Publishers must widen their frame of reference in order fully to understand the change in business models that taking their content online might necessitate – looking beyond traditional pricing models and text formats within their particular field of publishing.

This was one of the key finding of the inaugural Semantico Symposium, held recently in London to discuss implications of the shift to mobile for publishers and information providers. An invited audience of publishing industry leaders debated the issues under Chatham House rules, covering the following three themes:

• Devices and technology
• Business models
• Future strategy options

It was a stimulating event with a high calibre guest list, delegates attending from organisations including Oxford University Press, Nature Publishing Group, Macmillan Education, Wiley-Blackwell, CrossRef, CABI, BSI Group and the Institute of Engineering and Technology. To do justice to the discussion, we’re reporting it over three blog posts. This post is on the theme of business models.

Business as usual?

Publishers putting their content online find a very different commercial environment from that which they are used to in offering their physical, print products. However in some respects, the issues with online are not always that unique, though publishers often need to look outside their own particular niches sometimes to see this – even where mobile is concerned.

One thing that is often held up as a major disruptor is the ‘freebie’ culture of the internet – the widespread expectation that information should be free; an attitude that is opportunistic in some quarters, profoundly ideological in others. Though there are obvious problems with this from a publisher’s point of view, the other side of the coin is that the interconnected, globalised nature of the web offers unprecedented reach for content that is easily discoverable and not sequestered behind a paywall. Mobile holds out the promise of intensifying this reach, since more people have mobile phones than computers. Free presents big opportunities as well as big threats.

How this trade-off between reach and revenue protection will work itself out is currently being watched with great interest in the news publishing market, with Murdoch’s Times Online leading the charge for keeping content behind the paywall. A wide variety of subscription models are being experimented with online, and mobile has slightly upped the ante here through the way it enables micro-payments (fairly seamlessly in the case of Apple). Apps are a micro-payment system, looked at from a certain point of view, and the fact that many apps are offered in both premium and free versions points towards a pricing model that will be familiar to many. Freemium/premium models, if they can be made to work, offer big opportunities for marketing, while safeguarding the value of core content – and in doing this many publishers will feel themselves on (reasonably) familiar ground.

As someone who has recently upgraded his shredder to a more industrial model partly to deal with the quantity of publisher offers that fall through the letterbox on a daily basis, I can testify to the many and various ways in which publishers deploy free and cut-price offers offline.

Free trials, forced free trials, freemium, premium, tiered subscription – all of these physical-world species of offer have their online equivalents in the age of the app; and seeing this point of similarity perhaps provides a more useful way of looking at the whole ‘free’ debate. In the end, it’s a case of plus ça change, perhaps.

Who pays?

One result of the internet’s ‘freebie’ culture, in consumer markets at least, has been a drive towards funding content in different ways, notably through advertising-driven models (Google being the most successful example, of course).

Clearly this is not going to wash in more specialized areas of publishing such as learned journals, but even there we have see something of a ferment, with the Open Access movement proposing a move to an ‘author pays’ model. Although this has failed to make serious inroads to date, nevertheless the issue of ‘who pays’ continues to be a live one in academic publishing, where many markets are three-cornered, involving institutions (or organisations) and end-users as well as authors. At least one of our symposium guests felt that in their view underlying market structures were not in revolution, despite changes in the way people pay for content: ‘basically, the same people end up paying.’

There’s no doubt that online does provide different ways to pay. It has enabled the Big Deal, still a dominant model in institutional sales, although coming under some pressure. Easier micropayments, and more sophisticated access management, hold the promise of a more varied and flexible future for pricing models – even though it is a future in which publishers are going to have to stay on their toes in order to protect the value of their content.

Greater convenience and sophistication in the way content is paid for may well be necessary, however, in order to cope with the way the content itself keeps threatening to transmogrify.

iPad and incunabula

Printed works in physical formats – be they monographs, journals, dictionaries or whatever – owe their form to purely physical constraints that do not obtain online. Why do we turn pages rather than unroll a scroll when we read a book? Because the codex, derived from the wax-covered tablet used by the Romans, supplanted the scroll sometime around the sixth century AD by virtue of its superior compactness, sturdiness, ease of reference and economy (i.e. it used both sides of the paper). On an electronic device, the choice to scroll or click to a new page is dictated only by latency, a restriction that is fast disappearing as bandwidth increases, so that eventually that choice will be a pure design decision.

As this point approaches, with the launch of the iPad, it seems likely that we are seeing new hybrids and evolutionary experiments in the form of text – the equivalent of incunabula.

Though e-books currently mimic the conventions of the printed book, it is not always so clear with other types of text how helpful it really is for a book to preserve its physical-world form. An educational textbook, for instance, looks a lot like a magazine. Would it make sense to format them as such when they end up on iPads? Similarly a learned journal can resemble a database in its essential form more than it does a magazine. With a proliferation of devices with which to access electronic information products, including smartphones, e-readers, touchscreen tablets, netbooks and the (now) old-fashioned desktop, will the device we buy end up being dictated by the type of content we want to access on it?

