Manny Ruiz had an epiphany. After spending too many hours of his
life on the phone, faxing and following up with reporters, the
Cuban-American co-founding partner of Porter-Novelli's national
multicultural practice quit his job and opened Hispanic PR Wire to cater
to a market he understands: minorities.
"When we launched, we wondered if it was crazy to challenge PR Newswire
and Business Wire," says Ruiz. "But as of this week, we're distributing
to 2,316 journalists in 1,025 media outlets. There's room for
Better-connected than ever
More than a year after wire services received a revenue kick from the
press release mania that followed from the dot-com boom, new factors are
keeping them healthy. Although economic ills have meant that the volume
of press releases are down an estimated 25% according to one source, the
wire services are doing nicely by selling greater numbers of their
For example, agencies and corporations are outsourcing more distribution
tasks due to cutbacks. Reg FD forces public companies to release
material financial information to the public, and newswires are emerging
as the preferred vehicle to carry information to the street. Multi-media
advances, including video and audio news releases, now allow newswires
to offer higher-end services at higher-end prices. Plus, newswires are
betting that financial globalization will keep them in the black far
into the future.
David Armon, president of PR Newswire Americas says it's painful to
acknowledge that layoffs at agencies and corporate PR departments help
"We see a lot more reliance on our services in the places where there
have been cutbacks," says Armon. He adds that new business from investor
relations services has doubled. "Companies used to have a staff to
update investor relations pages with bells and whistles. They don't have
the bodies to put against that now."
Economic woes have led to fewer press releases for product
introductions, new personnel announcements and mergers and acquisitions.
But, due to Reg FD, financial press releases are longer and more
specific with more detailed disclaimers. Armon says this has meant big
money for newswires.
PR Newswire, as part of a public company (United Business Media) is,
regrettably, the only company to release financial results. The numbers
are instructive. With revenues up 27%, to dollars 210 million, the
Webcasting service had a 200% increase in business between January 2000
and January 2001. Earnings releases went up 28% over the same period,
while mid-quarter earnings projections announcements were up 78%. Web
conference calls shot up 147%. The investor relations business is so
important to PR Newswire, it has even sent its own staff to fill space
at agencies, including GCI Group.
"We've offered to send our staff into the agencies to sit at a desk that
used to be occupied," says Armon. "We're calling this an outsourcing
program where we offer our expertise in-house."
However, not all newswires agree with cashing in on Reg FD. Bill
McCarren, president of USNewswire, says his 15-year-old public
affairs-focused wire has, and wants, no part of the financial feeding
frenzy. He says financial releases are a legal requirement, and they
should not be confused with news.
"If you look at what companies like PR Newswire are distributing, which
is often financial results for a Nasdaq company you and I have never
heard of, this copy is not going to attain any news coverage anywhere,"
says McCarren. "While that may be a nice business, it's not a very
attractive channel for reporters who want to find and write stories that
will appear in the paper."
Regardless, Reg FD and new tech capabilities have spelled big business
for most wire services. For example, most services are eager to
transform company Webcasts, which usually consist of a few PowerPoint
slides and the disembodied voice of a CEO, into impressive presentations
with interactive streaming audio and video.
And, with visions of increased fees for increased services, newswires
also want to add the latest technologies to the lowly press release.
Michael Lissauer, SVP of marketing and business strategy for Business
Wire, says his company is a year or two ahead of widespread technology,
and estimates that news releases with photos, logos and flash graphics
will become a major trend in the next two years.
"Agencies are somewhat behind the curve with technology," says
"Business Wire came out with a product called the Smart News Release
about four years ago that embedded within a press release audio, video,
flash. We're putting out between 1,200 and 1,500 news releases a day,
yet only 40 to 50 have multimedia."
By the end of this year, Business Wire is planning to complete its
conversion to XML, or Extensible Markup Language, a platform-independent
format for structured documents and data. When written in XML,
structured documents, which include spreadsheets, address books,
financial transactions and technical drawings, can be viewed in text
format even if a computer does not have the program that produced the
"XML will change everything," says Cathy Baron Tamraz, chief operating
officer for Business Wire. "The recipient will be able to pull out
whatever they need, and news releases will be put together very
differently than they are today."
