COMTEX's CEO Charles Terry on Rising Profits and New Competitors

When we got Charles Terry, President & CEO of COMTEX News Network on the phone last week, he had literally just walked in the door after a two-week vacation. After we hammered him with all our questions he said he felt like he’d been thrown back into the saddle again, even more quickly than usual!

Q: Are content prices changing as more and more of it floods the Net?

Terry: We’re finding that we can charge more and more for our services. Part of the reason that we can do that is that content is important to the success of every web site. The one thing they have in common is the longer people stay and come more frequently, the more money you’ll make, no matter what your business model is.

Our real-time always changing content makes sites sticky. That’s why they’ll make an investment. We’re making their model stronger so they’re willing to pay real money up front and tie our royalties in terms of their success.

We’re signed 232 new contracts last year which is up over previous year’s 131. The year before that we signed 50. So we love the receptivity to what we do in the marketplace. Our revenues are pacing at 60% growth with 16 profitable quarters in a row. So here we are an Internet company with profitability and growth. Imagine that!

Q: What’s up with wireless? We hear some people say it’s just a publicity play and not anything that’s going to be profitable anytime soon.

Terry: We’ve been involved, been playing it since ‘95 at least. It really requires real time information, you don’t want last week’s Time magazine cover article on your WAP!

It gets back to who will pay for this stuff -- follow the dollar. Stock quotes and stock alerts are the most wanted content. What better way to do that then headlines, maybe summaries of stories?

We chose not to go to Bell Atlantic and Omnipage directly. We sell to phone.com, strategy.com, etc. All of these people have experts in that marketplace and the technology to interface with telcos. We just use everybody else’s marketing dollars and experts to attack the market. We’re bringing arms to the warriors, shovels to the miners -- however you want to say it.

Q: How are you competing with all the other content aggregation and syndication players out there?

Terry: Actually many of them are customers of ours. Screaming Media is a customer, Infospace is a customer, Powerize is a customer.

They offer very finely granular topic set. If you are a web site that’s focusing on solar power we have an Energywire which is a very coarse wire with 200 stories a day with 57 news sources. They [the aggregators COMTEX sells to] are delivering the top 10 stories in solar power drawing from our real time news and drawing on some of the energy verticals. They are getting real time through us and vertical stuff through periodicals and providing very nice granular set of headlines to that Solar web site.

If that solar Web site wants to go directly to some providers they have some work to do: approaching publishers, working with them, putting together a consistent feed….

Q: Do you ever compete with the publishers who send feeds to you? Do you ever both want to go after the same account?

Terry: Yes there’s going to be some conflict, some occasions where it’s gonna be a key account.

We’re delivering network of 750 plus sites. For the publisher, one relationship with us brings them immediate real growth in revenue. Plus they’re getting branding out of sites they would never get to on their own.

Using the solar energy site example, say we get one story a day in Energywire. Whoever produced that would never make that sale to that web site alone. It would cost them more to make the phone call than they would make on that one story. But you aggregate that and you start to get real checks every month.

The flip side of that’s true for Web sites; you’d need 5-6 publisher relationships for real time news at the bare minimum. We’ll deliver the news from 57 all in the same format, all integrated for you. We’re not selling AP, we’re selling stories about healthcare with meta data ticker symbols discussed in article included. So that’s a product, our public company wire. Our clients such as Stockpoint and PC Quotes don’t want to buy stories that don’t talk about public companies. So we sell them pieces of wires as opposed to entire wire.

Sometimes a client will want all of one publisher. Then we’ll work with the publisher in that situation, and ask them, do you want to play? Here’s the opportunity.

Q: what do you think about the brand new aggregation players such as BackWire and YellowBrix who are getting funded by VCs these days?

Terry: The really good news is that they’re validating our position. I looked at BackWire today. They’re similar to a lot of others, their email push to your desktop is only as goood as their search engine. They’ve got lots of great sources, but like Moreover.com they may or may not have a relationship with the publishers whose headlines they are carrying.

If you’re going to differentiate between us and them, the hard work, the digital reproduction of copywritable content is a very touchy subject. We’re become a trusted partner. We know the sensitivities of our publishing parters. If we go to the kind of site they don’t want to participate in, we ask them first.

We work with 57 different publishers and create 37 different custom real time wires. There’s a lot of work that goes into doing that right.

These others’ mentalities that this sort of content is free because it’s out on the net -- the question is who’s it value-added for?

Next Week: Part II of our exclusive interview with Charles Terry, in which he tells us about the Company’s broadband plans which new publishers he wants to partner with; and what he thinks about ecommerce-imbedded content.