to-one translation to an IP address. It can also link to email addresses, instant messaging identities and cell phone numbers. It's also important to note that ENUM is designed to be queried by machines as well as humans, meaning that all sorts of interesting applications to perform seamless communications are likely to emerge, not the least of which might be streamlining voice over IP (VoIP) call connection.

A lot of governments seem excited about ENUM as a way to bridge the wired phone network with the Internet. Needless to say, the usual suspects in the domain registration space are all circled around ENUM, hoping to become the central registration, and hoping to tap into all the associated registration fees.

Fees? Well, somebody has to pay for all this somehow, and the current notion seems to be to use the existing model for domain registration. And with all those millions of consumers out there hankering for ENUM, revenues could be huge.

Consumers? Hankering? Here we go again. Develop a new technology, and everybody immediately assumes a consumer market exists, primarily because they want a consumer market to exist. After all, there are far more consumers than businesses out there. Businesses want to be contacted, and they want to make the contact process as simple as possible. Is the same true of consumers? Will millions of them rush out to link and expose all their electronic contact data in a searchable public database? I suspect that caution will figure into this at some point.

As to hankering, I have to ask, just as I did with the national cell phone directory: does the market really want this? It's a huge issue, because not just revenue is at stake, but the ability to achieve a critical mass of listings, without which nobody will bother to use ENUM, and the whole initiative will collapse. Too much ambition and greed too early means the almost certain death of ENUM.

Governments are behind ENUM in the general belief that it will lead to technological progress, and hey, they're not paying for it (and they may well tax it). The big companies involved in ENUM see big profit opportunities, although ENUM has all the characteristics of technology in search of an application. And unlike directory assistance and the white pages, there's no opportunity to impose "unlisted number" fees because the database does not exist, and it depends on consumers to populate it.

It will be interesting to see how ENUM evolves, but in my opinion, success will depend on scaling it down before ramping it up.

Google, not being content merely indexing all the free content in the world, has just announced the introduction of Google Print, a new service designed to index the full text of books. Since books are rarely plopped onto the Web in full form free for the taking, Google is now actively striking deals with book publishers for access to the contents of their books. Most significant of all: Google won't give away the full contents of the books it indexes. Rather, it will show only a few pages of the book to show the user's search term in context. If the user wants more, Google will provide links to online retailers where users can buy the book. Yes, Google is now supporting and facilitating the sale of content! This is huge.

Consider the possibilities: subscription-based database and directory publishers can use this new service to merchandise their products and develop direct online sales. This approach, adapted properly to the special issues of database publishers, could prove significantly more powerful as a sales tool than buying search terms. Since Google wants to aggressively grow this new area, it's also likely to remain free for some time.

Initially, Google says it wants to provide online purchasing links to online book retailers such as Amazon. My guess is that this is a temporary gambit because Google doesn't want to look like it's trying to compete with Amazon. While I don't see Google getting into online bookselling, what seems inevitable to me is that Google will ultimately offer links direct to publishers, for a fee, so that participating publishers can sell directly. That's critical for serials publishers, who need to capture the customer's name and address to generate renewal sales. The only way to get this information is to cut the book retailer out of the picture, and Google's platform could make this happen. By the way, Google Print could be a boon to the e-book business, because if you've found a book through a Web search, my guess is you want to get your hands on it sooner rather than later, and e-books provide that through instant downloads.

I've always liked the integration of paid content with free content via search. I first saw it with the old Northern Light service many years ago, and it seems to be coming back into fashion again. You can argue about the best ways to co-mingle free and paid content, but everybody seems to agree that overall it's a good idea.

To my mind, the best part about co-mingling free and paid content is that it offers a constant if subtle reminder to search engine users that not all content is free. The most damaging aspect of the big search engines is that they have inadvertently created a perception that they offer most if not all of the information in the world for free. Those of us who sell content have all been hurt by this. That the biggest search engine of them all will soon start including and merchandising paid content is absolutely a good thing. To the extent we can use it to better sell our own products it's an even better thing.

I must say I am enormously impressed with my initial experience with the new Google Desktop tool which creates a miniature search engine on my local computer. I was stunned at how easy it is to locate information on my hard drive, including items I had lost, forgotten, and even some I thought I had erased.

To download this remarkable and free new tool, simply go to http://desktop.google.com and you’ll be just a few mouse clicks away from installing it on your hard drive. The installation is one of the smoothest and easiest I have ever experienced. This is due in large part to the compact size of the software. Once installed, the application fires itself up, and immediately starts indexing your hard drive, including all documents, emails, notes, presentations. In fact, Google Desktop will also archive and index all your Instant Message exchanges. My only disappointment so far was learning that it doesn’t index the contents of PDF files. "Our goal is to have it behave like a photographic memory for your computer," said Marissa Mayer, Google's director of consumer Web products. That’s a laudable goal, but when exact copies of things start getting made, copyright questions immediately start to surface.

