Web strategies for professional publishers: developing an information services portal

This paper examines how the free distribution of electronic information on the internet is rapidly changing the commercial environment for small to medium-sized print publishers, and suggests some recommendations for publishers in the process of establishing their own web strategies. It begins by addressing the concept of the ‘network economy’ and the way in which electronic networks have changed the fundamental economics of many businesses. It then suggests seven recommendations for learned and professional society publishers adapting their own business models to the web, highlighting the need to differentiate print from electronic products by building an electronic information services portal for current members and subscribers. Learned Publishing (2000)13, 83–94 Donald C. Klein Web strategies for professional publishers 83 L E A R N E D P U B L I S H I N G V O L . 1 3 N O . 2 A P R I L 2 0 0 0 trends as succinctly as I can, and then I will offer a few recommendations for publishers trying to migrate their business model to something that will allow them to thrive simultaneously in paper and electronic worlds. And finally, I will illustrate the way our company, ingenta , has responded by positioning itself to work with publishers in this new arena. Britannica and the network economy Although an older example, the Britannica experience illuminates a number of issues that are still relevant for publishers. When a company which did not even appear to be a direct competitor in the field can package together a substitute product that combines ‘almost as good’ content with a whole range of unique value-adds (searching, multimedia, easy archiving, etc.), offer it at 1/36th the cost ($50 vs. $1,800), and then deliver it with alarming speed directly to the consumer, a very fundamental paradigm shift has occurred. Business strategists Philip Evans and Thomas Wurster have looked at the Britannica experience in some detail and conclude Britannica fell victim not so much to CD-ROMs, but the new economics of electronic networks.1 Enabled primarily by PCs and increasingly by the internet itself, all products, whether goods or services, are subject to an entirely new set of economies of scale once the internetworking of information and consumers has taken hold through electronic media. And they go so far as to claim that we are entering something that they and others term the ‘network economy’, where traditional value chains are being uprooted because of the free flow of information.2 But one of the important points Evans and Wurster single out in the Britannica story is that the headless horseman rode out of a completely unexpected quarter of the forest. Britannica always knew their market positioning vis-à-vis Funk & Wagnalls, and, in fact, Britannica did create their own CD-ROM (still priced at $1,000). The real shift that caught them unawares was the constitution of a new type of consumer network which they were at a disadvantage to leverage. The majority of home PCs, each of them interconnected through common software and – most importantly – an ongoing relationship to the provider of that software, offered Microsoft entirely different economies of scale for marketing a substitute product, primarily by bundling it with other offerings. This CD-ROM example highlights two important points. First, the changes brought on by electronic media are really all about connecting people, not machines. In the Britannica example, the key to Microsoft’s success was the establishment of new types of relationships with consumers, based on their ongoing need for software. The internet itself is really only a continuation of this larger trend toward networking consumers in new types of ways. As the net links individual computers directly through open standards of electronic exchange, larger and larger networks of people are continually being opened to new types of product suppliers beyond just Microsoft or AOL. New rules for competing within these networks are being created, many of which disadvantage older ways of doing business. What used to be a source of competitive advantage can quickly become a liability, particularly anything associated with high fixed costs such as print production or a large direct sales team (Britannica had both). Second, a CD-ROM example helps us remember how potent electronic media can become as alternatives to text when bundled with the right elements. Soon, broadband access to the internet (offering roughly 2–3 times the bandwidth of T1 and available through existing cable or copper infrastructures) will allow CD-ROM-level services to be delivered directly to the home, workbench, laboratory, etc. If a major publisher can be overturned through the older, essentially broadcast distribution medium of CD-ROMs, imagine how fierce the competition is going to be on a broadband, interactive internet. Why should I go online? Given all this complexity, why should a publisher attempt to sail through uncharted waters? I will offer two reasons: first, because traditional value chains are being uprooted because of the free flow of information 84 Donald C. Klein L E A R N E D P U B L I S H I N G V O L . 1 3 N O . 