Business Models For Successful E-Publishing

"In the future, there will be even weirder business models."
-- Tim Berners-Lee (Creator of the Web)


The majority of Internet users now access information free of charge and this is going to be a difficult attitude to change. Consumers are the most difficult to convert to a fee based system. Businesses on the other hand are accustomed to paying for information, especially specialized information.

Businesses are also beginning to make more focused use of the Internet by intranet and extranet technologies. So, businesses are willing to pay for information which will add value to their enterprises.

The same problems of charging and pricing which faced the first database providers are comparable to the problems facing those who wish to sell digital products on the Internet. We might call these 'native' models.

Most models for internet commerce, however, have been transplanted from the bricks and mortar marketplace. Although some of these models are successful (such as ad revenue and list sales) they don't fully embrace the concept of a pure internet commerce.

Let's take a look at some native and transplanted models:

Native Internet Business Models

The library model: Academics, researchers and librarians were the first to realize and exploit the internet for accessing and disseminating information free of charge to their community of peers. Dissemination is primarily web based (HTML), by database access or by email.

The freeware model: This model is used by the software community to provide users with applications for free download or free trial downloads. Netscape and MS Explorer are the best examples of this model. The free trial model is adopted when issues are of concern to the software developer.

There are literally thousands of software developers and publishers who market software online using a trial model or a model based on disabling certain features. If you want every feature of the program some form of payment or registration is required.

The information barter model: A similar model to direct marketing where a company purchases a database of information from an organization (usually a utility company). In the on-line environment information is also sold to others and used to produce customized products according to user preference. Internet news sites use this method of business. Amazon.com is probably the best example.

Digital products and digital delivery model: Digital products exist in the virtual world and can be delivered via digital methods, e.g.: WWW, ftp, CD-ROM or on-line databases. There is a distinct difference between these products and those which involve digital purchase but physical delivery.

Access Provision Model: Used to provide access to the Internet and is therefore the model adopted by Internet Service Providers (ISPs). Some ISP's are purely advertising supported, such as NetZero.

Web Site Hosting Model: Many ISPs provide additional services to users such as email and web servers free of charge but are sustained by advertising revenue.

Private Access Model: Web sites will sometimes have certain areas that are restricted to non-member. Once you become a member you receive full or partial access to premium services or information. The Wall Street Journal online is a good example of this.

Entrepreneurs who also utilize this model include:

Jonathon Mizel (http://www.cyberwave.com/),

Marlon Sanders (http://www.higherresponse.com/)

Dr. Ralph Wilson (http://www.wilsonweb.com/),

Monique Harris (http://www.sellyourbrainfood.com/),

Harmony Major (http://sitesellingpower.com/),

Allen Says (http://www.profitsecrets.com/), and

Declan Dunn (http://activemarketplace.com/).

There are many more. These entrepreneurs sell monthly or annual subscriptions to specialized business information and access to a peer community. This model is fee based and often is sustained by advertising and/or affiliate revenue as well.

Transplanted Bricks and Mortar Models
Mail order model: This is the model used in most electronic commerce web sites. The user purchases goods from a web "shop" and pays for them via the web using credit or debit card. The goods are then physically delivered to the consumer.

Advertising based model: Adopted by most of the search engines and other free sites. The most common form is the banner advertising hypertext link which takes the web user to a particular site or service. Revenue is generated by the advertiser.

Free trial model: Normally used in the software industry. Users can "try before you buy", the user is provided with downloaded software sometimes with limited functions and given a period of time to use the product before deciding to purchase.

Subscription model: Users subscribe to products and services such as electronic journals or databases for a limited period before deciding whether to make a permanent subscription. Similar to the free trail model, however the user continues to pay a subscription rather than the one off payment associated with the free trial model.

Direct marketing model: The use of electronic mail to promote goods and services. Know as spamming and universally loathed by most of the internet community.

Real estate model: Selling of space on web sites. For example an estate agent advertising property might also sell space to other actors in the property market such as solicitors or surveyors.

Incentive scheme model: Combined with advertising and often offering the chance to win prizes or attain free goods.
Toll gate Model: Become a portal site with a directory of specialized web site destinations all within your web site.

Don't believe for an instant that you can't creatively mix and match these models or parts of them to develop an model that suits you and your business objectives. A combination of models is the most likely solution for a profitable business.

Pure internet commerce redesigns the business processes involved in the publishing industry.

The New Paradigm For The Information Chain

The information chain continues to redefine itself according to technology and cultural changes.

There are many versions of the information chain however there are three parts of the chain which we will look at in the context of digital publishing.

Figure 1a shows the relationship between the content creator (normally the author) and the end-user or the 'consumer' and a conduit for delivering the information.


This is the broadest possible relationship. The digital publishing chain outlined in Figure 1 includes an expanded definition of 'author' and 'conduit' to include such variables as 'access and storage'.

In this expanded idea of the information chain, the author is not the only source of information. The sources include publisher, distributor and packager showing that there are a variety of ways from whom information can be generated.

In addition the 'conduit' for information delivery expands to include the components of access and storage of the information.

Next we look at the traditional information chain side by side with the new paradigm of electronic information publishing:


Before we examine the diagram in detail, let's define some of the traditional players in the traditional information chain.
Who's who in the traditional information chain:

· The content creators: Includes entrepreneurs, authors, writers, packagers and self-publishers - they create the product which is sent to the publisher.

· Publishers: Those who are responsible for selecting material, ensuring quality, editing, copyright, marketing and production.

· Distribution: Usually specialty firms servicing the physical delivery of the product - the function distinct from the actual publishing process and is usually undertaken by a third party.

· Secondary information providers can also be involved in the distribution process. They can provide indexing, abstracting and cataloguing services and offer access to sources through information gateways.

· Storage & access: Includes libraries, bookshops, secondary information providers. Products are stored at some physical location usually a library or bookshop. Often there is a cost involved in the storage of these products, however this would usually be at the distribution level where stock may have to be warehoused.

· End-User: The consumer of the information or content. The consumer is the last level but the most important.


Electronic Publishing Information Chain

Technological innovation within the publishing industry has the potential to alter the publishing process. These changes are outlined in Fig 2:

Basically, although the players remain the same, the publishing process is different in that the delivery can be directly from the source making intermediaries unnecessary. The major change occurs when self-publishers consider the ease in which they can deliver information directly to the end-user. In this case, it is assumed that distribution is completed electronically.

In this new paradigm, the "Internet" takes on many of the functions of the traditional information chain such as Publisher, Distribution, Storage and Access and Secondary Information Provider.

It's not that these functions will be replaced in the new paradigm - but that they are transformed.

For example, the new Internet publisher can provide the quality control necessary to increase the acceptance of e-books.

There may be potential strategic partnerships that can be developed between publishers and electronic storage facilities that could provide security, DRM and fulfillment of digital goods ordered by end-users.

And secondary information providers can play an important role in the new paradigm by building customer databases through which digital goods can be sold in niche markets.

So although the traditional information chain is being redefined, so are the players in the traditional chain. The new paradigm is opening opportunities for services to the new electronic publishing industry that have not yet been exploited.

Issues For Commercial Electronic Publishing

Any model for electronic commerce in the publishing industry has to address certain issues -

· security
· copyright
· payment (micro and macro payments)
· delivery

We have laid a solid foundation for understanding electronic transactions as they relate to digital goods and service sold over the Internet and we've compared traditional publishing to the opportunities for electronic publishing.


Entire Contents © Copyright 2001 by David Vallieres. All rights reserved.