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Pencil Sharpening:
Why Paid Content Struggles to Define Meaningful
Price Points |
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13 October
2003 |
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In yet another turn of the online music
worm,
the Napster brand has been resurrected, this time as a
DRM-secured song down load service offering 99-cent song
downloads and other online treats. But why 99 cents for a
song? Does anyone really have a handle on how much premium
content is really worth in a technology-savvy publishing
world? The question reverberates
loudly into the professional world, where institutions are
creating extremely sophisticated publishing cultures far
more advanced than any file-swapping phenomenon could ever
have manufactured. Expect the institutions, not the
publishers, to lead the way towards new ways to price
premium content that make sense to results-focused
institutional cultures. |
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As the
most recent chapter in the Napster saga unfolds, we are
seeing the resurrection of this brand name as a DRM-secured
song down load service offering 99-cent song downloads as a
major factor in its marketing strategy. This is becoming an
increasingly popular concept in the business, despite the fact
that,
according to a Sunday New York Times article, this is about
ten times the level of what 45-RPM single songs cost back in
the 1950's. Who decided that this was a great price? Simple
math, do some degree: take the price of a typical CD these days
and divide by the typical number of tracks. Or, according to
the Times, take the advice of Steve Jobs, who felt in pricing
songs for sale on Apple's
iPod
service that something lasting that costs a fraction of what a
cup of Starbucks coffee goes for is a pretty good deal. In
other words, your guess is as good as mine as to how much
content is really worth to a given audience monetarily much of
the time. "What the market will bear" seems to be the operative
heuristic in setting many premium content prices, akin to
seeing how many people line up for World Series tickets at $250
a pop on the primary market (and who knows what on the
secondary market).
This kind of hip-shot mathematics is
probably fine to some degree for mass-audience content, which
has a long track record of individual purchasing history and
market research to back up these educated guesses. But truth be
told, much professional content is not priced with any
extraordinary degree of greater sophistication, and typically
far less research. Many major content providers servicing
corporate accounts look at what they need to run a profit in a
given year, then at the number of accounts that they are likely
to service, and work from this "top down" position to a pricing
structure that seems reasonable to what they assume is a
relatively captive audience - the public utility approach, you
might call this. Still other times there are new sources and
capabilities added whose pricing is determined by a sweep of
the hand by an influential sales or marketing executive, in
spite of the best efforts of others to produce more rational
models. If we sold five thousand of this new thingamabob
content for $25 extra a seat, the thinking goes, wouldn't that
look great in the sales report. Sad to say, I've seen it happen
more than once.
In an era when most institutions find
that accessing premium professional content is but one factor
in deploying a range of highly valued and integrated electronic
content sources, though, the point on the pencil for most
premium content providers has grown rather dull. In the process
of becoming expert in such endeavors as knowledge management,
collaborative publishing and managing and generating their own
real-time content, these institutions have a far better
appreciation of their own return on investment in the content
that get generated by their own institutions for their own
benefit and the benefit of their business partners.
Increasingly these benefits can be measured on a scale that's
very meaningful to the top line of a business unit as much as
the bottom line: how much product research results in
marketable products due to improved institutional publishing,
how many transactions are captured by the sales force, how many
cases are won in court. In such a granular and sophisticated
arena of content value awareness, most publishers fall far
short in justifying the return on premium content investment at
such a level of detail.
The New Napster-vs.-file-sharing
paradigm, then, is really only a simple model for a more
sophisticated battle over premium content pricing with similar
roots and similar pressures for resolution. Average folks
figured out via file sharing that content distribution in the
hands of the people most interested in the content created lots
of value for themselves before those concerned with labeling
something with a price even guessed at how to play the game. So
here come the publishers with a stab at what people will
tolerate and a raft of schemes to draw people in to their
premium folds again, well after the fact. While institutions by
and large don't have a premium content piracy issue on their
hands driving usage in building out their collaborative
portals, the prevalence of highly valued content from internal
sources that sit increasingly at the very side of premium
content puts similar strong pressure on premium publishers and
aggregators pushes many of the same pressures to the fore. What
is that premium report or article really worth in the context
of an institutional publishing community with very specific
and increasingly measurable content-enabled business goals?
While the answer to that question may not yet shake the pricing
formulas of major providers just yet in some circles, there has
been a fundamental shift in how institutions view themselves as
content producing and content consuming organizations thanks to
Web-enabled technologies.
There's no singular, Napster-like
phenomenon out there putting direct pressure on premium
publishers to rethink pricing models for professional content.
Rather, there's an evolution of a range of sophisticated
technical capabilities available to individuals and
institutions that are shaping human outlooks on what creates
value in content more pervasively than any hacked-up piece of
file sharing software could ever have engendered. The answers
to how much premium professional content should cost are going
to come increasingly not from vendors but from that base of
expertise in a far more direct and shaping fashion than ever
before. Be it in the guise of the Business Information Officer,
the Market Data Manager or whatever equivalent function comes
to life in an organization, the contextual value of content in
solving real business problems will be driven through people
who understand and control the technology, the content sources
and the human environment in which it is created and consumed.
Sharpen up that Number Two pencil, dear vendors, the fun has
just begun.
-
John Blossom
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