IT’S THE END OF THE ROAD FOR FLYWHEEL MEDIA

By: Karim Mostafa

Thomson Company Will Go Out Of Business





by Karim Mostafa



Flywheel Media, Thomson’s interactive division, has decided to close
its doors for business, CEO Paul Camp tells E&P Online.



During the next 90 to 100 days, Flywheel will begin shutting down its
various operations, including what, until earlier this year, were
separately known as Thomson Interactive Media and Thomson Target
Media.



Thomson Newspapers, which sold most of its newspaper properties this
summer, could not find a buyer for the Stamford, Conn.-based
interactive division, Camp said. Up until two and a half weeks ago,
there were ongoing talks with a potential buyer, but Camp would not
disclose the names of those companies.



According to the company, more than 800 newspapers in North America
are currently conducting business with Flywheel. Among the company’s
many clients are Media General, the Toronto Star and CNHI. (E&P
Online will also be affected since its classifieds section is
powered by Thomson technology.)



In a letter to customers, Camp said Flywheel’s Freezone children’s
products would continue to operate under another Thomson division.
Camp promised ‘orderly shutdown during which Flywheel will fully

honor its contractual agreements with customers.’



Camp, who has been with Thomson since 1993, says the main reason
for Flywheel’s closure is the bad market for Internet companies in
the content and ASP (applications service providers) business. If
Flywheel had gone on the market just one year earlier, Camp believes
it would have raked in millions.



However, some Flywheel customers have reported declining service
from the company during the last year or so.



‘[Flywheel’s] technology is sound,’ said Peter M. Zollman, executive
editor of the Classified Intelligence Report and acting principal of
Advanced Interactive Media Group. ‘It surprises me that Thomson would
pull the plug without seeing whether clients would want it. It will
definitely leave some people in the lurch.’



One year ago, Flywheel Media didn’t exist. The company was created
earlier this year as Thomson tried to consolidate its new media and syndication businesses under one name. Thomson Target Media,
predominantly a content syndicator, was created in 1992. The
Chicago-based group created products such as Coverstory and
Healthfile. Meanwhile, Thomson Interactive Media created online
classifieds and Web-building services in Stamford.



The merged company took the name Flywheel, which in the last three
months launched a new business-model for content syndication that
didn’t reach its full fruition. Two months ago, Flywheel started
offering online content verticals, covering topics such as health
and women, for free to newspaper Web sites. Flywheel hoped to make
money by selling to print newspapers the same content which readers
had become familiar with online.



Camp says the business model was beginning to show evidence of success.
In the last two months, Flywheel had signed on several new clients who
sought out the ‘pay-for-print, but free online content’ deal.



‘Free online content will drive print sales,’ Camp said. ‘I’m confident
that strategy would have worked if we’d been around longer.’



The news took the newspaper industry by surprise. Flywheel had been a
sponsor of events at E&P’s Online Classifieds Industry Symposium being
held this week in Monterey, Calif., but the company pulled out at the
last minute.





~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~





Karim Mostafa (kmostafa@editorandpublisher.com) is associate editor
for E&P Online.





Related stories:



FLYWHEEL

MEDIA OFFERS BODY & MORE (08/23/00)



FLYWHEEL

GETS ROLLING WITH FREE CONTENT (08/04/00)



FLYWHEEL

MEDIA PROVIDES CONTENT TO NEWSPAPER SITES (06/16/00)



THOMSON

INTERACTIVE TO BE SOLD WITH PAPERS (02/15/00)





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