2 A P R I L 2 0 0 0 it is important to establish a presence in this new arena; and second, because learned publishers already have many of the ingredients to succeed spectacularly well on the internet. The first point is really a cautionary one: you need to be careful that your primary products are not rendered obsolete. In a network economy, competitors can come from anywhere to move in on your product category. And the threat may not come from a direct substitution, as in the case of Encarta. In examining the newspaper business and the traditional bundling of news with a range of additional services such as classifieds, Evans and Wurster comment: The greatest vulnerability for newspapers is not the total substitution of a new business model but a steady erosion through a sequence of partial substitutions that will make the current business model unsustainable. As a result, many people predict that whole new value chains will soon replace the traditional links of author, editor, publisher, printer, distributor and reader. And of course we are already seeing this movement with organizations like PubMed Central, FatBrain, or the Los Alamos preprint server for physicists, which connect authors directly with readers. Being positioned to make the right partnerships in this shifting marketplace will become an increasingly important factor in the future. The second point, however, is the more important one. Learned and professional society publishers are in a very strong position to succeed online, primarily because they tend to focus on highly targeted niche groups of professionals where they have strong customer relationships. Whereas Britannica’s home users could ‘get by’ on more limited content, the professionals who rely on learned publishing content for their livelihood are much more reluctant to switch to something with lower editorial quality. These are very ‘sticky’ relationships, or what some refer to as ‘locked in’, and have a strong chance of remaining so online. Moreover, learned and professional society publishers have a unique resource: networks of authors, editors and readers who are specialists in their field. If the appropriate business model can be constructed, these networks constitute very viable platforms for building and sustaining online businesses. The trick is how best to migrate these relationships and premium content online. Seven recommendations for establishing a web strategy Of course, there are no simple answers to building a successful online strategy. But through ingenta ’s experience of working with a wide range of publishers, as well as developing our own end-user-focused services, we would like to offer some key issues which publishers may wish to explore: 1. Consider which of your content should be available free-to-use and which should have restricted-access To help draw users to your premium full text, you will need fairly large sections of your overall content portfolio which you can circulate for free on the internet, and that division often requires an institute-wide policy decision or some sort of coordinated plan. For journal publishers, the choice is often easy – abstracts and other header information are viewed for free while full text requires some sort of rights verification. For book publishers, it is hard to sum up an entire book in one abstract, while for newsletter and looseleaf publishers it is more difficult because most of the individual stories within an issue will not have readily available abstracts. These are issues publishers will need to wrestle with. Watching what competitive publishers are doing can be instructive: for example, Multex displays the first few lines of every page for free for each of the major reports they sell. 2. Consider selling electronic versions of your premium content on-demand as a starting point Migrating online, a number of pricing regimes are available.3 The debate over whether electronic media cannibalizes existing print revenue streams – broadly known as ‘channel conflict’ – is certainly not over, but we find it is disappearing. If a Learned and professional society publishers are in a very strong position to succeed online Web strategies for professional publishers 85 L E A R N E D P U B L I S H I N G V O L . 1 3 N O . 2 A P R I L 2 0 0 0 publisher is still in the early stages, one suggestion is for it to start by offering bundled access for print subscribers and in addition sell individual items to nonsubscribers as pay-per-view (PPV). The broad market base for individual article sales reachable through the internet, a process that has become increasingly compromised in the past under papyrocentric publishing systems because of the price differentials, could then become a real revenue earning opportunity given the increasing robustness of e-commerce support services. Of the 25 publishers currently offering their content through ingenta ’s portals, 4 are offering their content for free to attract new readers, 15 offer PPV (ranging from £9.50 to £15.58 per article), and 6 restrict access only to subscribers. Once the publisher has a fairly wellestablished online presence, then attention can be directed toward selling electronic licences for a total information service, with heavy discounts for bundled print subscribers. The argument here is that print and electronic versions are in essence different products with different value propositions (portability vs. searchability, etc.), and the more one can differentiate between the two (discussed below) the more potential publishers have of developing simultaneous revenue streams. For now, electronic media are still in their infancy, and it is imperative that one’s content establish a market presence in the online world, even if at this stage it is nothing more than a PDF of the print version sold ‘by the drink’. 3. Consider pursuing both direct and indirect sales channels for your PPV Once a publisher has made the decision to sell premium content over the internet, it should consider selling through both direct and indirect sales channels (i.e. the publisher’s website as well as third-party sites). We believe a publisher should not miss an opportunity to sell to the millions of potential users through its own site, particularly for reasons listed below. But putting up a website is not enough: an individual pubFig. 