I say this because in addition to indexing your own information on your computer, Google Desktop also stores and indexes an exact copy of every Web page you visit. This could arguably put the user in violation of copyright law as well as violating the terms of use conditions of some sites. "Fair use," the common defense against claims of copyright infringement, is a bit murky and often in the eye of the beholder. The same holds true for users of paid access subscription sites (Web pages delivered with SSL encryption can also be indexed by Google Desktop by the way). One possible nightmare scenario: a user purchases one-day access to a content site, and uses the Google Desktop to capture huge amounts of information, all automatically indexed for easy future retrieval. Further compounding the issue is that Google Desktop is integrated into your Web browser, blurring the lines not only between personal and Web-based content, but where that content resides, and the ownership of that content as well. Yes, you can engage in serious content piracy without Google Desktop. My point is that it's just gotten significantly easier, and some people may end up doing it without even realizing it.

Google certainly didn’t create this problem: other desktop indexing tools already exist (and you can count on a lot more in the near future), but it is taking it to a new level by making the capture of Web-based data automatic, seamless and essentially invisible to the user. And it’s one more encroachment to which content producers will need to remain alert.

The USC Annenberg School ' s Center for the Digital Future has just released results of a nationwide survey in year four of an ambitious ten year project to monitor how the Internet is influencing all aspects of American life. A noteworthy finding was that users are at last acknowledging that not all online information is created equal.

For the second year in a row, the study found a decline in the number of users who believe that "most information on the Web is reliable and accurate." The figure is now down to 48.8%. The number of users who believe that "only about half the information on the Web is reliable and accurate" continues to grow, and now stands at 41.5%.

How do users determine quality? The answer in a word appears to be "brand." Users consistently rated the information quality of "established media" and government Web sites higher than Web sites of individuals (which I read to include small and unknown media sites as well). According to the study, 62.1% of users believe that established media Web sites are "mostly reliable and accurate" and 56.5% of users believe that government Web sites are "mostly reliable and accurate." The percentages rise even higher when the study looks only at users who've been using the Web for a number of years.

I've suggested for several years now that there would ultimately be a "flight to quality" as users began to realize how much inaccurate, outdated, incomplete and biased information exists the Web, and that this shift would primarily benefit those established publishers with a reputation for providing quality data. These data suggest that this important and very positive shift is already underway.

Detailed data from this survey can be found at: www.digitalcenter.org

BellSouth Advertising and Publishing, the yellow pages arm of BellSouth, has announced that it has become an authorized agent for Google, and will market Google paid search programs through its vaunted 2,000 person strong sales force.

BellSouth and other yellow pages publishers such as Dex Media had previously created Web advertising bundles that they had been offering to their customers. These bundles consisted of various combinations of Web site hosting, Web site design, and entry-level paid search programs. However, this move by BellSouth greatly changes the playing field. It also appears to be an admission by BellSouth that paid search has become more than an optional add-on, and that search engine advertising is as compelling to advertisers as its own online yellow pages offering.

This deal also suggests some recognition by Google that to crack the potentially huge market for local advertising, it needs feet on the street, and that its self-service approach to sales and customer service fails to cut it with smaller and less sophisticated advertisers.

Can this marriage work? For BellSouth salespeople to successfully sell Google paid search programs in conjunction with print and online yellow pages, they're going to have deal with some sticky questions: Does Google replace the need for my online yellow pages advertising? How much of my yellow pages budget should I allocate now to Google? How come Google offers pay-for-performance pricing and you don't? One thing that is certain is that smaller advertisers are much more likely to re-allocate their existing ad budget to participate in Google than find new dollars to participate in Google. That means a real risk of revenue loss for BellSouth.

It's also important to remember that while corporate executives can make all the plans and sign all the deals they want, if the sales force doesn't buy in, they will not succeed. What kinds of things does yellow pages sale organization like? Simple, quick, easy, add-on sales that in no way jeopardize their existing revenue or commissions. The Google deal fails all these criteria.

My prediction: the BellSouth sales force will ultimately submarine this deal. Google will end up no worse for wear, and BellSouth will realize that repping their competition is not in their best interest. I'd also like to reiterate that what really may be making paid search so attractive is its pay-for-performance model. If so, BellSouth may want to take a look at Verizon's deal with FindWhat as perhaps a better path.

With the ink still dry on its wacky deal to sell online advertising for Google, BellSouth has topped itself by announcing an Internet yellow pages joint venture with SBC Communications. And if that isn't enough, the new joint venture has announced that it is finalizing a deal to acquire Internet start-up YellowPages.com. The dust hasn't settled sufficiently to know if the new joint venture will also be selling online advertising for Google, but hey, why not?

What's going on here? Great question. Having had limited success selling to their own home markets, these two regional giants will combine forces so that they can enjoy limited success selling online advertising in their combined home markets. The press release announcing the joint venture proudly notes that it will have "50 million monthly consumer searches, giving advertisers increased traffic." Actually, the new joint venture's Web site will certainly get increased traffic, but the local auto body shop in Macon, Georgia isn't likely to, and therein lies the rub: yellow pages owes all it success to advertising from local businesses serving local markets.

The big yellow pages publishers have always been long on cash and ambition and short on creativity. That's why it's not all that surprising that when they want some fresh new ideas, they pull out their checkbooks and buy some. In this case, the fresh ideas are being supplied by YellowPages.com, a seven-year old Internet start-up, which is being acquired for possibly as much as $150 million, according to some press reports. Do the math: even yellow pages publishers wouldn’t pay that much for a domain name. What they’re really trying to buy is a clue.

