Magazine article Online

Growth Trends in the Electronic Information Services Market: Part 3

Magazine article Online

Growth Trends in the Electronic Information Services Market: Part 3

Article excerpt

In my last two columns (November and July 1993), I discussed trends contributing to growth in the electronic information services market by covering the technology and database areas. This column will complete the theme by discussing a variety of general marketplace trends.

For readers interested in more detail on the information business, including growth forecasts, significant recent events, company profiles, and general market activities, several excellent sources are available. Three that I have found very useful are:

* Simba Information's Online Services: 1993 Review, Trends & Forecast

* Digital Information Group's Online Factbook

* LINK Resources' North American Electronic Information Industry Five-Year Forecast

All are updated frequently, but unfortunately, these reports are expensive and may be beyond the budget of many searchers (Simba's costs $645 and the Factbook costs $395).

Recently, Barbara Quint performed a useful service by reviewing the sources of market data for the electronic information industry[1]. Besides discussing the reports that are available, Barbara also described some newsletters that are useful for keeping up-to-date on events in this rapidly changing industry. Readers of this column who are interested in more detail (including lots of numbers) are strongly urged to consult one of these sources.

Here I will briefly consider five trends that are currently contributing to growth in the electronic information services market:

* pricing

* computer literacy

* vendor reputations

* market demand

* telecommuting

PRICING

Pricing may not be considered a growth trend, but applied appropriately, it can stimulate marketplace growth. As consumers, we are all acutely aware that pricing is a significant driver of demand, and the information business is no exception. In most publications concerned with online information, articles describing pricing strategies of service providers, and tactics users can employ to cut search costs continue to appear. In 1989, I published an article in ONLINE that discussed pricing algorithms used by major online services [2]. In that article, I questioned whether the ideal information pricing scheme could be found, and concluded that, "The problem is complex and multidimensional....Only with cooperation between users, database producers and databanks will we arrive at a satisfactory pricing scheme." The search for satisfactory pricing schemes continues unabated to the present day, but there have been some significant changes and advances.

Pricing has become more fluid in the information industry, and it is now common to find discounts and other special arrangements for high-volume customers. (Fortunately, the situation has not quite arrived at the level of confusion existing in the airline industry, where a plethora of fares, conditions, and restrictions means that many people receiving the same service are paying widely different fares.) While these strategies may be favored by those who benefit from them, lower volume users may resent paying higher "list" prices. To achieve growth, prices must be set to reflect closely the value received by all users, while still achieving an attractive return for the service provider--no simple task. Fortunately, most information service providers listen to their users; pricing algorithms are now being examined closely at the most fundamental level.

Users are demanding prices that are not only affordable but also more closely reflect the value received. Early online information services adopted the service bureau model and used connect time as their basis for setting prices, and connect time pricing has become pervasive in the industry. Today, users want simple pricing schemes, and there is a growing demand for flat-rate pricing. It is probably safe to say that present algorithms, which are confusing and possibly perceived as arbitrary, have dissuaded many from using electronic information services. …

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