Britannica.com said Tuesday that it has reduced its head count in the United States by 31 percent, or 68 employees, as part of a new strategy to concentrate on subscription-based services.
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
"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