1 Multiple distribution channels for PPV. print and electronic versions are in essence different products with different value propositions 86 Donald C. Klein L E A R N E D P U B L I S H I N G V O L . 1 3 N O . 2 A P R I L 2 0 0 0 lisher will not get the number of eyeballs that will make the cost of migrating to electronic distribution worthwhile. One possible scenario for developing multiple channels is shown in Figure 1. It is a commonly held belief that end-users do not know the publisher of a particular journal let alone article, and visiting countless publisher sites to locate a particular piece of information can be frustrating. A small, specialized publisher needs access to users that the intermediaries or ‘portals’ can provide while the publisher develops its own value-added services on its own site. 4. Actively leverage partnerships and alliances Alliances and partnerships on the internet are commonplace, if not required. On the infrastructure side, a publisher should consider outsourcing its hosting and server maintenance requirements to groups that have that expertise as one of their core competencies. On the strategic side, a publisher should consider partnering with groups that can bring users to its content – there is too much competition out there for people’s eyeballs not to develop as many routes to premium content as possible. In other words, a publisher should consider forming partnerships which constantly generate new impressions for the free-to-use components of a content portfolio, and then link through to subscriber/PPV access to full text. 5. But only pursue those partnerships that allow the publisher to maintain a direct commercial relationship with the customer We like to argue that licensing models in the traditional sense – where the reseller owns the commercial relationship with the enduser – are declining. People who come to publishers and want to resell the publisher’s content to their own customers should be considered with caution. For example, how many people know Encarta CD-ROMs are really Funk & Wagnalls World Book content? The same can be said of many of the traditional subscription agents and aggregators which are trying to reinvent themselves as ‘portals’. In essence, their game plan is really still the same: they want to sit between the publisher and the customer and take home a healthy slice of the margins. The economies of scale of the electronic world do not justify this business model. Of course, in either case, a guaranteed revenue stream can be an attractive proposition. However, we argue that there are large opportunity costs to be considered for publishers that do not capture customers directly. We recommend publishers only work with groups that share a piece of the action, clearly brand publisher content at all times, and allow the publisher to maintain a direct commercial relationship with that customer. Common methods include performance-based revenue share arrangements and open sharing of customer information. 6. Consider developing a services portal strategy to move beyond PPV This recommendation is probably the most important. Just as in the print business, the healthiest margins are in annual subscriptions. Selling piecemeal through multiple channels will help bring new customers to premium content, but converting this traffic to annual electronic subscriptions is the ultimate goal. We believe this conversion can be achieved by differentiating electronic content from print content through the construction of an overall service.4 Sometimes called ‘portals’, or ‘knowledge environments’, or even ‘total information services’, this approach involves creating a subscription-based portal on the publisher’s own site where electronic versions of the print form the cornerstone but are substantially enhanced by additional services, including the following: d Context: the interlinking of related content items to the text, such as statistical databases or multimedia content. d Community: the interactive services with your editorial staff or other portal users that allow people to exchange information, such as discussions, community rooms, calendars, etc. d Personalization: the ability for end-users to tailor web services, such as electronic a publisher should consider forming partnerships which constantly generate new impressions for the free-to-use components of a content portfolio Web strategies for professional publishers 87 L E A R N E D P U B L I S H I N G V O L . 1 3 N O . 2 A P R I L 2 0 0 0 news feeds, to their individual needs or preferences. The creation of these complex services will require partnerships and alliances, which in turn will require revenue sharing. But many analysts believe these types of vertically focused service portals will replace journals and other print-based periodicals as the format of the future. To make them work, entire new value chains will need to be established which replace the author– editor–publisher–printer–distributor model of the print world. New relationships, particularly with related content producers and technology companies, can be quite strategic as long as they match the publisher’s ultimate end goals. 7. Strongly consider working with open standards wherever possible We find that many publishers have already taken a number of steps toward building these types of service offerings on their websites. However, they have found the going very expensive, if not out of control. Much of that expanding cost scenario, we believe, is unnecessary and often comes from attempting to knit together multiple proprietary technologies: Microsoft’s ASP or Vignette’s Storyserver for the site and content publishing, WebCrossing for the discussions, WebBoards for the announcements, etc. We advocate staying away from these technologies and instead only using systems where data and content storage are completely application independent, preferably in highly structured XML. Such open standards-based systems help you achieve much greater interoperability between applications at a reasonable cost, while avoiding migration or switching costs further down the development path. Building and managing a services portal If you decide to follow recommendation (6) Fig. 2 Services portal architecture. entire new value chains will need to be established which replace the model of the print world 88 Donald C. Klein L E A R N E D P U B L I S H I N G V O L . 