Pricing of Digital Information

The emergence and rapid growth of Internet has made it an important media for distributing digital products including computer software, stock quotes and financial information, news, books, journals, music, and videos, searching and online services. However, the distinctive characteristics of digital products, such as a significant investment cost to produce the first copy, low marginal production cost, low distribution cost, indestructibility, transmutability, and easy to reproduce, suggest that the traditional pricing policies (e.g., setting price equal to marginal cost) may not apply. Yet, little has been educated on pricing for digital products distributed over the Internet, and so far few businesses offering digital products have made money on the Internet.

New digital operations, provide significant other pricing options because they differ in terms of whether they maintain the existing content bundle, whether non-payers can be excluded from use, the types of experience they deliver and how they are used.

Digital media require significant new thinking because they tend to be joint and complementary products with print. These lend themselves to selling strategies of bundling and versioning that permit uses of bundle pricing, option pricing, multiple purchase pricing, differential access pricing, and inventory based pricing that have not typically been used in the newspaper industry.

Pricing is particularly complex in the digital environment because the number of price choices grow exponentially. In the print product managers price advertising and the circulation, but when they add an online product they have to make 8 choices because they are shifting to a multisided platform operation. If mobile, social media and other print products are added to the portfolio, one must give significant thought to the roles each plays in the portfolio and the interactions of pricing choices among them.

Although digital media use is growing significantly, companies need to be pragmatic in their investments and operations and their hopes for new revenue. Online consumption is still only about 10 percent of all media use and online advertising is still only about 13% of offline advertising. Those numbers are significant and rising so companies needs to seek and exploit opportunities in digital spaces, but managers cannot expect those to immediately replace the contributions of their legacy operations.

Customers are transitioning to electronic journals at a rapid pace. For example, 90% of Elsevier´s journal subscriptions in the academic and government market are purchased via ScienceDirect. With customized contracts based on specific parameters suited to content and constituency needs, these customers achieve savings ranging from 10% - 75% less than the same collection of titles at print catalog prices.

Print subscriptions continue to be an option, however as one example, only about 10% of academic and government customers rely solely on print subscriptions. Journal pricing is based on several factors and is evolving to meet changing needs. ScienceDirect offers the greatest opportunity for value and increased productivity.

•  Keynote speakers1st speaker:
Brian Jagt
Director at Deloitte Consulting

2nd speaker
Alexandra De Lange
Manager Strategic Business Models & Pricing at Elsevier

•  Schedule
13.30 - 14.00
Welcome

14.00 - 15.00
Deloitte
Insights on how to build an online Pricing model that support business strategy across different markets. Several business cases will be used throughout the workshop to provide you with direct applicable tips and tricks

15.00 - 15.30
Questions & Answers

15.30 - 16.30
Elsevier - Pricing of online scientific journals
Best practise sharing: Elsevier, publisher of scientific information for the STM (science, technology and medical) sectors introduced their online platform ScienceDirect in 1997. Since then Elsevier has migrated the majority their customer base from print to online subscriptions. This presentation will focus on the pricing structure that contributed to this migration and the challenges Elsevier faces today in the field of pricing of online content.

1. Elsevier and the scientific journals business
2. Elsevier’s pricing model
3. Strategic pricing challenges is Elsevier facing today

16.30 - 17.15
Interactive group session & experience sharing around desired outcomes.

17.15 - 17.30
Wrap up: Lessons learned +
Questions & answers

17.30 -
Network drink