Online farmers expose Reed Net House of Straw

Huff and puff but not enough stuff

Farming On-Line is getting a £7 million cash injection in return for undisclosed equity from Internet Capital Group Europe. With 18,000 subscribers paying £174 each per year, FOL dominates the British online agricultural scene (yes, there is one) and, with links to big suppliers, it could well become the de facto trading hub for this sector. Subscribers get discounts of up to 40 per cent for purchases ordered through the site, FOL says. "Until we came along farmers had to wait until they got their weekly paper for specialist information," co-founder Jonathan Jackson told The Times. The site may not do much for Welsh hill farmers (some of whom lack electricity, let alone the means to buy a computer). But it shows why Reed Elsevier, the lumbering Anglo-Dutch publishing giant, will have a hard time converting its offline and online properties into the Internet. Reed Business Publications is the owner of Farmers Weekly, by far the most important newspaper for the UK agricultural sector. But where is itstrading hub? Last week, Crispin Davis, Reed Elsevier CEO, revealed the group's plans to invest £705 million on turning itself into an Internet powerhouse. Reed Elsevier has unique proprietary online properties -- such as the Lexis/Nexis database for lawyers, and it has huge offline brands. It wishes to exploit these through a series of b2b portals, such as TotalJobs, a recruitment site, and one for the electronics industry. Reed may have a good chance with both of these, as it has a massive subscriber base, and big name electronics papers on both side of the Atlantic. Also, the publishing side of the electronics sector is much less competitive than, say, IT. On the computer pub side, Reed Elsevier owns Computer Weekly, Europe's biggest and most profitable computer magazine(even though it operates only in the UK). But as with farming, it could be too late for Reed Elsevier to make a big success on the b2b portal front. Very simply, there are far too many well established, and well-capitalised companies already operating in this space. As a late entrant, Reed Elsevier's best bet is to team up with players which are already active in this sector. In return for equity, it provides the mortar, while its online partners supply the clicks (and the fancy Net IPO ratings). We would not be surprised if, in coming months, the company announces deals along these lines. ®

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