Every June, when the annual conference of the Special Libraries Association brings thousands of information professionals (5,516 this time, to be exact) and hundreds of vendors together, we all ask, "So, what's new?" Members look for new tools with which to serve their clients, and vendors and industry observers look for input to strategic planning (or, at least, that's what I prefer to believe!).
The SLA conference—in Indianapolis, June 6-11 this year—is a key opportunity for direct communication between the membership and the suppliers from whom they buy the bulk of their tools. Information professionals appreciate the opportunity to be face-to-face with vendor representatives on the exhibit floor and to be in the audience when vendor reps take to the podium in sessions; vendors, on the other hand, appreciate the opportunity to show, tell, explain, and clarify.
So, what was new or different? Most of those I asked replied "Not much" and went on to comment how the Indianapolis venue might explain the fact that the attendance was quite a bit lower than that achieved last year in Seattle. "Déjà vu all over again" was how several attendees characterized the lack of industry-rocking, competition-heaving announcements; "consistent with our expectations" was the drift of comments from vendors about the nature of booth traffic.
That is not to say there weren't new things to see on the exhibit floor. But they were on the whole logical extensions to content and functionality, sensible combinations and aggregations, and enhancements to improve already good products and services. And that's good news, in my humble opinion.
But I did come away with a collection of signals that from the information industry's point of view, there are stresses and strains associated with the economic underpinnings of the players' businesses. Hardly a new subject, it of course had particular prominence because of the two sessions in which the new Dialog pricing policy was discussed; but for me, the exhibit hall was one long echo of the challenge faced by all players: How do we pay for, and who else pays for, quality content delivered by robust functionality? How do we deal with "royalty creep"—publishers requesting ever higher royalties for their content? What about customer resistance to what they perceive as very high prices compared to all the free stuff on the Net? Consumption-based pricing makes sense in customers' minds, but it can be difficult to develop formulas that will in fact pay for all the work it takes to bring that one article up on a user's screen. How does overhead like customer service and marketing get accounted for in a per-article pricing scheme without making each article appear to be priced ridiculously high?
Information Economics 101
Standing in the booth of one of the significant niche content players, discussing the move toward desktop delivery and enterprise solutions, I was struck by how much sense it would make if the content package could simply be hitched up to a major player's well- developed and well-oiled intranet delivery engine. What's the sense of investing in reinventing the wheel? Conversely, the engine owner might appreciate the opportunity to add niche content to the basket of goodies for sale. (I'm happy to report that the players in question agreed with my suggestion.)
In times of ample revenues and profits, such alliances might not be thought of. But these days, they have to be. The costs of infrastructure and human resources are rising, while customers expect that their costs—vendors' pricing—ought to fall. That can't work for long, and if we are to maintain a healthy industry, some "interesting" solutions must be sought out.
Of course, some of the models from the past could always be dusted off and inspected for utility—as The Dialog Corporation's Dan Wagner appears to have done, with much customer displeasure to show for it (to put it politely).
I attended Wagner's presentation "The Dialog Corporation—Strategy and Plans for the New Company" along with several hundred others who wondered why, oh why, that session was concurrent with the "Vendor Pricing for Online Systems" panel session featuring representatives from Dialog, LEXIS-NEXIS, IAC, and Investext. Well, one can't be in two places, and I'm sure many in the audience had buddies in the other session with deals to swap notes.
Wagner definitely has a confident air, and I believe his direct manner defused most of the potential hostility. My note swapping would indicate that by comparison to the vendor panel Q&A portion, the Q&A in the Wagner session was a snooze. His presentation was matter of fact. Here's the executive summary/paraphrase: These are the plans for content consolidation; alliances with other vendors such as CompuServe, West, AltaVista, and others; backbone connectivity ("Dialog Net"); and functionality enhancements. And yes, let's talk about pricing. The bottom line is that Dialog is not a cheap operation to run, and it's fair that customers pay for value received. Connect-time pricing makes no sense and value lies in the powerful search; consider the flat-fee option.
I thought Wagner did a good job of explaining the rationale for the choice of the new pricing model. Regardless of one's opinion, at least it was clear how the decision was taken. And I found this comment intriguing: "If Dialog made a mistake and we earn 400 percent more, we will credit those customers whose bills for typical searches went up by that much."
I have always believed that customers will understand and accept pricing when they can clearly see why it is necessary, because they know that if the company does not survive, they may be the ultimate losers. Therefore, I think the antidote to all the discussion triggered by the new Dialog pricing is a simple "information economics 101" lesson. If customers were invited to examine the typical operations, capital, development, and royalty costs of industry players—we could use fictitious, setups but enough information is available to build very accurate representative budgets—and then invited to suggest price approaches that would ensure the continued health of those players given the current and expected customer mix, there might well be a loud collective "Aaaahh, I see; well then."
Conversely, if vendors got a closer look at some typical information center budgets, they too might be in a better position to appreciate the dilemma experienced especially by smaller organizations.
Show Us the Money
So my suggestion for next year's SLA conference (I'm sure it's too late already, but never mind) is that a suite of "Show Us the Money" sessions focus on information industry economics. Part One: Industry players. Part Two: Customer organizations. I'm talking spreadsheets and bottom lines with numbers, not generalities. Such a suite of sessions would go a long way toward taking the emotion out and leaving room for plain old inventiveness and business smarts throughout our discussions.
It's a roundabout route from Indy to Toronto, where I live, so I had plenty of opportunity on leaving the conference to ponder one simple notion: Us-and-them is hopelessly outdated. How nice it would be if we SLAers and vendors could roll up our sleeves, open our files, and work on our common challenges together.