Aggregators

Based on the theory that you can't have too much of a good thing, a new generation of Web aggregators is combining content or applications from many sources and service providers into single Web sites.

These firms gather content or applications and market them to third-party Web sites. They differ from traditional aggregators, which collect information exclusively for their own sites. The new aggregators offer everything from consolidated consumer financial information to business applications from application service providers (ASP). They can be divided into two categories: displayers of information and resellers.

Displayers collect and display specialty information from multiple sources. That information can include subjects such as skateboarding, crafts and women's sports. This is the traditional model embodied by Web sites such as Santa Clara, Calif.-based Yahoo Inc.

Resellers have emerged as a type of aggregator. They collect content or applications and remarket them to Web sites operated by other firms. Depending on their focus, these aggregators market to consumer-oriented sites and to corporations that operate external Web sites for customers or intranet sites for employees.

For instance, telecommunications equipment firm Nortel Networks Corp. in Brampton, Ontario, buys general news and new product announcement information for its intranet from iSyndicate Inc., an aggregator and reseller in San Francisco.

"Aggregation is nothing new, but there are getting to be more Web aggregators all the time," says Kathleen Hall, an analyst at Giga Information Group Inc. in Cambridge, Mass. Aggregators are valuable, she says, because the broad array of content and applications they provide often helps keep visitors at a Web site longer and prompts them to return more often.

In addition, says Hall, "working with aggregators is easier for a corporation because it doesn't have to license [content or applications] from 20 different providers."

For example, Andrew Fritz, president of FringeGolf Inc. in San Francisco, which runs a Web site for young golfers, says he found he could contract for sports news and statistics content cheaper and more easily through iSyndicate than if he signed multiple contracts with other providers. He also says it helped that iSyndicate would host some of the content he licensed on its own server.

Jeff Thomas, iSyndicate's vice president of marketing, says aggregators like his company aren't interested in driving traffic to their own Web sites. "Our revenue model involves licensing fees or other fees. We don't really care whether or not there are millions of eyeballs on our dot-com site," he says.

Another aggregator/reseller is VerticalOne Corp. in Atlanta, which resells aggregated personal data such as financial information, online bill-paying services and accumulated incentives like frequent-flier benefits to consumer-oriented Web sites such as CNBC.com.

"Our service creates 'stickiness' for Web sites by giving people more reasons to be there," explains Sandra Dunn, VerticalOne's marketing vice president. Her company gets personal information by logging into servers at banks and other institutions, using user identifications and passwords provided by individual consumers.

Thomas says it may not always be cheaper for a dot-com customer to buy content via an aggregator, but it's easier than contracting with multiple sources. This reselling of content for a fee, sometimes called "syndication," "is emerging as an organizational principle for all of e-business," he says.

Daniel O'Brien, an analyst at Forrester Research Inc. in Cambridge, Mass., says he agrees that syndication will be big on the Web. "Dispersed digital audiences will create a need for 'hypersyndicators' - firms that serve custom bundles of content, applications and commerce," he says. "Hypersyndicators will effectively connect providers and distributors and alter the economics of content distribution."

According to Victor Petri, an Internet global practice leader at PricewaterhouseCoopers in Boston, aggregation also makes sense for consumers or businesspeople who are trying to get information from the Internet.

"How many Web sites do you really want to go to? Web sites need to have more to offer than a niche application or a niche service. More of these Web companies will have to consolidate their content and services," he says.

William Sheehan, an analyst at Giga Information Group Inc. in Cambridge, Mass., says ASP services are the latest type to be aggregated online. Sites such as Jamcracker Inc.'s Jamcracker.com aggregate applications that include customer relationship management and human resources management systems.

ASP aggregators aren't yet common because the service provider business model is still emerging. But there are about 10 ASP aggregators, including Sunnyvale, Calif.-based Jamcracker.com, that target firms demanding the wide choice of ASP applications that aggregation provides.

ASP aggregators should simplify the process of choosing an ASP application while offering discounts of 15% to 20% compared with what individual service providers would charge, Sheehan says.

Web aggregation may be slowed by low consumer demand, says Avivah Litan, an analyst at Gartner Group Inc. in Stamford, Conn. She says no more than 1 million consumers will use Web sites with aggregated information to help manage their personal finances this year, because it takes too much effort.

"The technology is there, but user demand and user ability to absorb the technology [aren't] there and won't be this year," Litan says.

Alexander is a freelance writer in Edina, Minn.

Copyright © 2000 IDG Communications, Inc.

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