Britannica.com cuts U.S. staff, adds fees

The online venture of 232-year-old reference guide Encyclopaedia Britannica said it employed 220 staff members in its U.S. offices before the layoffs. The Chicago-based company said the layoffs did not affect foreign offices; the company mostly concentrated on positions that produced feature and topical content.

The layoffs are not the first for the privately held company. In November the reference site cut about 16 percent of its staff, or 75 people, in an effort to reach profitability.

"The way the market is going, companies are definitely looking for other ways to bring in revenue to fill the gap for lagging ad sales," said Betty Cho, Internet analyst at Nielsen/NetRatings. "The speculation is that subscription services are a viable way of making up some of that lost revenue, particularly if that site has a lot of content."

Britannica.com is the latest company to reduce its staff after a cooling of the once-sizzling online market. Both online and offline media companies--such as CNBC.com, News Corp., The New York Times Co., CNN and Knight Ridder--have been affected by the melting online advertising market, often causing them to cut spending and lay off employees.

The reference site also joins other dot-coms in its move to start charging for formerly free services. BlueLight.com and FreeEdgar, among others, have altered their services to charge a fee for additional usage or limit the number of free items.

Britannica.com said it decided to switch to a subscription-based model in response to recent changes in the Internet industry and in an attempt to reach profitability quickly. It has also seen its popularity with Web surfers slip slightly--both at home and at work. In September, the reference site was ranked No. 98 among most-visited Web sites, according to Nielsen/NetRatings. In February, however, it slipped to the 159th spot.

The site plans to shift its focus to reference, education and learning content.

"There was a time not along ago when most observers believed that Internet services had to be supported mainly through advertising," Britannica.com Chief Executive Don Yannias said in a statement. "We are out there in the marketplace, however, and we're convinced that a diversified business model combining free and subscription-supported products is the road to success."

The company said it hopes to sell services such as BritannicaSchool.com, a Web-based educational site geared toward elementary and secondary students. The site is expected to feature study guides and extensive school resources, as well as interactive curriculum materials for teachers. BritannicaSchool is scheduled to launch in June and run as a subscription service for school districts and individuals.

Cho said that companies moving to subscription programs must be able to market their services and show customers the value of paying for the content.

"For sites like Britannica.com, they're going to have to prove their value in providing content that's going to be worth paying for," Cho said. "Britannica can do it. Their loyalty rate is pretty good...And if a company's got a loyal following, then they stand a better chance of successfully launching a subscription program and getting those people to pay."