This week technology media juggernaut TechTarget announced that it's launching CIO Decisions, a new print magazine with a circulation of 60,000, targeted at senior-level information technology executives in mid-market companies.This will be the third print magazine published by TechTarget, which started life as a Web-based publisher serving information technology professionals, a group that by now you would think would want to receive all information digitally.

Also this week, the British Computer Society , another large group of information technology professionals. released the results of an extensive survey of its membership that found that members preferred to receive the Society's magazine, Computer Bulletin, in print format.What's noteworthy is that an audience so comfortable with technology still has an appetite for print, and that publishers are still willing if not eager to support that appetite. Perhaps it's a reaction on both sides to the problem of noise.

For subscribers, so much is flying by them so quickly in electronic form that it's difficult to keep up. The print format allows them to read where and when they choose, when they can best focus. For content that isn't time-sensitive, this makes a lot of sense.For publishers, launching a new Web-based publication means immediate competition with large numbers of competing Web sites, blogs and email newsletters. In print, the number of competitors is dramatically reduced, and with the reduced amount of postal mail being sent, a print publication can make a big impact fast.The British Computer Society study also found that members did want to receive certain things electronically, such as breaking news and job-critical articles, and they looked to the Society's Web site as a reference archive and member bulletin board.All this suggests that publishing in both print and online formats can actually offer competitive advantages, provided that publishers recognize that the optimal mix of formats will continue to change, and be ready to react quickly. It also suggests how dangerous it can be to ever assume we know what our customers want.

If level of press coverage is a reliable indicator, radio frequency identification (RFID) technology is poised to become the "next big thing."

What is RFID and why does it matter? RFID technology is deployed through tags that can be thought of like bar codes with little radio transmitters attached. More precisely, they are relatively inexpensive, paper-thin computer chips that can contain manufacturer codes, product codes and serial numbers and can broadcast this information to nearby receivers. RFID tags could revolutionize the tracking and counting of equipment and inventory, and therefore have potential applications in almost every industry. The first widespread rollouts of RFID are about to begin, and where there are products and inventory, there are (or should be) electronic buying guides and marketplaces.

Another important aspect of RFID tags is that the information on them has to be meaningful globally, and that means coordination, which means databases. The big winner to date is Verisign, which scooped up a contract to maintain the primary databases of companies and their products and ship that data rapidly around the world (RFID is designed to allow trading partners to exchange all sorts of product information on a real time basis). However, ICR believes that Verisign sees its biggest opportunity long-term in the movement of the data, not the data itself. That leaves manufacturers or their agents (industry database publishers, anyone?) to upload and maintain the product information.

Further, while the RFID specification provides for a globally standardized company numbering system, it anticipates that vertical industries will use existing product identification systems or create them. Thus, the book publishing industry will likely embed existing ISBN numbers into RFID tags, and the food industry will use UPC codes. Opportunities abound in those industries lacking such standard product identification schemes.

It seems every industry has its own exciting ideas of how to take advantage of RFID technology. The pharmaceutical industry wants to label all prescription drugs with RFID tags containing individual product serial numbers as a way to combat theft and counterfeiting. Almost every industry seems to see inventory applications, as merchandise can broadcast its arrival at the warehouse door, and its departure at the store's main entrance, all without human intervention. Wal-Mart has already announced that it will mandate use of RFID tags by its largest suppliers beginning in January 2005.

One of the most adrenaline-charged corners of the Internet during the dot com boom was occupied by electronic marketplaces. At their peak, over 1,000 of them existed, mostly in B2B verticals. By some estimates, fewer than 100 of them survive today, and the most successful of them are B2C marketplaces.

Electronic marketplaces are important to buying guide publishers because not much separates the two. Indeed, marketplaces offer a logical evolutionary path for buying guides because they support infocommerce precepts of business process integration and adding value by increasing user productivity. Most tantalizing of all, marketplaces hold the promise of transactional revenues, which can far exceed advertising and subscription revenues. It’s the right destination, but the road to this promised land has been a rocky one. (think IndustryNet – ahead of its time and VerticalNet – out of its mind).

Why are consumer marketplaces flourishing while B2B marketplaces struggle? There are three primary reasons. First, consumer marketplaces are a totally new concept, and compete only marginally with local yard sales and flea markets. They’re asking users to do something new, not change their established habits. B2B marketplaces, by contrast, are rigid and highly structured, and often require substantial changes in how users conduct their business. Second, it’s easier to achieve liquidity with consumer marketplaces – enough buyers and sellers to produce satisfactory outcomes on both sides. B2B marketplaces, by contrast, often need fantastically high levels of industry participation to achieve liquidity, and most fail before to achieve it. Third, consumer marketplaces are a borderline form of entertainment. They tend to be the electronic equivalent of noisy bazaars, with personality, pictures, and generally low price-low risk transactions. B2B marketplaces are more typically designed for the “rational” business buyer, so content is factual, quantitative and so uniform that computers can make purchasing decisions – and indeed some B2B marketplaces were designed with exactly that objective. So it’s no wonder that humans have been slow to embrace them.

