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Free Britannica to cut off Encarta's air supply?

The old guard goes portal in bid for survival

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Encyclopaedia Britannica, founded in 1768 by three Scottish printers, became free on the Web from yesterday, at www.britannica.co.uk It had previously made most of its revenue from sales of a $60 CD-ROM, and online access fees. Britannica.co.uk is a new company that may seek an IPO, and is run by Don Yannias, who was previously CEO of the publishing company. The print edition will continue to be sold for $1,200, but it will be slimmed down. The companies are privately held by Swiss investor Jacob Safra. The new Web site could become a significant portal, linking to current news in newspapers, wire services and some 70 magazines, including Science, Newsweek, and Fortune, as well as weather forecasts and the like. A link to Barnes and Noble so that Britannica articles can reference books that can then be ordered online is being discussed. Gateway is a sponsor, as is 1-800Flowers. An online store is also being developed, but ad revenue is planned to be the primary source of income. The latest management chewing-gum tome Blown to Bits by Philip Evans and Thomas Wurster of the Boston Consulting Group (Harvard Business School Press), gives an interesting account of how Britannica was knocked from its pedestal by Microsoft. In 1990, Britannica sales were $650 million, but the decline-and-fall story is one of riches to rags. With Encarta, Grolier, and Compton being mostly given away with PCs, it proved impossible for Britannica to continue its pricing model. The door-to-door sales teams were dropped three years ago, and Britannica had spurned an approach from Microsoft, so Microsoft did a deal with Funk & Wagnells and first produced Encarta in 1993. When the then-owners, the Benton family, finally decided to sell the company in May 1995 after an impossible battering from Encarta, Microsoft was no longer interested in buying it. Safra bought the company for less than half the book value. Microsoft meanwhile finds it cannot generate sufficient annual renewal sales of Encarta, which is edutainment adapted to cater for regional user prejudice, rather than scholarship. Until this move yesterday, it had been feared that Britannica would go to the wall, and with it the destruction of the serious encyclopaedia industry. Perhaps there is now hope. ®

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