Westlaw: Profiting on Public Records

A friend forwards this City Pages article on Westlaw, the legal publishing giant that is now part of Reuters-Thomson. A very profitable part, we should note: the St. Paul company drew $3.5B in revenue in 2008, and its operating profit margin was 32.1% (Carlyle tells us eBay makes 20.8% profit, Google 19.4%, and Amazon 3.4%). And note that Westlaw is making money on publishing while newspapers go under. What gives?

Westlaw’s keys to success:

1. Find a niche with growth potential. Alas, there will always be more laws… and more lawyers. And lawyers can afford to pay good money for publications they need for work.
2. Organize information to make it useful.
3. The Internet is a distribution channel, not a product.
4. Turn words into math. Remember, the computer doesn’t have to understand language to recognize useful patterns in it.
5. Separate the signal from the noise. Make search work!
6. Computers can’t do everything. Westlaw derives huge advantage from a staff of 800 attorney-editors constantly checking each other’s work. This is law: innocent people can be put in prison (and scumbuckets can go free) is you screw up a case law report!
7. Treat content like patented material. This is the part that bugs me: In the 1980s, West sued LexisNexis for referring to its page numbers. Westlaw claimed it owned the arrangement of information on the pages it published, even though the information itself was public record. LexisNexis caved, finding it cheaper to pay West $50K a year to use the page numbers than pay the lawyers to knock West down a peg in court. Grrr.
8. Print’s not dead; it just needs online help. Both print and online can generate revenue; play in both!