The most important trend in consumer marketplaces is that they now are moving from the spot market, auction model to more conventional storefronts, where specific merchandise is dependably available at any time. In a sense, they are morphing from flea markets, where you never know what’s on sale, to shopping centers, where you go because you know exactly what you’ll find. This is a significant evolution and one that is now being adapted by business-oriented marketplaces (think eBay Business). With the organization of large collections of vendors in one place with common front-end interfaces for product discovery and ordering, we’re seeing the next-generation of buying guides, and they will present a formidable challenge. For buying guide publishers, the time for pre-emptive moves is now.

CitySearch, producer of online consumer city guides (and a subsidiary of InfoCommerce Group's latest favorite, InterActive Corporation), has raised eyebrows with its announcement that it will be offering advertisers a pay-per-call option, in addition to its existing pay-per-click programs. Pay-per-call is analogous to pay-per-click, but the mechanism for capturing and measuring ad effectiveness is phone response rather than clickthroughs. Advertisers run a special number in their online advertisements, each call is tracked by the service provider, and the advertiser pays based on the number of calls received.What's going on? What we're seeing is increasingly explicit acknowledgement that -- gasp -- clickthroughs are not the same as sales. The great irony here is that the place where pay-per-click advertising apparently doesn't resonate is among smaller, local advertisers, so-called "unsophisticated advertisers" who view pay-per-click as buying increased traffic, not increased business. CitySearch believes, and we concur, that, when it comes to pay for performance, it's a lot easier to prove the value of, and charge for, forwarded phone calls than anonymous clicks. And while it may seem hard to believe, a large percentage of businesses still don't have Web sites, but pay-per-call can work for these companies, while pay-per-click can't. Pay-per-call combines the best of two worlds - the increased reach of the online media, the traditional measurability of direct response and the siren song of "pay for performance." And it proves the significant benefits of viewing old world and new world marketing channels as complementary rather than competing.While the CitySearch embrace of pay-per-call is significant, real credit for this important development properly goes to FindWhat, which launched the concept back in September. FindWhat is working in partnership with technology provider Ingenio; CitySearch is using technology from CIRXIT. This new technology is already hard at work chasing the huge B2C market, though we would contend the opportunities are just as big in B2B. Unlike the consumer market, B2B buyers are not known for purchasing machine tools, overhead cranes and printing presses through online shopping carts. B2B purchases are typically more complex, with longer sales cycles. At some point the buyer usually picks up the phone to call the seller. That's why showing true return on investment is so difficult for those selling pay-per-click programs to B2B companies. A pay-per-call capability is a much more apt and convincing selling tool for B2B publishers.So keep your eye on pay-per-call. For B2B buying guide publishers, this is one killer app that can actually live up to its promise

By now, you should be familiar with the term "click fraud" which refers to the act of repeatedly clicking on paid search links to either fraudulently make money, or to create an expense for those you don't like (such as a competitor).

We've addressed click fraud in columns past, citing the investigative news stories coming out of India suggesting that there are sizable organizations in place that exist solely for the purpose of committing click fraud. Click fraud is an important development for B2B publishers to be aware of. Most don't employ the pay-per-click business model, and thus their advertisers can't fall victim to click fraud, an advantage that many B2B publishers should be quick to emphasize to prospective advertisers.

But how big is click fraud really? It's getting a lot of attention lately, but how prevalent is it?. Reliable statistics on illegal activities like this don't exist, and the search engines have all been taking steps to implement technological solutions to reduce click fraud. So is click fraud a tempest in a teapot? We were starting to think so, until we saw this stunning quote from George Reyes, Google's CFO, speaking at a major investment conference hosted by CSFB this week:

"I think something has to be done about [click fraud] really, really quickly, because I think, potentially, it threatens our business model."

As one insight into the size of the problem, Jessie Stricchiola, the president of Alchemist Media, a paid search consulting firm, told CNN that she estimates that as much as 20 percent of all clicks on paid search ads are fraudulent, and she contends that not all search engines have been as aggressive as they could be about combating click fraud. Of Google she noted, "Google has been the most stubborn and the least willing to cooperate with advertisers" that complain about click fraud.

Published reports indicate that click fraud was a primary topic of conversation at recent conferences sponsored by Jupiter and Majestic Research as well. There are now open discussions in investment circles about how exposed the major search engines may be with regard to click fraud, and some analysts are even suggesting a close watch on companies such as eBay and Amazon, which are heavy buyers of paid search, and thus have a greater exposure to fraud.

In our view, click fraud is simply one more illustration of what continues to be most problematic about "pay for performance" advertising: it looks great as long as you don't look too closely. Yes, search engines only get paid if they perform, but for most B2B marketers, "performance" means having traffic shipped to their sites. If that's all you want, great. But if you're depending on paid search for qualified leads or sales, maybe it's performing, maybe it's not. Nobody really knows for sure. And even if the search engines are able to wipe out the scourge of click fraud, they remain resistant to looking too closely at the remaining legitimate clicks they generate for advertisers. To the search engines, all clicks are created equal, and they need it to stay that way. Because if it becomes clear that not all clicks are of equal value and quality to the advertiser, guess what? Advertisers will want to pay less for all clicks, or only pay for the best quality clicks. Either scenario is bad news for the search engines, for whom your ignorance is their bliss.

