Free Complex Products: Sign of Revenue Starvation?
January 12, 2010
Here is a hypothetical. You are sitting in the airport. A young woman sits next to you and examines the engineering diagram for a CPU with 1,000 cores. You ask her, “What’s that?” She says, “The basic building block of Google’s hyper grid architecture.” You look at her, glance at the diagram, and wonder what the heck she just explained to you.
That’s information without context. You don’t know what you looked at. You don’t know what a hyper grid is. You don’t know why Google needs an architecture. In short, you get a peek in Messrs Brin and Pages techno-think and its worth bupkis.
I learned from one of my two or three readers that Dialog Information Services, was giving away free online searching for a couple of months. That is big news to me. ProQuest, a commercial database publisher, bought Dialog from Thomson Reuters and aims to make it pay off big time.
The story “Dialog Offers Free Searching of Selected Cengage Files Through March 30th” appeared in a publication called the Resource Shelf. Aimed at info pros, the Resource Shelf covers some of the machinations in the world of former online superstars like LexisNexis and the aforementioned Dialog Information Services. (If you resonate with ss cc=7600 AND ESOP AND UD=9999, you know this service is not what it once was. Today’s online searcher has little interest in where data originates, editorial policies, and command line searching on systems written in part in PL/1 and running on big honking machines.
The reference to “Cengage” refers to a spin out of Thomson Reuters. Yep, the same Thomson Reuters that sold Dialog to Pro/Quest. If you are like me, it seems that Thomson Reuters got out of the commercial online business and now its former kissing cousins are teaming up to pump up usage of these commercial databases.
Most online users today don’t think too much about paying $0.25 to print a title while paying connect time to outfits like Tymnet. Lawyers, at least some lawyers, still do this. Patent researchers still fork over big money to look at special databases containing publicly accessible patent data. Certain chemists love—absolutely love—searching for chemical structures using the Chem Abs super service.
The key point in the Resource Shelf’s write up was, in my opinion, this segment:
“During this time all DialUnits, Connect Time, and Alert Profile charges will be waived to allow customers to search these files and create and run Alerts profiles at no charge. Output pricing such as full formats and Alert prints will be charged at current rates.”
What this means is that “free” applies to the part of the service that does not generate the big bucks. What makes money for commercial online services? Online types (looking at a record in electronic form) and offline prints (getting a hard copy of the search results). Note that if your query returns zero useful results, the traditional customer friendly approach is to charge for the privilege of finding out that there was no useful information in the database you query. Lawyers love this sort of zero results is good information. Most people don’t.
In fact, the commercial online services have to get out of their historical approach to online and find a way to attract new users and generate meaningful new revenue. Here’s why:
- Google is good enough and free.
- Commercial database publishers are in a market squeeze arguably more problematic than the mostly inept content management system vendors find themselves. (CMS doesn’t work too well either in my opinion.)
- Enterprise software vendors are putting code shims in place to provide certain high value information within other enterprise applications. Data.gov might be immature, but it sure suggestive.
- The costs of running an outdated infrastructure with data that change less frequently than I paint the log cabin in which I live don’t match the real time demands of 20 somethings
- The expense of creating a commercial database is creeping up. The mom and pop shops cannot compete with the more sophisticated operators like Ebsco, one of the big dogs in the high value information business.
Add this up and what do you get? Not too much. I think it is a marketing play that communicates that both Dialog and Cengage may be grasping at straws. Why? Go back to the hypothetical with which I started this write up. Most people won’t know what they are looking at when they run queries against these databases:
80 Aerospace/Defense Markets & Technology
13 Business & Management Practices
88 Business A.R.T.S.SM
479 Company Intelligence
275 Computer Database
18 F&S Index
583 Globalbase
149 Health & Wellness Database
150 Legal Resource Index™
47 Magazine Database
75 Management Contents
570 Marketing & Advertising Reference Service
111 National Newspaper Index
211 Newsearch
649 Newswire ASAP
160 PROMT (1972-1989)
148 Trade & Industry Database
93 TableBase
So what’s the number. That’s the Dialog number which you enter with the command “b 160”. See what I mean. Giving away free information without context means zero, maybe less than zero because a potential customer may be turned off when paying for outputs.
I don’t go to the real “library” any more. I use my own online files and free online resources. That’s the problem. When someone from the commercial database world does not use his own products, something has changed. Free won’t bring back the bad old days of traditional online services.
The field of battle has shifted. The free offer underscores how much of a gap exists between the former giants of online and the new services from other vendors. There’s no 1,000 processor architecture available that can alter a business model that worked 30 years ago.
Stephen E Arnold, January 12, 2010
I state that I was not paid to point out that free with a tiny footnote that explains the not free part of this Dialog offer. I shall report this pitiable excuse for a non-compensated write up to the US Postal Service, another traditional institution hit by new technology and changing user behavior. Where has all the junk mail gone?
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