SCA Blog

What business models have been developed to sustain and improve the provision of e-content to the citizen? What economic indicators do funders and/or publishers use in assessing the cost/benefit of mass digitisation?

Moderator Peter Kaufman kicked off the discussion with a timely tale about Prince  or, rather, the Artist Formerly known as Prince. Last weekend the singer gave away free copies of his most recent album, Planet Earth, through a deal with the Mail on Sunday. This angered the Entertainment Retailers Association and its co-chair, Paul Quirke, commented that “with behaviour like this he will become known as the artist formerly available in record stores.” In response, Prince’s spokesperson said that “Prince’s only aim is to get music direct to those who want to hear it”. There is, said Peter Kaufman, a lesson there for us all.
Read on for the rest of the discussion.

PK:I would like to focus on one area that’s really under-understood - the commercial interests of the commercial companies. When Google et al invest in digitisation projects the economic calculations revolve around five essential considerations:

1. Immediate revenue
2. Effects on closing future deals that may bring additional revenue
3. Immediate profit
4. Effects on closing future deals that may bring additional profit
5. Valuation - stock or private

There’s a possible sixth point - that they may act out of charitable interests. Google is unique in that it’s founded by grad students and it may be that they just want to help libraries?

More and more companies act in ways that are counter-intuitive to those of us with classical business education. People are studying the benefits of open source projects ? business models of, for example, drugs and pornography where it may be sense to give some things away for free. To observers trained in classical pre-internet business this behaviour and some of these decisions eg Steve Jobs’s call to abandon DRM and Amazon’s decision to sell EMIs music without DRM, publishers putting pdfs of books online for free, universities like MIT putting all of courses online as open courseware - these seem like acts out of a psychedelic novel

I think the economics of open content needs to be better understood by all of us

In its digitisation strategy draft document JISC does not take a position on this in the way that, say, the Wellcome Trust might. The strategy doc avoids the loaded term “knowledge commons’ and does not contain the world ‘free’ - a good practical approach

What are the implications for us? If we were to switch brains with a commercial company executive we would be thinking, what can I monetise, give away for free? would appreciate that almost every act in which we enagage by computer renders us a producer or co-producer of screen-based media - every image, blog, email, will become a piece of the monetisable cosmos for Amazon, Google, Adobe.. in this kind of psychedelic moment we may find that we have more in common with companies like Google than we thought.

Investment banks and analysts who cover the media tell us things and we would do well to that too much choice can be detrimental as it leads to user dissatisfaction, searchable content my be better than more content and paid search is a multimillion dollar business. We need a better understanding of the motivations of commercial companies and working with those who analyse them may help

Dan Jones: a lot of those examples are not giving away content for free per se but doing it as a consequence of a business reality - DRM didn’t work - people burnt cds and gave it away ? not necessarily indicative of a wave of free content

Alistair Dunning (AD): with Google books content you can’t download and repurpose it in the ways you choose so it’s only free to a certain extent

TBC: with local search, 15% of search travel is around local search but less than 1.5% of the advertising spend is by local companies - Google turn off their algorithms when you do a local search as it does not work as local companies do not advertise. It’s interesting as an org trying to promote local content

Kevin Guthrie (KG): hard to make judgments on business models at this stage as they are so young. Google transformed the advertising world - all the other things they do hangs off the cash generated by the big monster ? they are about speed - doing things really fast, it’s fundamental - keep throwing new things up, keep doing new things even if they don’t have a business model. For example, Google news, they spend a lot on it but no business advertising? it points to something, that independent of whether the commercials are good or bad guys, they have penetrated the insulated environment of our community. The scale of the commercial world is forcing the academic worlds to respond - it’s determining the pace of change which has never happened before - we can’t control it any more - it’s about scale - question of collaboration is about pooling lots of money to make the big ideas happen
DJ: It’s not necessarily a choice - they can be a means to an end- the big barrier we have is the resource - if we did rights management effectively, it’s not about giving it to Ancestry or Proquest but about working collectively and getting what we want out of it - know who you deal with - content will not drive these companies forever - we have a little window to ask them to help us out - we need to be in tune with what they developing or we will miss out

PK: In an ideal world could imagine projects that could be started and completed as joint ventures from the very beginning

SP: need models of how this can work effectively - concerns about protecting the interests of the public good (which is not about holding on to content) - many of us aren’t business people so there are concerns that if we’re not careful we could give things away that we should be looking after on behalf of the public - we need to come up with those models so that we can put those relationships in place with the right licencing agreements etc

DJ: Businesses come to us with a whole different deal than they may take to individual libraries ? collectivity is not a panacea but scale is important

KG: when I hear about concerns about Google etc it’s never the people who are in on the deal ? it’s that contrast between local and system-wide interest - certain organizations have more leverage than others so if that leverage can be shared?

DJ: you will have a different reaction if you are approached by, say, google than if you are going out to companies with a clear idea of what you want to get out of it

AD: in UK a lot of places will not have the skills to do those negotiations so also need to build up the skills of people so they are not scared when talking to these businesses - some will be terrified and likely to fold completely or not pursue it so we need to develop those skills

PK: Peter Brantley, head of the Digital Library Federation, would be good to have at a future meeting - he’s trying to help organise clusters of resources online to help people with negotiation strategies which are useful without breaching any non-disclosure agreements - there are also legal clinics in institutes that can be helpful and open to helping cultural and education institutes - or could there be a kind of agent for a library system to connect deals and so on - ways to more formally and systematically introduce potential partners to each other

TBC: public sector information directive is up for review in next year or two

DJ: we do have that kind of help if the holdings were crown copyright but not where have mixed copyright material

PK: what are Google up to in the library world with reference to business models I talked about at the start?

DJ: it?s the future revenue and future profit - looking at the open movement and thinking that in the future possession in digital content will be 9/10th of the law - and so rich that can afford to kiss a few frogs

PK: could turn to analysts on wall street to get an idea of what the commercial companies are up to

DJ: reality of the speed that they do it with can be quite different from the image that they will rush in and digitize your whole library

AD: Google is not the only commercial publisher in town - there are different models with different possibilities but nobody is sure which ones will shake out in the long term so JISC doesn’t authorise one particular model

David Baker (DB): when, where and how do we invest? In the commercial business model, if we substitute ‘usage’ for ‘revenue’ and ’saving’ for ‘profit’ and redefined value as ‘to’ and ‘by’ the sector then we’re not so far apart - we need to talk to these businesspeople and see what the synergies are

TBC: not on the list is the idea of growing the market - some evidence that certainly the BBC do that in an explicit way ? to grow the use of technology - a variation on future deals or future revenue

KG: agree with usage and revenue but equivalent of profit is impact and we’re struggling with how to monitor that impact

PK: Can I mention a very useful article: New Metrics of Scholarly Authority by Michael Jensen in the Chronicle of Higher Education - talks about being in an age of information abundance - talks about web 3.0 and provides inspirational list of how we can make sense of the billions of pages of content we will have in the future

PK: There’s a risk of panic and entropy when Google walks through the door but need a recognition that the institutions are equals - invite them in on the basis that “we are making a million pound investment in this - do you want to come in and invest a million pounds too? These are the rules - Need to think like those guys - if they were approaching someone from the commercial world then things like stock options and equity would come up - could identify the projects which would arouse that level of interest

DJ: everyone involved in a potential consortia needs to have a clear idea of what they want to get out of it on an individual and on a collective level