An article in a recent issue of DM News by Meg Weaver, founder of Wooden Horse Publishing which produces a database covering the magazine industry, concludes that magazine publishers have hit a wall in terms of subscribers, and that the numbers are in significant decline. As she phrases it, this is "... a dirty little secret the magazine industry doesn't want you to know: We have run out of readers in this country."

To document this claim, Weaver cites her analysis of Audit Bureau of Circulation numbers. By looking at cumulative circulations of all audited ABC publications, she notes that the industry grew consistently in terms of circulation until 1990, when things began to plateau at 366 million. The 2003 number? A cumulative circulation of 353 million. Weaver attributes this primarily to uncreative "me too" publishing practices in the magazine industry, which leaves the industry in a position of continuously poaching subscribers from each other rather than creating innovative new magazines that would attract net new subscribers.

But is this the full story? My first concern was reliance on ABC circulation numbers, since ABC is favored mostly by consumer publications. Further, ABC provides circulation numbers only on its membership, and that creates a sample biased towards larger publications that need circulation audits.

My sense is that the story, which probably does begin around 1990, is far more nuanced. What we've seen over the last 15 years is an explosion in the number of increasingly specialized magazine titles, some with circulations in the low thousands. We've also seen increasing amounts of information delivered via the Web, faster, fresher, more accessible and often even more specialized than the most specialized print publications. In short, information is proliferating, and as a result, audiences are fragmenting as they increasingly move to access only the information of most interest to them, shutting out a lot of more general information sources in the process.

We're now in an era of extreme specialization. Subscribers are getting used to mixing, matching and filtering content. And as they read less, and focus most on topics they care most about, guess what? You need to keep up with them editorially, because these empowered readers want depth and substance, and they know immediately when they're not getting it.

This shift has implications for data publishers too, because our businesses are being forced to address the same trends. What was "good enough" in terms of editorial quality isn't good enough any more. The data that our subscribers choose to receive gets scrutinized as never before, by increasingly expert eyes. It's a tough new standard to meet, but there is ample evidence that if you can deliver good quality editorial, there will be an audience willing to pay for it.

Publishers, hold onto your hats and grab your digital cameras: it's looking like the next big battleground in the directory world is going to be visual.

All of a sudden, photos of businesses and buildings are red hot and getting lots of attention. Several months ago, infoUSA announced it had dusted off its mothballed project to photograph every business in America, and would be adding photos to several of its products, including its beefed-up business credit reports. CoStar, producer of a national commercial real estate databases, has a fleet of trucks running around the country snapping shots of every office building. Now, Amazon.com's new search engine, A9, is generating big buzz with a yellow pages directory with photos of businesses. And, rising above them all is GlobeXplorer (a 2004 InfoCommerce Model of Excellence), which offers aerial photos of America and which are being integrated into several business database products.

Why pictures? Let's face it: directory and databases are very useful, but very useful is not always the same as very interesting. Adding photos makes a database more interesting. In some applications, a picture may well be worth a thousand words. In fields such as real estate, it's hard to conceive of a product without photos. Even in a credit report product, a photo of the business might provide valuable added insight.

But do photos add much to a yellow pages product? I took a quick spin through the A9 yellow pages to try to answer that question. When you do hit a photo of a business (and A9 only has coverage in selected areas right now), it's impressive. A9 offers you a series of snapshots around the business, so you can get a view of the whole street. In a great case of unintended product placement, more than a few of these photos seemed to be of UPS trucks parked at the curb and obscuring the storefront, but overall the project achieves one of A9's stated objectives, which is coolness.

The big question of course is "why?" Is the user better off for having access to these photos? A9 suggests photos help users more quickly get to stores by providing a visual cue in addition to the address. That's certainly valid (although the cost/benefit ratio seems a bit high), but there is a bigger issue. In many cases I would be staring at a well-composed photos of a business with no clue what it did beyond the general yellow pages category in which it was classified. Therein lies the rub: A9 is layering these neat and glitzy photos on top of a very weak dataset. Photos may distract users from the lack of information about the listed companies, but they don’t substitute for basic data.

A search for restaurants in downtown Philadelphia brought me lots of listings, all sporting name, address, phone and photos. Yet the photos, while novel and interesting, still don't tell me about cuisine, menu, hours, credit cards accepted, or any of the more mundane facts that are frankly more useful. When it comes to directories, photos without a strong underlying data record will never offer more than part of the picture.

I'm just back from the SIIA Information Industry summit, and it was refreshing to see so much enthusiasm in this industry again. Online advertising is back with a vengeance, and many in the room are predicting 20% to 80% growth in online ad revenues this year. And for the subscription-based publishers in the room, there seemed to be growing comfort with their products, and in how to market effectively to ever more demanding customers. And all this wasn't just my sense: more than a few speakers and attendees were noting that "it feels like 1998 again."