1 3 N O . 2 A P R I L 2 0 0 0 and develop a services portal, we have a few more strategy suggestions that might prove helpful: 1. Create a unique content package by integrating multiple materials Once your premium periodical content is available in electronic form, both on your own site and through selected intermediaries, the next strategic move is to differentiate your own versions in unique ways so that users will be drawn to your own site. The first step in that process is to integrate it within a web of related materials.5 All the materials you integrate need not be held locally on your own server. Open standards of exchange are making it easier and easier to link distributed repositories of content seamlessly without negatively impacting the experience for the end-user – a key reason for utilizing open technologies like XML. 2. Enhance the resulting content package with community and personalization services This is the second half of the equation. While the web of linked content forms the research base which will draw users to the service, the community and personalization services will allow users to derive a unique value from this content that they will not be able to obtain anywhere else but on your site. Again, the key recommendation we have for building these services is to use only open standard technologies for storing the member-generated content. Unless you have programmers in house, you will need to use commercial software, but the storage of the content itself we recommend using XML instead of relational databases so that the content can be easily redirected to other applications if need be. 3. Encourage internal editorial staff to perform new roles Below we describe a project team of three to six people overseen by a publisher/new media director to build this type of portal. Because the portal will depend on the published content as its cornerstone, many of the roles described are quite similar to ones used in project teams for print publications. But as an interactive service, many of the roles have added dimensions. There is no reason why existing staff members cannot be effectively repositioned to fulfil these duties. In particular, involving some of your key editorial staff in email discussions and interactive community groups will help drive those discussions and begin to attract dedicated users over time. 4. Migrate toward a ‘writing to the web’ scenario One useful efficiency that can be gained from developing a portals strategy is the ability to use the service itself as way of collecting and gathering content for an eventual print publication. Traditionally, a publisher’s print production process is set in stone, and only afterwards is the resulting output digitized and posted, often referred to as a ‘content–print–electronic’ scenario. Over time, publishers may shift to a ‘content–electronic–print’ scenario where their portal becomes an increasingly efficient means of gathering a broad range of submissions in electronic form and then posting them as a kind of preprint service. After input is collected from core end-users, this content can then be narrowed, filtered, and edited for the final print publication. We call this a ‘writing to the web’ scenario, and it is particularly effective for journals and magazines. 5. Contract externally for the building of the basic service As noted above, we believe the core assets of a publisher are its editorial skill and expertise and its relationships with readers. Launching a portal does not mean you also have to become an IT company. Plenty of technology partners are available to build a service for you. In fact, we find that in-house projects often suffer from an inability to scale over time. A better approach, we believe, is to cultivate internal technical talent to manage a collection of different external vendors and technology partners. Instead of building the systems themselves, the technical manager should think more about a strategy of ensuring the continued cultivate internal technical talent to manage a collection of different external vendors and technology partners Web strategies for professional publishers 89 L E A R N E D P U B L I S H I N G V O L . 1 3 N O . 2 A P R I L 2 0 0 0 interoperability over time between a whole range of different databases, file servers, and software. Project team roles and responsibilities If you decide to build a services portal for your members, subscribers, or readers, some thought should be given not only to the resources required to build it, but also to the staff and editorial expertise needed to manage the project on an ongoing basis. Briefly, we suggest that the team start with the following: Publisher/new media services director This person performs the traditional role of watching out for the bottom line of the entire project. Depending on the scale of the undertaking, this person may be the same one who oversees the print publications, thus performing an expanded role, or it may be a parallel position where the two agree to co-operate. The following roles comprise the dayto-day project team. Again, depending on the scale of the project, the team may start off with three and then build to six or even more as the service grows in usage. The roles aligned to the left are the primary ones, and the ones indented underneath are secondary and can be added over time: