Magazine article Information Today

Web Services Complicate Pricing Issues

Magazine article Information Today

Web Services Complicate Pricing Issues

Article excerpt

No one walking around December's Online Information exhibition in London could have failed to notice the degree to which the information industry has become intoxicated with the Web. Very few stands were not showing at least one Web product; a number had several on display. Of course, the Internet being the Internet, this was by no means a seamless process. At one point, Knight-Ridder had to abandon a timetabled demonstration of DIALOG Web in favor of showing the new version of KR ProBase. "Internet performance was absolutely appalling," commented Isabel Oswell, from OneSource Information Services. "We were all trying to connect at the same time and the service was continually failing to respond."

Network reliability aside, however, anything beyond a superficial glance at the myriad Internet-based services on display could not but cause the visitor to conclude that designing a Web interface is the easy part. The real challenge begins when addressing the marketing and pricing issues.

The Pricing Puzzle

Knight-Ridder's approach typifies the attitude all too often adopted by companies when embracing new methods, i.e., taking established paradigms with them. In particular, the company has taken the controversial decision to migrate the connect-time pricing model traditionally associated with proprietary online systems to the Web. As Knight-Ridder's Maxine McGarvey explained to me, "Both DataStar Web and DIALOG Web have a `search-and-retrieval' charge, plus a document charge (using the same price list as for the traditional DataStar and DIALOG products)." She added, however, "This is not based on the full connect time to DataStar or DIALOG, but on the time that the system is actively working, i.e., searching for a result or displaying documents."

Be that as it may, the decision has been greeted with a lot of head-shaking in the industry. "What Knight-Ridder is doing is reminiscent of early CD-ROM publishing, when content providers simply dumped their data onto a CD-ROM and announced that they now had a CD-ROM product," Information Access Company's CEO, Bob Howells, commented to me, "whereas what is needed is to re-create products around the new medium."

True, Knight-Ridder has been more adventurous with its ScienceBase product (http://krscience.dialog.com). Here users pay a $50-a-month subscription plus usage charges (typically $3 per article) but no connect charges. Even so, this contrasts unfavorably with STN's newly launched Web product, STN Easy (http:/stneasy.fiz-karlsruhe.de). Like ScienceBase, STN Easy is a Web-based, science-oriented subset of the company's full database portfolio-in this case 24 of STN's total offering of 200-plus files. STN, however, has decided to impose no up-front or ongoing subscription charges. Registering as a user is free, with charging entirely based on pay-as-you-go. This consists of a flat fee for each search (typically $2) plus a charge for each document displayed (typically $3-4).

But Internet pricing is a thorny issue and STN's approach also has its critics. At the London press launch of STN Easy, a member of the audience commented, "This form of charging is out of date. Why not have advertising?" To which STN representatives could only respond, "Who do you think is going to advertise on a technical and scientific information service?"

Well, they might. Microsoft itself has doubts about the advertising model, even in the frenzied consumer market. Microsoft's group marketing manager of interactive media, Marty Taucher, confessed to me recently, "We've done a lot of research and we think we are developing some compelling products. But will the online advertising market-which is an important part of our revenue stream going forward-develop? Will marketers and advertising agencies really choose to divert more of their advertising budgets to online banner advertising and new media? We're optimistic. The trend is good. But you just don't know."

In terms of functionality, some of the more interesting Web products coming on-stream in Europe, ironically, come from CD-ROM publishers. …

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