The only disturbing note was the seeming appetite to address the growing cost and complexity of data compilation by simply skipping the hard stuff. What I mean by this is that there is a lot of activity around the idea of essentially automating the editorial function. Halsey Minor created some buzz when during his luncheon talk he mused about the possibility of building services such as CNET without editors. We heard from companies whose entire businesses were based on re-packaging data gathered on the Web. In several conversations with publishers, it seemed that all of them were seeking opportunities for products that could be built largely, if not entirely, from Web-based data gathered on an automated basis. This thinking stands in stark contrast to one of the main themes I heard hammered home by speaker after speaker: success depends on adding value to your content and building content products that were not only useful, but unavailable elsewhere. Certainly, software is more powerful than ever, and there are examples of products built largely on an automated basis that offer real value. But when it comes to building database and directory products, I believe a lesson I learned early on still holds: if the data you need for your product is easy to collect, your new product is probably a lot less valuable than you think. Re-formatting readily available data or adding a few additional data elements rarely yields "must have" data products, particularly in today's demanding environment. Just as important to remember, if you can get your hands on the raw data easily, so can your competitors. And the software you developed to create your automated product? Every single day, application development tools are becoming cheaper and more powerful, meaning that your "proprietary software" offers little competitive protection either. While you can light up a data publisher's eyes at the thought of eliminating phone calls, faxes and mail, and possibly even eliminating human editors altogether, what we're really seeing is a re-emergence of the perpetual motion machine fallacy on the late 1980's, where a number of half-baked schemes were launched where the database was supposed to somehow maintain itself, the product would be shipped automatically, and the publisher's primary responsibility became checking his daily bank balance from the beach. If only! I am very excited by the potential of data mining tools and user self-updating, and all the wonderful things that can be done by applying software to the wealth of data available on the Web. But I'm concerned by our blind rush towards the world envisioned by computer industry visionary Bill Joy where "the future does not need us." Let's not be too eager to disconnect data quality from human effort just yet. Instead, let's recognize that the human editorial function, which by the way allows us to address the sizable base of businesses that still have no Web presence, is fundamental to the creation of the value added products we need to produce in order to succeed and thrive in the years ahead.

I remain amazed at the number of database publishers, particularly those chasing B2C markets for the first time, who haven't seen fit to make their heading structures as friendly as possible to a wide range of audiences.

Consider health sites that offer consumers physician specialties such as "Otolaryngologist." Or legal sites offering categories such as "admiralty law." Or a food ingredients directory with a category for "EVOO" (that's Extra Virgin Olive Oil in case you were wondering).

Technical terms and acronyms may be acceptable as categories in a trade directory (and I say "may" because even within a specialized field, not everyone has the same level of knowledge and expertise), but they're major roadblocks when trying to woo outsiders -- in these cases, consumers.

Kudos then to UK yellow pages publishers Yell, for recently introducing alternate headings based on regional dialects, in recognition that descriptive terms in common use are often not the formal term.

Taxonomies also need to account for common misspellings. One industrial directory found by an analysis of its searches that large numbers of users never got to its category for "throughbolts" because they were typing "thrubolts."

Too much effort you say? Like it or not, we all now operate in a "satisfy them or lose them" environment. Anticipating how users will search for information results in more hits, and more satisfaction. The smartest publishers I know all log and regularly review user searches that generate zero results as a simple way to identify problems. When your site allows users to search your heading structure using free text, such reviews are even more important.

The more paths you can provide to get to your data, the more satisfied users will be and the more successful you will be. When it comes to database taxonomies, if your terminology is correct, and the user's terminology is wrong, then you're wrong too.

When we coined the term "infocommerce" way back in 1999, it was meant to express our belief that information content needed to be linked with software and become increasingly integrated into the business processes of our customers. This would go far beyond assuring high renewal rates. It would drive customer demand for better and deeper data, for which publishers would be able to charge premium prices, with all this data now integral to the basic operation of client companies. We saw this as a very attractive vision of the future, but at the time it really was in the realm of theory.

Over the past few years, we've seen these precepts of infocommerce become part of mainstream thinking in the industry, with more and more publishers talking about delivering high value data as continuous data feeds, and finding ways to embed themselves into the workflow, systems and processes of their customers. But while more of us are "talking the talk," still only a handful of us are "walking the walk."

That's why it is so nice to hear a top executive at leading company demonstrating that they not only see the future, but are making serious strides to re-position their companies accordingly. Nancy McKinstry, chairman of Wolter Kluwer's executive board, told the audience at the recent DeSilva & Phillips conference that it was the goal of Wolters Kluwer to move beyond providing their customers with information to read in favor of finding ways to "embed our content in what our customers do." And in a dramatic illustration of their commitment to this goal, McKinstry noted that the company now devotes as much effort to creating software as it does to creating content and has already reached the point where "we have as many programmers as we do editors."

That's a dramatic statement for a publisher to make, but it reflects the reality that our business is changing profoundly. Reference data has traditionally been standalone and passive, and that constrained both its utility and its value. Need to find something in the old days? You'd stop what you were doing, look it up, and then go back to what you were doing, often cutting and pasting or re-entering the reference data you had found. That's not efficient or productive or easy, which means that a lot of directories and databases became place of last resort, destroying their value. Information that is used frequently and valued highly is information that is integrated into the daily work of the customer, if not driving the daily work of the customer.

