Magazine article Online

The Pricing Conundrum

Magazine article Online

The Pricing Conundrum

Article excerpt

Looking back at 1994, a major theme was the change in online pricing. It sort of snuck up on us, but by November and the DataTimes announcement, the trend was clear. Change was in the wind and connect time was dying, albeit a slow, reluctant death.

Pricing online services and resources has been a problem ever since Roger Summit and Carlos Cuadra cooked up connect-time pricing in the early 1970s. Back then, connections were made at 300 baud using terminal with no downloading capability, and time spent connected to mainframe computers was a valid cost factor.

Now the technology of online has changed and so have pricing algorithms. Online services were reluctant to move away from time-based pricing, but alternatives to remote online, in the form of networked CD-ROMs and locally-mounted tapes, forced the issue. More recently, the Internet, client-server architecture; the rise of the consumer services and agent software such as Hoover have made it imperative that the traditional online services respond with new pricing initiatives, if not lower prices.

In November, DataTimes announced a relaunch of its service, touting a flat monthly fee for access and headline viewing, then charges for full-text retrieval of articles or reports. It claims an industry "first" in discarding connect-time charges, but Dow Jones switched to information-unit pricing in March 1994, levying charges for each thousand characters that crossed the connection. Dow Jones had tested the water with information-unit pricing, but put it into effect across the entire system with this move.

Dialog initiated major pricing changes in August 1994, lowering connect-time prices, raising per record charges and adding a View fee for display options. In tune with the times, Dialog's stated goal is to lower connect prices further and place pricing emphasis on the information received from the system.

SandPoint Company and its customers weren't satisfied to wait around for lower connect time from the major online services, and in late October at the ONLINE/CD-ROM '94 conference, the company announced flat-fee pricing. In an 18-month project named Tsunami SandPoint has negotiated contracts directly with database publishers, and in turn, will offer flat fees to its customers. For many databases Hoover access will now run directly to database publisher' host computers or to files mounted on SandPoint computers, bypassing Dialog and other host systems.

NewsNet's new pricing structure, unveiled in September 1994, didn't eliminate connect time but moved from a multitiered "read" rate to an "information retrieval" rate and a low basic connect rate. New options include predictable per-issue prices ($10 to $60) for downloading full newsletters, billing to the second and no premium prices for higher modem speeds, plus other adjustments in NewsFlash and other display rates.

Mead Data Central, recently purchased by Reed Elsevier, has not officially changed its pricing options for years, but subscription or fixed-price contracts are widely-available to regular volume users. LEXIS/NEXIS bills relatively low connect-time fees, levying per-search charges instead based on what files are accessed. The usual complaints of high prices are heard here, too, but have been ameliorated somewhat by enhanced system features, such as FOCUS, that allow searchers to fine-tune search results without incurring additional search charges.

PRICING CHALLENGES

Many online newcomers offer prices that are not connect time-based. …

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