CD-Rom publishing appears to have gone into freefall, with a number of leading publishers pulling out of the market – among them HarperCollins and Penguin. Another market innovator, First Information Group, is seeking a buyer to help it out of financial difficulties. But it would be wrong to see these events as the beginning of the end for CD-Rom as a delivery platform for information, entertainment and training.
The latest figures from TFPL Multimedia, which publishes The CD-Rom Directory, indicate that there are now more than 18,000 CD-Rom titles available, an increase of about 40 per cent in the past year.
Only a small proportion of these titles are business-to-business information, but directory publishers have been quick to recognise the benefits of being able to deliver their databases on CD. More than 25 per cent of the Directory Publishers Association members offer CD-Rom versions of their directories.
Until a few years ago, the only other electronic delivery options were floppy disks or the specialised online services such as Dialog, Lexis-Nexis and MAID. The rapid growth of the Internet would now seem to offer directory publishers the opportunity to reach a global market, at a lower investment than creating CD-Rom versions.
In practice, however, the issues are more complex, and directory publishers are having to look carefully at the benefits and problems of the three main electronic delivery options – CD-Rom, the Internet and online. To make matters more complicated, the three options are not mutually exclusive, and there is considerable interest in the benefits of linking CD-Rom and Internet technology to create hybrid products.
Until the arrival of electronic formats, directory publishers had little idea of how their public ations were being used. Direc tory publishers are now recog nising the importance of surveying the market before designing and launching a CD-Rom product, and also continual surveys of customer satisfaction.
Richard Price, product manager at Reed Information Services, notes: “Users have to feel in control of the product, and that means we have to invest heavily in researching the requirements of subscribers to the Kompass and Kelly’s directories.”
The most important requirement that users have at the moment is to be able to integrate information from a directory with another application. Reed recognises that a CD-Rom cannot be a closed product but, says Price, “it has to be compatible with other office applications so that, for example, mailing lists can be developed with the minimum of effort on the part of a marketing manager”.
Euromonitor has also developed products to meet this need. The company’s World Marketing Data & Statistics 1995 on CD-Rom incorporates spreadsheet and charting functions to speed up the graphics, which can then be incorporated directly into a report by a customer.
At present, this cannot be provided over the Internet, though Java will soon change the situation, making it possible for software to be downloaded, providing enhanced functionality compared with that currently available on the Net.
Perhaps the most complex issue that directory publishers have to wrestle with is the premium that they are able to charge for the CD-Rom and Net versions compared with the printed version. The problems are even more complex for publishers such as Reed which gain revenues from advertising (either display or payment for extended entries) and from subscriptions, compared with a publisher such as Graham & Whiteside, where all the revenues come from sales of the directory.
Graham & Whiteside publishes a range of company directories that usually cover a number of different countries – such as its Major Companies of Europe and Major Companies of the Far East and Australasia – and are just about to release CD-Rom versions in response to user demand.
In many respects it is rather easier for a new market entrant such as Graham & Whiteside to set a CD-Rom price. More established companies, such as Dun & Bradstreet, price their CD-Rom products at a factor of ten or more over the printed product; making a radical change to this premium is not easy.
Alastair Graham, managing director of Dun & Bradstreet, reflects that “setting the price of our new CD-Rom products took a great deal of discussion and research but in the end we decided on a 50 per cent premium on the print product”.
The range of prices charged for CD-Roms is very wide – from over 10,000 for the Jordans FAME product to less than 300 for the CDBook products of Reed. Price believes there will continue to be a market for high-priced products with excellent functionality, such as Reed’s online and CD-Rom products derived from the Kompass directories with additional information added on company financial performance.
However, he says that Reed is also looking carefully at the functionality/price equation at the lower end of the pricing scale. “Our CDBook met a clear need for an entry-level product when it was released in 1994, but our users now want a wider range of search options,” he says.
The pricing issue that all publishers fear is how to take advantage of the Internet without having a serious impact on revenues. The present revenue options on the Net are through the sale of advertising space, establishing a subscription, or charging for information directly, using a credit card. A major challenge is to convince Net surfers – who are used to getting information for free – that data is costly to collect and collate, and is worth paying for.
At present most directory publishers are wary of the Internet, and currently use it only to market their directories to a global market – providing online ordering facilities.
Although the range of information available on the Net is initially enticing, users soon recognise the benefits of using products from a company with a reputation for information quality, whether the medium is CD-Rom or the Internet.
Most directory publishers would agree with Andy Maslen, Euromonitor’s sales and marketing director, who says: “Issues about branding and quality have never been as important as they are now.”
A customer will accept that the production process for a printed directory will introduce a few errors, but will be highly critical of the same errors in a CD-Rom or Internet version. Not only do publishers have to maintain very high quality standards, but also have to move away from annual updating to be able to offer quarterly or monthly changes.
It is the prospect of being able to update a CD-Rom through a connection to an Internet database that appeals in principle to many directory publishers. However, there are some technical issues to solve, though these are nowhere near as difficult as deciding on the pricing of the hybrid products.
At opposite ends of the spectrum are a low-cost disk and high-price updates (suitable only for very rapidly changing information) or a more expensive disk and cheap or free updates. Somewhere in between lie profitable niches.
Over the next couple of years the high capacity DVD-Rom format will offer new opportunities for directory publishers, and over the same period the Internet will also develop better transaction technologies, search engines and browsers.
As companies such as Graham & Whiteside show, electronic delivery is now not the province of the major publishers. Although print revenues will continue to sustain directory publishers for a few years to come, user demand will result in a rapid growth of the market for both CD-Rom and Internet delivery. As Maslen says: “Directory publishers will have to digitise or die!”