We've all talked about the desirability of owning "must have" information. This new environment allows us to get to that goal more easily than ever before, but we've got to see the vision, and make the necessary investment to adapt our products now. Those who do will find themselves with even better businesses than they ever thought possible. Those who don't will end up as roadkill on the information highway.

We're pleased to announce our first Models of Excellence award for 2005 has been awarded to Primary Intelligence for its Account Profile product.

For a handy reference to Models of Excellence winners for 2005 and years past, please visit our awards page for the complete lists and full details.

Just yesterday, VNU's European arm announced a deal with NewsGator to distribute a bundled offering of the NewsGator RSS reader and VNU's business content covering the information technology industry.

Why is this significant? Because I think RSS feeds are potentially very important, and very good news for business publishers, including data publishers. RSS feeds are simply content sent by publishers in a standard XML format to users. Users read RSS feeds with newsreader software such as the product offered by NewsGator. RSS feeds are commonly associated with blogs. There are two ways to view a blog. You can visit the blog just as you would any other Web site, or you can have new blog entries sent to you as RSS feeds. Every time the blog is updated, the new information is automatically sent to your newsreader and you are alerted.

What excites me is not the technology, which conceptually speaking is quite mundane. Rather, it's the potential of RSS as a new and powerful distribution channel. RSS feeds allow publishers to push content directly to the user's desktop, bypassing spam filters and a whole host of other hassles and delivery impediments.

That's why I have begun to think of RSS feeds as "trusted feeds." Users subscribing to RSS feeds are saying to publishers that they value, trust, and want or need this specific content, and they will pay attention to it upon arrival.

And dare I say it, the other reason RSS feeds are so powerful is that they represent push technology. Push technology has been discredited in the eyes of many because it has been so badly over-hyped in the past. But I increasingly believe the successful publishers of tomorrow must have a push aspect to their product. It's simply the only way to engage your attention-deprived users in a value-added way that doesn't offend. I would even go so far as to say that the surprising resiliency of print publications is due largely to the fact they push content to users, a different form of trusted feed if you will. RSS feeds aren't only for blogs and news stories. They are equally adaptable to pushing out new listings and other event-driven data. This kind of continuous customer connection is crucial these days as more and more publishers find that it's actually easier to sell a subscription than it is to get a subscriber to use a subscription. And if they don't use it, they won't renew it. Staying visible with your subscribers is essential. RSS feeds provide a low-cost and increasingly popular way to do this. With RSS feeds, the medium is very much the message.

It's been an interesting week in the world of pay-per-click. First there was the big New York Times article on click fraud, which gently concluded that the search engines will ultimately extinguish it, so paid search marketers can rest easy. Then, click fraud was the topic of a lively session at the huge Search Engine Strategies conference, where nobody seemed to think that the problem of click fraud would disappear anytime soon.

There also was the article in Business Week suggesting Google might just be a "one trick pony" given its near-total focus on paid search advertising. For good measure I'd throw in the announcement by the snap.com search engine that it is rolling out a "cost per action" advertising program that allows advertisers to tie payment to specific activities, such as downloading a white paper, registering or making a purchase. Keep in mind that while snap.com may be a small player, it's an Idealab company, and they're the people who invented paid search in the first place with a little company that later became Overture.

All this market discordance says to me that we're on the verge of a new generation of pay-per-click business models and tools that will reflect a better understanding by all parties as to what pay-per-click can and cannot deliver.

It's been my view that the phenomenal growth of pay-per-click has been fueled by hype and misunderstanding. Advertisers embraced pay-per-click because of its compelling COD -- cash on delivery -- premise which offered guaranteed results. Is it any surprise that advertisers flocked to it?

Despite their loose use of terminology, paid-per-click providers aren't really in the pay-per-performance business, at least as advertisers define it. These providers are selling traffic to their advertisers, with absolutely no guarantee that this traffic will turn into sales leads, purchases, or anything else for that matter. Stated another way, these providers are delivering what those in other media call advertising impressions, they just charge for them differently.

My sense of the market is that advertisers, sensitized by such issues as click fraud, are rapidly coming to realize that they've been buying impressions, not performance, and are now starting to demand real pay-for-performance that ties payment to specific, measurable and largely fraud-proof actions. Ultimately, what advertisers want, they get.

It's too early to say if this shift will be good news or bad news for data publishers, but it seems likely that this new clarity on the part of advertisers will work to level a playing field that had tilted much too far in favor of the search engines. Finally, everyone will truly get what they paid for, and that is a good thing.

While one could easily dismiss McGraw-Hill's acquisition of J.D. Power as a financial transaction given the seeming lack of fit with the various McGraw-Hill businesses, I'd suggest that this acquisition is a brilliant move, possibly in league with the 1966 acquisition of Standard & Poor's. Indeed, the two companies are similar in that both are strong and trusted brands that deliver needed, objective guidance in large and important markets.

