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Users doubt benefits of consolidation

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David Mort kicks off our new analysis section with a critical look at the effects of mergers and acquisitions on end-users

Consolidation has been a key feature of the STM information market in recent years. While there are still many small publishers of STM information, leading players are growing their market share through acquisitions and mergers, new product developments, and the inclusion of more 'must-have' content in their services.

However, a recent IRN Research User Panel survey, which repeated questions that were asked in 2001, shows that users are becoming increasingly concerned about this trend.

According to the survey, fewer users now feel that consolidation has helped to create 'one-stop shops' for information, while more users believe there is less choice than there was in 2001. More users are also concerned about the likelihood of price increases resulting from consolidation. On a positive note, there is a much stronger belief that consolidation has improved the quality of services available, as larger companies can invest more in product and service developments.

In 2001, the largest group of respondents (44 per cent) felt that consolidation would lead to the development of comprehensive one-stop shops for information, but by 2004 the percentage agreeing with this view has fallen to only just over a quarter of users. This is despite the efforts of leading players to market their key products and services as comprehensive gateways to the web.

A number of participants voiced concerns that some specialist journals are outside the offerings from the larger players, and that their information is missed if users only search the large sites. There is also the danger that scientific researchers will only look at journals available on large sites.

Responses to a supplementary question asked in 2004 indicated hat differentiation between vendors is coming less from content, but more from added-value features such as bibliographic software tools and content integration tools. More than 70 per cent of respondents agreed with this statement, which is good news for most of the leading players that are investing in added-value technology and features.

By 2004, slightly more users than in 2001 are convinced that consolidation has reduced choice. But still only a third of respondents hold this view. The latest survey came shortly after the announcement of Thomson's proposed purchase of IHI Holdings (see page 15), and some users are concerned about the impact on product choice and prices of all three major patent information players � Derwent, Delphion and MicroPatent � being under one roof.

An encouraging note for the leading suppliers is the feedback from users on service quality. Half of all panel participants in 2004 (compared to only 28 per cent in 2001) are satisfied that consolidation has improved service quality through increased investment in improved services from the leading players. However, there is also a growing minority (27 per cent in 2004, compared to 18 per cent in 2001) that takes the opposite view.

User opinions on price increases have hardened since 2001. A majority of users in both years surveyed equated consolidation with inevitable price increases for services, but the percentage taking this view has increased. It has grown from 54 per cent in 2001 to 63 per cent in 2004. One commonly held view is that consolidation can lead to price increases as more offerings are bundled into one service. This means, as one participant put it, 'there is no option to purchase the services you really want without being saddled with (and thus paying for) some that may never be used'.

David Mort is director of IRN Research, a market research and information company that specialises in the analysis of European information and content markets. The IRN STM Information User Panel consists of 35 UK-based STM information managers and librarians in academia and the commercial sector who have responsibilities for the selection and purchase of content. Topical questions are asked to the panel every quarter by email. The focus is on qualitative responses and opinions but there are also some quantitative results. Vendors and suppliers can add specific confidential questions to the panel for a fee. For further details contact: dmort@irn-research.com