Bertelsmann Ventures into Syndication with iSyndicate

International media giant Bertelsmann AG, following through with last week’s declaration that its future lies with content e-commerce and not the ISP business, linked arms Monday with San Francisco-based iSyndicate to create a European content syndication service.

The joint venture, “iSyndicate Europe,” will help European Web sites, corporate Intranets and digital devices enhance their content offerings by providing services and media offerings from widely recognizable publishing brands. In addition to Bertelsmann media properties, iSyndicate Europe will syndicate an array of independent content providers.

“Now that the European market for content syndication is poised for growth, iSyndicate wanted a strategic partnership with a significant media player,” said Joel Maske, co-founder, president and chief executive officer of iSyndicate. Maske will also assume the chairmanship of iSyndicate Europe. “Bertelsmann is an ideal partner for us to go into Europe with, as the company is synonymous with media content and together we will deliver solutions to build the syndication market.”

It used to be touted that “content is king,” but with the troubles experienced by companies like APBNews and drkoop.com to deliver the eyeballs that their advertising-based business models demanded, industry watchers began to question whether companies that rely on ad-generated revenue could hold their own. Michele Pelino, an analyst with The Yankee Group, said content syndication companies like iSyndicate Europe side-step this issue and create a stable revenue stream.

“We like the revenue model a lot,” Pelino said. “With content syndication you have a revenue stream that you can count on and that you can basically back up…I think it’s going to become more and more the way things are done. You know that those revenue streams are coming in from X number of customers.”

Pelino said the syndication model, which she described as “an arms dealer sort of relationship,” is also a winner for companies that rely on advertising because it allows them to focus resources on features like chat and message boards.

Each company will hold a 50 percent stake in the new venture. Bertelsmann has retained the right to appoint the chief executive officer but the deal also requires the media company to take a four percent stake in iSyndicate. In return, Bertelsmann’s Chief Creative Officer Rolf Schmidt-Holtz will join iSyndicate’s board. iSyndicate already has strategic partnerships with NBC, Microsoft, NewsCorp, InfoSpace and Vignette.

iSyndicate Europe will be headquartered in Hamburg, Germany and iSyndicate’s existing London office will be its first affiliate office. Bertelsmann’s new Content Network Division — directed by Schmidt-Holtz — will assume Bertelsmann’s entry into the syndication business.

“The joint venture is an important step toward strengthening our position in the content sector,” Schmidt-Holtz said. “We want to ensure that Bertelsmann’s diverse content is available wherever the customer wishes and expects to find it. Syndication represents a huge opportunity because the market is growing extremely fast.”

iSyndicate already distributes a broad selection of written, graphical, audio and video content from 1,100 sources, including The Associated Press, CBS SportsLine, CNBC, CNET, Reuters, RollingStone.com and Salon.com. Its European content providers include, among others, The Register, The Guardian Online, Haymarket Business Publications, FT.com and Virgin.net. That content is currently picked up by a network of more than 270,000 Web sites, including Citibank, Intel, OmniSky, Nortel Networks, Nintendo, Wells Fargo and Xoom.com.