And it exploits a trend we've been harping on for some time: the greatest need of both business and consumer buyers, all of whom are overloaded with information and starved for time, is objective third-party guidance in consistent, standardized form. We call it the "new 3R’s," -- ratings, rankings and recommendations, and J.D. Power is the embodiment of this type of high value information. McGraw-Hill has picked up one of the biggest names in one of the hottest segments of the information business, so the deal is already looking smart at this level.

Is it fair to call J.D. Power an information company? I think so. After all, its business is to gather, database and publish consumer opinions on a wide variety of products. If you call the gathering process "research," then you would regard J.D. Power as an awkward fit with McGraw-Hill. If you call this gathering process "compilation," then J.D. Power looks more like a database information company, and McGraw-Hill has a strong track record with that type of business. Admittedly the line is blurry, but I'd argue that the owner of the company can push it into one camp or the other.

So how does J.D. Power, a ratings database company fit with the existing McGraw-Hill empire? Think of how the Aviation Week Group could amplify its market dominance as the new source of data on passenger airline satisfaction, which it could extend worldwide. Think of how the Construction Group could leverage its position as the preeminent provider of residential and commercial builder and landlord satisfaction data. Think of the endless stream of valuable "best of" content for BusinessWeek. And perhaps the greatest opportunities of all could come from leveraging qualitative data from J.D. Power with quantitative data from Standard and Poor's that could lead to breathtaking new opportunities powered by two of the best-known and most trusted brands around. And none of these even addresses the possibilities inherent in the custom side of the J.D. Power business, where it helps businesses measure the satisfaction of their own customers.

What's the downside to this deal? Figuring out how to sort through and prioritize the endless array of new opportunities this acquisition offers. J.D. Power is a huge brand backed by a powerful data collection platform churning out some of the most sought-after content anywhere. In my opinion, J.D. Power has loaded the bases, and now McGraw-Hill is at bat. Watch out!

A major article in Wednesday's Wall Street Journal is suggesting that advertisers are beginning to balk at the rapidly escalating costs for keywords. The article cites examples such as "mortgage," which now goes for $7-11 per click, and "mesothelioma," a form of cancer caused by asbestos, which goes for $49. It also notes that eBay, one of the largest purchasers of keywords, is publicly complaining about high price levels. The article suggests that high prices, combined with growing awareness of click fraud, and the presence of middlemen, could cause a backlash that would curb the rapid growth of paid search revenue.

As Executive Editor Staci Kramer of PaidContent.org astutely notes, "The real lesson here: nascent also equals unpredictable, and overreaction in any direction can -- and will -- do damage." But marketing sloppiness exhibited by many keyword marketers is taking its toll as well. Increasingly in a product search, I'll find an eBay ad saying it's got what I'm looking for. When I click through to eBay, I frequently get the message "no items found matching your search term." Perhaps eBay thinks it is clever marketing to have dragged me to its site. My reaction, however, is that eBay just wasted my time, and I am sure to be less receptive to its keyword come-ons in the future.

It's not just eBay; a large number of online retailers seem to be buying keywords for products they don't sell, and brands they don't carry. The marketing objective appears to be to get me to their sites, even if under false pretenses. This game of traffic for traffic's sake turns the Web from a precision marketing tool into a mass medium. Run enough eyeballs past your site, and some of them will buy.

The paid search industry is beginning to realize just how crudely marketers are applying its very refined technology, undermining their real value proposition in the process. That's why they are starting to educate customers and give them tools to use keyword marketing correctly and productively. Credit FindWhat for helping lead the way by offering technology that shows how well clicks on ads convert to sales. FindWhat CEO Craig Pisaris-Henderson, who will be a keynote speaker at InfoCommerce 2005, believes better understanding of returns will ultimately encourage more spending on searches, but in a less speculative fashion. In a bold move to improve not only click analytics, but the overall quality of clicks, FindWhat removed a large number of marginal Web sites from its network a few months ago, making a big bet that as keyword marketers get smarter, the marketplace will reward those who can deliver higher quality clicks.

Step back a bit, and it's not hard to see that paid search marketing is going through an initial growth phase, complete with a gold rush mentality, lots of misinformation, and lots of money being wasted. But there are now signs that this phase is coming to an end, to be replaced by a new phase where savvier, more educated marketers will start using the technology in a much more sophisticated way. This will present new challenges for the big search engines, and create lots of lucrative opportunities for online publishers.

As I write this, we're putting the final touches on a new research report called Database Subscription Pricing Benchmarks, based on InfoCommerce Group's Subscription Price Index database. The SPI database allows us to examine how the marketplace has changed between 2000 and 2004, and that change is fascinating.

What's particularly noteworthy is the shift in attitudes in just four years. In 2000, publishers were being relentlessly pressured by a marketplace that honestly believed it could find anything it needed on the Web for free. With so many ill-fated Web start-ups, along with a lot of established publishers, indeed offering their content for free, the move toward a world of free content seemed inexorable. Needless to say, it wasn't a happy time for subscription-based publishers.

Those that continued to charge for their content were certainly in no position to seek premiums for their Web offerings, and the trend at the time was towards "parity pricing," with print and Web versions priced identically. Indeed, many publishers were having such difficulty with their sales that the idea of the bundled offering -- buy the print version, get the Web version for free -- became a marketing staple. This bundled offering neatly sums up the thin