Firm Designs Web Access for Special Publications

RESTON, Va. —  At Imark Technologies Inc.’s offices in the suburbs of northern Virginia, the first thing that stuck out was the cheap and simple furniture and small offices--all typical signs of a start-up.

But they were good signs, for it was clear this company wasn’t about to burn money on anything but essentials, even if it were set up to make a pile of money if its digital payments product turns into a raging success.

It isn’t yet, but the business focus is an interesting one, especially in the Internet--that elusive business medium in which so many small companies are pursuing a pot of gold while the industry is in gestation.

Imark was founded by two brothers, one a businessman and the other an economist and inventor. Their modest but clear goal is to offer a billing and metering technology for professional publishers, so that readers who need an article can click, download and pay.

Armed with a technology invented by one of the brothers, David Wiedemer, who is vice president of operations, the two convinced a former chief financial officer of America Online and a former editor in chief of Macmillan Publishing to come aboard as founding partners in 1993.

The prospect of a click-and-pay Internet business model was the rage just a couple of years ago, until everyone publishing on the Web figured out that consumers didn’t want to pay to read an article and pursued sites where the information was free.

Hence, the ubiquity of free news and information on the Web (although free is actually a misnomer. Consumers often unknowingly trade very valuable information about their tastes, preferences, and e-mail addresses--more valuable than a subscriber fee to marketeers--in return for access).

While the click-and-pay model might be discredited in the consumer market, that hasn’t kept Imark from pursuing it with professional publishers. In this specialized market, it might even make sense.

Essentially, what Imark has done is focused on a niche market that other Internet payment companies have ignored, since the main focus has been on Web retailing, banking and financial services.

In contrast, Imark is offering a service--a new way to sell--for professional publishers.

“Our biggest barriers are not competitors, although we expect competition to pick up as we get more successful, but the old way of doing things,” CEO Robert Wiedemer--the other brother--explained. “Publishers don’t really know how to sell this way. We explain it to them and offer a solution.”

Professional publishers offer abstracts of sociology articles, medical information, legal documents and other technical information--material that when collected and sold on a CD-ROM can cost thousands of dollars per unit.

Robert Wiedemer said Imark is trying to convince publishers they can effectively lower the initial cost for this information and hit a wider market than if they sell an entire package of information for a set price.

Under the new model, a user might get access to a Web site or a CD-ROM where the information resides for a much smaller initial cost than buying the entire database. From there, it would be “pay as you go.” One publisher, Silver Platter Information of Norwood, Mass., announced recently that it was using a Web-based version of the product aimed at libraries--a $5-billion market.

“The pricing is flexible, based on however the publisher wants to design it,” Robert Wiedemer said. It might be based on time, on what information is accessed, or it may be a combination of factors. Imark offers the technology to publishers without an upfront fee, taking a slice of the user payments instead.

So far, Robert Wiedemer said Imark has deals with 23 publishers covering 53 different products and says it is in talks with many more.

One of its biggest hurdles so far has been raising capital. It raised a few hundred thousand dollars through a private placement early in its existence and recently got about $5.5 million more when it went public on the Nasdaq market.

Although Robert Wiedemer said the company explored doing a deal with venture capitalists--a traditional model for a fast-growing start-up--the stock market was giving a much bigger premium for Internet-related companies than a venture capitalist would. So it went public under the previous name of CD Max Inc. The stock is now at $3.25, down from its offering price of $6.125.

In June, the company gave a presentation to analysts and investors at a technology conference in northern Virginia. But it is clearly at the far end of the spectrum in terms of risk--little revenue at this point, mounting losses and just a few million dollars to fund operations.

So Robert Wiedemer has a hard sell. Indeed, he says it’s harder to sell investors on the stock than it is to sell potential customers on the product--which might be instructive.

“People in the publishing world are now starting to call us,” David Wiedemer said.

The key to the product is the technology, which the company licenses from David Wiedemer, its inventor.

In another twist that could be lucrative, a trust whose beneficiaries are the company founders and their families also gets a small slice of revenue from the product once the company hits certain targets for earnings, revenue and stock prices. That could mean another stream of money, in addition to their ownership stake.

But so far, no one’s making a lot of money. Each founder pulls only a modest salary by the standards of senior managers.