Month: March 2005

Not too surprising to see Microsoft acquire Groove Networks — Microsoft was an investor in Ray Ozzie’s p2p project — and it makes sense to see Ray ascend to the triumverate of CTOs. Ozzie’s invention of Lotus Notes was hailed, justifiably, as a great leap forward and created the new category of "Groupware."

I hate Lotus Notes. I loathe it. I think, all other things being equal, if I had to chose between working at two companies — one running Notes, the other running Microsoft Exchange — I would go with the Exchange environment every day.

Notes was the ugliest, most user-unfriendly application I’ve ever endured. This is not surprising given Lotus’ brain-dead approach to user-interfaces in the early 90s, when CCMail — it’s evil email client — had icons that were drawn by participants in a split-brain experiment.

Don’t take my word for it. Notes sucks. 

In my morning crawl of the news sites I see that Google News — the perdurable beta news aggregator — has initiated a customization function.  It seems a little more useful and less inbox-crushing than the old model of email alerts off of keywords. In the end, it’s just an old "My Yahoo" customization tool driven by keywords.

 

 

 

David Churbuck’s Reel-Time FLog » Blog Archive » The Tenth Anniversary of Reel-Time

"In the beginning was the name Real-Time. It was to be the name of an online news project to be run by me and funded by Mitch Kapor, the founder of Lotus. Mitch was my Internet mentor in the early 90s when I was a technology reporter for Forbes Magazine. He had the first commercial net connection in the state — a T1 line from his Cambridgeport office to Software Tool and Die, the first commercial ISP which was based in Brookline. Mitch invited me to his office and showed me some of the pre-Web Internet technologies such as WAIS, Veronica, Archie, Gopher and USENET. I had been an online community geek beginning in the mid-80s, had really first experienced the first community at a Grateful Dead BBS called "Brokedown Palace" where Deadheads posted lists of their bootleg collections and arranged trades of 90-minute Maxell tapes. That led to the WELL, the first big online community based in Sausalito, California  …"

  I won’t boil the ocean of information economics and attempt a trenchant analysis of paid vs. free content, but a confluence of factors points to a disruption in the historical model of tucking value behind a so-called “cost-wall.”

I see three constituents in the market:

·        End-user recipients seeking answers and knowledge through two channels – online delivery or physical access to printed material.

·        Librarians and professional researchers who, for a fee, perform those searches.

·        Owners and aggregators who compile and store the information.

 
This essay was inspired by my experiences with Highbeam – a web-based, free-to-fee service that provides access to thousand of print sources for a flat annual or monthly fee. In an earlier blog post, I rhetorically asked the provocative question: will Highbeam “nuke” Factiva, the joint-venture between Reuters and Dow Jones that also provides access to a large database of print sources via an annual membership and a per-article charge of $2.95. My experiences with both products, and my experience with flat-fee subscriptions vs. micro-payments, or per-article schemes, led me to the conclusion that Factiva’s model was seriously challenged by Highbeam’s.

Executives from both companies weighed in with comments. Patrick Spain, the founder of Highbeam, notes that the market for paid-research is ripe for disruption as individual users are seeking research via a direct model, whereas Factiva has traditionally sold to enterprises, selling seats to volume-buyers (corporate librarians) who in turn distribute them to end-users.  Factiva, which does offer a tiered subscription system, countered that it is competitive with Highbeam’s offering, and further, offers higher functionality and better data sources.

 
Both companies negotiate, license, and aggregate libraries of articles from the original content creators – the publishers who pay to report, edit, and publish the source material. These include trade journals, newspapers, magazines, and the usual spectrum of professional content which is usually tucked behind a “cost-wall” on the publisher’s website. These archives are valuable assets and are treated as such. While I have no insights into the profitability of a typical newspaper’s archives, I can speculate that direct article sales and licenses to commercial online database such as Highbeam, Factiva, Lexis-Nexis, constitute a nice annuity that publishers can be expected to defend against the “Information Wants to Be Free” barbarians and CopyLeftists.

 
Archives and paid-research are under increasing assault by the masses that have been conditioned by search engines to expect instant gratification from their search requests. From the early days of Brewster Kahle — WAIS and Gopher to the present state of Google, the digitization of libraries, and paid-search services — there has been an inexorable march to take librarians and gatekeepers out of the equation. They don’t like this very much, and argue, sometimes with great credibility, that it takes an information professional to a) perform an efficient search, b) distinguish between the validity of sources, and c) rank-order results in terms of relevance.

 
In corporate environments where unrestricted searching can rack up massive charges, having a gatekeeper makes perfect sense. I can recall instances where reporters at PC Week incurred nasty bills from MCI via its early online research services. And with some commercial databases extracting very expensive pounds of flesh per citation downloaded, it makes sense to put someone who has a clue about what they are doing be in control of the search process.