The value of technology
Of course, extra technology costs the customer. Business Wire charges
dollars 525 for a 400-word text release with US distribution to all
major media, databases, trade publications, online services, the
investment community and the Business Wire Web site. Video is an
additional dollars 800.
"As the news release gets more robust, with more components, it will be
priced accordingly," says Tamraz. "What you're buying is the ability to
do more with the press release."
However, Michael Terpin, co-founder and chairman of Internet Wire, a
company that cast its lot with new technologies when it was named two
years ago, won't bet the farm on multimedia as a revenue powerhouse
"In terms of multimedia as growth revenue, I don't see a time in the
near future when the volume of multimedia will be anywhere near the
volume of text," he says. "Although digital cameras will help somewhat,
right now it's a lot easier to write a quality press release than it is
to film your CEO."
Terpin says guaranteed publication via Web syndication is a more
immediate added value. He says five years ago, 90% of newswire press
releases would not be written about in mainstream media, so discounting
people with fax or Lexis-Nexis subscriptions, many press releases never
reached their audiences. Today, he says, 100% of the press releases sent
out on a newswire, minus anything deemed inappropriate by a Web portal,
can potentially reach millions of Web viewers.
"Like how BusinessWeek has a million readers, but not everyone reads
your four paragraphs on page 38, being placed on a portal is a
relatively sizeable impact compared to six years ago when a very small
number of people might see a release," says Terpin.
However, McCarren cautions against wires promoting Web-only
distribution. He thinks the standard press release should still be
written and distributed to a target audience of reporters.
"From our business perspective, the real value for press release
distribution is to do a good job distributing to media and therefore
give your client the best chance of their story receiving attention by
the largest papers, television shows and magazines," says McCarren. "AOL
and Yahoo! can help get the word out, but news consumers value the
vetting that is done by the media. People want to see how the media
interpret raw news."
Terpin insists that the media is also his top priority. He says current
advancements like e-newsletters and targeted press release technology,
which keeps PR messages from cluttering journalists' desks, will
continue to help the wire service trade reach its primary target.
"What will make news wires successful going forward is there are a small
number of aggregators journalists know they can contact to get the
information they need," says Terpin. "If everyone sends out their own
releases, it gets like the heyday of fax, and there's overload."
Meanwhile, in the rest of the world, PR Newswire and Business Wire have
spotted potential for greater use of their services and are building up
their global infrastructures. The industry is building out, anticipating
demand, betting Reg FD-like laws will be passed around the world,
beginning in Western Europe.
Earlier this year, Business Wire opened an office in London - its first
full-service office outside the US. The company sees Germany as its next
logical step. PR Newswire had less than 12 people in Europe two years
ago. Now it has more than 200 employees in the region, and Armon says
financial regulations - and the newswire money - will begin to flow
first in England.
"Later this year, every stock on the London Stock Exchange will be
issued through a commercial service like ours," says Armon. "The
Financial Services Authority is driving this, and we've been undergoing
an infrastructure build-out to have editors, security and other things
there in time."
At Business Wire, international distribution comprises 15% of the
company's revenues, and Tamraz says the company is willing to invest in
global branding. "There's international business to be had," she says.
"Countries are looking to the US and Canadian models for distribution.
They want US exposure, and they want to promote themselves within
Europe. We're willing to spend what is necessary to be able to work in
Headquarters: New York
Affiliations: Americas, Europe, UK, Africa, the Middle East, Asia and
International offices: 11
Headquarters: San Francisco
Affiliations: Americas, Europe, UK, Netherlands, Asia, the Middle East
International offices: Five
US NEWSWIRE, DIVISION OF MEDIALINK WORLDWIDE
Headquarters: Washington, DC
Affiliations: Americas, UK and Germany
International offices: Three
Headquarters: Los Angeles
Affiliations: Bloomberg, Dow Jones, Yahoo!, Associated Press, Reuters,
CBS Market Watch, Lexis-Nexis
International offices: US only