The choice also exists, with certain reference works, for example, to turn a book into a software application that answers specific questions or helps the user through a specific task in real time, such as diagnosing a medical condition – or finding the nearest Michelin star restaurant – or choosing the wheat crop to grow in a particular type of soil. In this new future, some books will really have very little reason to be books anymore.

New forms, new models

Clearly, new and changed content formats are likely to create a need for new pricing models, and by extension for new business models. But they also put pressure on the traditional fault lines that divide one niche of the publishing industry from another. It is a source of frustration for some ‘techies’ in the online publishing industry that these lines are still so rigidly drawn; that there is a monographs industry and a journals industry, for instance, and never the twain shall meet.

This seems all the more counter-productive as two things are clear from the discussion above. Firstly, that there is a lot to be learned from one area of publishing watching closely what is going on in another, since many of the issues being faced online are common ones for all information providers of whatever stamp. And secondly that the old divisions will increasingly lose meaning as terms like ‘monograph’ and ‘journal’ gradually become irrelevant to the way that information is presented and consumed online.

The debate continues

Tune in next time for a further report from the Symposium, as we move to discuss future strategy.

Originally held as a means for informing customers about the technical development of Semantico’s products, the event has since grown to become a forum for knowledge sharing and debate about a wide range of issues around online publishing.

S3UG 2010 focused primarily on project management with a secondary theme on the growing importance of mobile devices and the future of publishing.

If you were unable to attend but would like to view the slides from S3UG or were present but would like to do it all again, we have provided a link for you to view the slides for each of the talks below.

From all the Semantico team, we look forward to seeing you at next year’s S3UG Event.

Richard Padley – Keynote and company update

Gareth Bish: Business Models

Liam Sheerin – Agile Development

Andrew Grimes: Waterfall vs Agile – Project Methodologies

Richard Padley – Choices in mobile content delivery

For those who were unable to attend, or would like to listen in full again, you can listen to a recording of eBook readers and the Future of Other New Technologies and view the accompanying slides below.

If you would like to view the slides or listen later at your own leisure I have made the accompanying slides and an mp3 recording of the presentation available here.

It’s always suspicious (to a jaundiced marketing person’s eye) when a show organiser chooses to place a large seated cafe area at the centre of the exhibition floor.

There were some noticeable absences at this year’s Online Information exhibition at Olympia – no doubt the result of crunch-inspired budget caution – and the air of an industry bracing itself for further shocks.

Public sector cuts have come to be seen as one of the few predictable features of a scarily unpredictable outlook for 2010, but the recent news from Dubai has shown that the private sector may not have exhausted its store of nasty surprises yet. Meanwhile, closer to home, there’s one less book retailer on the high street this Christmas with Borders going down – and as print news sales continue in a similarly downward direction, Rupert Murdoch has sounded the retreat, enjoining other Publishers to follow his lead and dig in behind their paywalls.

Small wonder, perhaps, that the on-stand drinks parties spilling out into the aisles had plenty of space this year to spill out into.

Quality not quantity

When a show is in such a period of contraction it’s usually the organisers who like to bandy the phrase ‘quality not quantity’ about, but interestingly it was a Publisher we heard using it this year. A show like this is about conversations, and OK there were a few less conversations happening this year than last, but perhaps they really were more valuable ones. Certainly, there seemed a serious progression from last year in many quarters. Tech industries in boom are notoriously productive of hot air. Sometimes it takes a chillier climate to bring a greater air of reality.

Answers not results

The conference at Online Information is always an interesting one. We at Semantico were too busy with those valuable conversations, perhaps, to catch all the sessions worth seeing, but what we did see confirmed our view that, more than ever, Search is a critical issue for our industry.

Two extremes, perhaps, of the current landscape were visible here. The leading edge of semantic search was represented by Conrad Wolfram, who launched Wolfram Alpha earlier this year. Like all good things it is now available as an iPhone app. Wolfram’s assertion is that users don’t look for search results, but for answers. Being on the leading edge of search he of course denies that what he is doing is search: preferring to say that he is creating ‘knowledge environments’. One thing that really came across as distinctive in his approach is the emphasis on the presentational aspect of data.

At the other extreme, arguably, and at some remove from the leading edge, lies Bing. It is hard to gainsay the notion that Microsoft is playing catch-up with Google here, as in many of its recent offerings, and despite what it says in the marketing books about ‘fast follower’ being the more advantageous positioning in tech markets, surely this can’t seem a great place to be when you used to be … well, Microsoft. It’s hard to think that any sliver of useful innovation Microsoft manages to come up, any incremental enhancements to where we are now, won’t instantly be snapped up, and probably improved upon, by Google.

Which is not to say that Google doesn’t have its own catching up to do elsewhere …

Get real

There’s a lot of talk about real-time search at the moment, some of which was being purveyed at the conference by search guru Stephen Arnold. This interest largely results from the stellar rise of Twitter, and Google’s stated ambition to improve its game in this area. But real-time search is hard. At the moment, Google indexes certain sites hourly; however, there are many others that it indexes only three times per year. Keeping up with the global information stream, and prioritising exactly what should be kept up with, is an extremely challenging computational task.

