The Strategy Interviews – Andrew Prozes

Andrew Prozes is the president of Southam Information and Technology Group, with responsibility for directories, newsletters, databases, business lists, trade newspapers and electronic information in Canada and the u.s.Prozes has an honors degree in applied mathematics and computer science from the...

Andrew Prozes is the president of Southam Information and Technology Group, with responsibility for directories, newsletters, databases, business lists, trade newspapers and electronic information in Canada and the u.s.

Prozes has an honors degree in applied mathematics and computer science from the University of Waterloo in Ontario and an mba from York University in Toronto. He sits on the boards of several information technology associations in Canada and on the board and executive committee of the Information Industry Association which has its headquarters in Washington, d.c.

Q. Southam has applied for 511 numbers from Bell Canada, and it has also signed a deal with Dialog Information Services from Knight-Ridder. Could you explain what these two things are and why the company has done them?

A. The N11 [511] application and the joint venture that we have signed with Dialog are two very separate issues and really involve products directed at two different markets. They are two related but separate strategic objectives for Southam.

Consumer market

The N11 is directed at the consumer market. It is part of Southam’s strategy to collect all the information that we gather, whether it be in textual form or voice or pictures, or, perhaps, eventually, video into one database, one digital database, and then to deliver that information in as many ways as meet different marketplace needs.

Q. How do you envisage what the markets might be? Can you give some examples? How is the person in the street going to use the database?

A. We have extensive experience already in this area because six of our newspapers already provide voice information services which would be very much like our [proposed] 511 or N11 service.

We handle 16 million calls for information every year and that’s growing at 25% a year. The information they request is information about current news, legal information in some cases, information about weather, information about sports scores, information about where to find certain services in the city, even horoscopes and financial information.

The problem with the current services is really twofold.

One is that the phone numbers that the consumers have to call are regular seven-digit phone numbers which are very hard to remember and can only be communicated to the public through newspaper advertising, in our case.

The second problem is that in order to make the services expand as powerfully and as wide-reaching as the public wants, there has to be some way to charge easily and inexpensively for the service.

Right now, the newspapers are in a bit of a bind because the only way you can charge for certain information that we think the public would be prepared to pay for is by offering it through a 900 or a 976 service.

Nine hundred [service] does not exist in Canada, but it will soon. The problem with that is that it is a time-based, reasonably expensive service.

The 511 service in the United States at the present time is 50 cents a call and it’s a line on your telephone bill, so it provides a charging mechanism.

Q. How does the Knight-Ridder deal differ from the 511 situation?

A. The 511 or the N11 is directed to the consumer market. The arrangement with Dialog is to deliver products to the business and government markets in Canada.

The Knight Ridder joint venture involves delivering or marketing information from our newspapers in full text form through an on-line medium. Government and business access the database because they want research material. The charges are typically in the $200 per hour range.

The consumer market is interested in product that is cheap, easy to use. The on-line services that are delivered to the consumer today are typically in the $15 a month [range] and involve what we call ‘all you can eat;’ in other words, all the services that you want to use you can use for $15 a month.

Q. As well as providing information for a fee using 511 numbers, how about the possibility of there being advertising on the service?

A. We think that there will be in voice and in other areas as well the probability of two forms of service: one that is d[ata]-based, with little or no advertising, and the other type [will be] the free, advertiser-supported service.

Quite frankly, we see it in cable tv today where we have network broadcasts which [are] advertiser-supported and at the same time we have [taxpayer-supported] channels, and the pay-per-view movie channels where we pay and expect we’re not going to get any advertising on them.

Q. Southam has this huge amount of information stored. Looking down the road a bit, is there the possibility of an all-text channel on cable tv?

A. It’s not only a possibility, it’s a very strong plank in our electronic information strategy.

We clearly see two services being delivered as a result of us having the [data]base that we do have.

One is to provide on-line interactive information service to consumers who have computers with modems. These would be serviced [much] as those found in the United States today under the names America On-Line, Compuserve, Prodigy, and so forth.

User-friendly

The other service that we clearly anticipate delivering to the marketplace is the kind of information you described as well as something that has to be packaged in a more user-friendly way through the cable services.

We already have a teletext news service delivered through Videotron to English-language subscribers in Montreal and Quebec City and other communities with the Videotron feed.

We see that as just being very much a rough beginning towards building services that truly have broader appeal in the marketplace.

Q. Five years in the electronic age is a very long time. But what sorts of things do you envisage five years from now?

A. I see an enormous increase in home access of information through the computer equipped with a modem, and through the cable system.

I think it’s noteworthy the United States’ Prodigy now has two million subscribers to its electronic on-line service.

I think it’s also noteworthy that Videotron in Montreal has 220,000 users of its Videoway interactive information service which they charge $8 a month for.