 
I don’t think high-priced commercial databases are doomed. The more esoteric and technical the information, the less appealing it is to the unwashed Google-masses. The middle-market — for solo “knowledge workers” attempting to save themselves an expensive and inefficient trip to the library — is where Highbeam is going to strike gold … if, and only if, there are enough freelancers like myself with heavy research needs. Factiva? I predict a revision of their model to become more friendly to the individual subscriber. With their business at about $245 million annually in 2003 (according to Hoover’s http://www.hoovers.com/factiva/–ID__59927–/free-co-factsheet.xhtml),  a slight decline from an estimated peak of $250 million in 2001. They aren’t exactly huge, nor are they on a steep growth trajectory. Matching Highbeam with a flat-fee offering to independent researchers could (if they can figure out how not to croak their corporate base) put them back on top with individual reseachers.

 
While I may rail against walled-garden models and how they doom their builders to irrelevance, I can’t safely predict that they’ll come down under pressure from free and flat-fee search. I do think newspapers are fooling themselves with registration requirements, and further I am very dissatisfied by publishers who at the very least can’t distinguish a paid-print subscriber and grant that person unrestricted archive access. New York Times are you listening?

 

Price Comparison – Highbeam vs. Factiva

 
First, let’s look at Factiva’s Individual Subscription model and compare it to Highbeam’s.

 
Factiva: $69 a year for an annual subscription. This doesn’t give the subscriber any searches. Just the price of entry. That comes out to about $5.83 a month. On the surface, Factiva would appear to be a big bargain compared to Highbeam’s $100 annual fee (or monthly $20). But that’s all you can search, full-text.

 
Because I paid Highbeam a monthly fee of $20 per month, lets compare Factiva at $5.83 and what you get is (I assume as I am unwilling to pay Factiva for the test) an account with a password and the right to start searching. (Factiva’s Individual Subscription does not offer a monthly option. It should, with automatic renewal until the subscriber tells them stop.)

 
Let me first define what I mean by a “search” – that’s a keyword(s) query that results in a search result page (SRP) where the results are then opened to their ultimate full-text form. Not just headlines, not headlines and first paragraphs, not executive summaries. The full enchilada taken all the way to full text and ultimately, export to local storage or import into an app like Microsoft Word.

 
Factiva also has some lesser charges. Here they are:

• Full text article, picture or PDF – US$2.95;
• Keywords in Context – US$0.75;
• Full article/report plus indexing – US$2.95;
• Headline, Lead Paragraph and Indexing – US$0.75;
• Custom Format with Lead Paragraph – US$0.75, each charge being per article/document, with the charge being incurred on opening the relevant document.

That puts a little more hair on the deal.

Here’s where Factiva’s economics fall apart for me. While they win the monthly subscription price war hand’s down — Factiva is $6 a month and Highbeam is $20 —  I can open, print, mutilate, spindle and fold as many Highbeam articles as I want for my $20 at Highbeam. Every one I open at Factiva causes the meter to advance $2.95.

 
That means five opened articles on Factiva and I’m paying more than I would for an infinite number of articles at Highbeam.

 
Or does it? A little snooping around on Factiva led me to the discovery of another tier, called iWorks. Here’s the skinny on that:

”Factiva iWorks Individual Subscription Pricing is available via registration in Microsoft Office 2003. Individuals can access Factiva iWorks at a cost of $9.95 for 10 articles per month, or for $2.95 per article (prices listed and charged in USD). After entering a query, unregistered users will get headline results and will be prompted to register when they select a headline. “

So there is a cheaper tier of service priced at $9.95 a month for 10 articles at Factiva. That is waaaay cheaper than Highbeam at $20 for the same 10 articles.

If I stop at ten articles.

Okay. So the “Individual” account at Factiva is obviously not for me. iWorks — to go back to some research I recently performed on railroad gauges — would have worked for the first ten articles, but would have turned expensive very quickly for every one beyond that quota. The search ostensibly would have cost me $59 at Factiva under the Individual plan. Google would have failed out of the gate because it has a bad filter and is stupid in its own endearing way.

 

The Market

 
What are the bigger market dynamics at play here? Factiva is a classic market defender and Highbeam is the attacker. Factiva is defending its market for selling excellent research to companies. Highbeam sells it to individuals like me who need corporate level resources. 

 
Google is already eating at the fringes the old world of professional, expensive research, and Highbeam is moving onto dinner. Of course someone could undercut Highbeam too, but I don’t see a lot of wiggle room in negotiating archive licenses from the publishers.

 
Patrick Spain came up two good insights based on his experience at Hoovers. The “occasional” user wants to know something. So show them something. If they want more, charge ‘em. But don’t just charge ‘em for that piece of information, charge them for the right to see ALL the information..