Keeping up with the local information stream can be a challenging task too, even at a slightly downsized event such as this; so these notes are necessarily impressionistic. Over all, our impression is of a tougher, but perhaps slightly more real, marketplace for online publishing. Which bodes well for the upturn when it eventually comes.

We’d also like to thank all those who thronged our stand on Wednesday afternoon (and spilled out into the aisles) to help celebrate Semantico’s tenth birthday. Here’s to the next ten!

Exhibition floor, Online Information 2008

If there was a dominant theme out on the floor of this year’s Online Information 2008 show at Olympia, it had to be the continuing rise of e-books. I conducted a brief survey of opinions from the stands and, even discounting for the tendency of suppliers to talk up their own market, it was an optimistic view that emerged.

The last year has seen barriers to adoption both financial and attitudinal subside. New tools coming into the marketplace have dramatically reduced the cost of producing e-books. Apprehensions about issues such as back-file access – if you cancel a subscription where does the e-book go? – have noticeably dwindled, according to Ebsco’s John Reid.

So which are the sectors that are adopting fastest?

E-books surge in Education, Retail and Health

Helped by government initiatives such as JISC funding for publishers, the market is maturing in Higher Education. No surprise there perhaps: HE has been a long-time user of e-books. But for Dan Breeze of Coutts Information Services, it is the development of a market in Further Education which is perhaps more significant: ‘this is a market that just wasn’t there a year ago’. And the upcoming JISC initiative targeted at FE can hardly hurt matters in this area.

Similarly, Ernst Kallus of Libre Digital points to significantly increased uptake in retail, a traditionally reticent sector, fueled in the past year by Waterstones and the introduction of the Sony Reader.

E-books are also developing fast in the NHS, driven by devolution of healthcare to GP surgeries (those who have had the slightly disconcerting experience of seeing a GP Google up their symptoms will be reassured, no doubt, to know that more authoritative sources are also available in surgeries!).

Drivers

Among the institutions, as in Education, pressure on shelf-space is a big driver for e-books; but the added value offered by searchability and other ‘converged’ effects (such as adding Web 2.0 style social networking capability) is undoubtedly coming into play.

Third party deals with hardware suppliers such as Lenovo make it possible for an HE institution to supply a student not just with a reading list but with the actual texts themselves in digital form, loaded onto a laptop – along with the capability to exchange notes and to discuss insights with the course tutors and other students.

According to Mark Howard of Dawson Books, today’s students regard print as an anachronism and expect digital resources to be available as a matter of course (no pun intended). The larger academic publishers have certainly got this message; it is perhaps librarians who have lagged – though even here knowledge (and even enthusiasm) are picking up, to judge by the steady stream of them I saw pitching up at the DawsonEra stand during the day.

Prospects for 2009

Of the people talked to, Martin Marlow of Ingram Digital was probably the most bullish about the market, saying we were ‘over the tipping point’. E-books are, in his view, now seen as an inevitability rather than a ‘nice to have ’. Recession may lengthen decision times, but will otherwise not slow the market significantly, since a lot of the necessary upfront investment has already been made.

Others too were sanguine about downturn effects: Ernst Kallus of Libre Digital pointed out that Publishing traditionally does well in a recession. And while Mark Howard thinks the worst is yet come, in that the next round of Education budgets will almost certainly bring funding cuts impacting 2010 spend, he also sees counterbalancing, positive forces at work. One of these is the sheer utility of e-books for academic study and reference, which make them especially useful for distance learning – a significant export market for HE. Another is a fresh wave of adoption poised to hit in the ‘mid-market’ of academic publishers. Now that the larger publishers have all adopted, and are showing profitable results, there’s no longer an argument for delaying adoption among smaller publishers.

Chuck Richards of Outsell telling us that B2B users today are spending more time on search than research, clear indication that things are going badly wrong on the usability front. Publishers are paying more attention to this now than previously, but we still have a fair way to go, clearly! Chuck also revealed that marketeers spend two thirds of their budgets on their own publisher websites. It will be interesting to see how new tools such as promotional widgets, and greater use of social networking, start to change this. Online marketers are increasingly talking about taking the fight to where the customers are – i.e. on blogs and on social networking sites like MySpace et al. Will we start to see more of that spend going ‘away from home’?

Julian Ashworth, Head of Reed Elsevier Pricing Centre of Excellence talking about the importance of pricing flexibility in optimizing the value of online innovations. This is something we’re really conscious of as builders of access management systems, for fairly obvious reasons: in order to build an appropriate amount of flexibility into a pricing system it’s important to have a firm grasp of the options that might be needed. Clients, equally, need this knowledge in order to specify their requirements accurately.

Simon Ferguson, Publishing Director, RBI standing up to be counted on Virtual Worlds. Second Life and the rest may be well into ‘the trough of disillusionment’ this year, but apparently the future is (still) virtual: the top two sites visited by 12 year olds, Stardoll and Club Penguin are virtual world sites (Nielsen).

Dave Langan of Silverbear saying things that will be music to the ears of our Technical Director at Semantico in extolling the virtues of agile web development. In Dave’s view it requires more management buy-in but delivers to business requirements and to time and/or budget more effectively.