readers have questioned what goes into the decision-making process as a
Web site begins charging a fee for what formerly was free, including how
site owners set pricing schedules. In the case of some search engines and
other popular sites, target Web sites can pay to improve their positioning
in search results or, sometimes, must pay to guarantee inclusion in any
form. The consumer may end up paying in more than money, but in lost quality
of search results. In any case, the trend is worth exploring.
In his January
28, 2002, article "Search Me/Doom Ahead for Search Engines That Charge
Listing Fees," Hal Plotkin [email@example.com]
notes, "Many Web surfers probably haven't realized it yet, but most of
the big online search and directory firms (with the notable exception of
Google) recently started asking for money from sites that want to be included
in their indexes or listings. The charges range anywhere from roughly $80
to $300, payable annually."
Less than a month
after Plotkin's article appeared, Google launched a new premium advertising
program, AdWords Select. "Adwords text ads appear on search result pages
when a query matches the keywords purchased by advertisers. They appear
to the right of search results, in small boxes labeled 'sponsored links.'
The AdWords Select program gives Webmasters an unprecedented level of control
over both placement of an ad, and the amount of an advertising budget spent
to maintain that placement.... Unlike other programs where the highest
bidder takes the top placement, Google measures click-through rates, or
popularity to help determine the position of an ad" ("Google Launches AdWords
Select," Searchday, no. 208 [February 20, 2002]; Internet; Available at
Last October, Overture
Services, Inc. (formerly GoTo), the leading provider of Pay-for-Performance
search to Web sites across the Internet, announced that it would provide
additional search results to the users of Ask Jeeves [http://www.ask.com].
Up to five of Overture's relevant search results would be placed in a more
prominent position on the Ask Jeeves results page, presented under the
heading "You may find these sponsored links helpful."
offers four different types of listing enhancements (logos, icons, custom
taglines, text links) that Webmasters can purchase for an entire site or
just for specific pages. Benefits and pricing for the subscription service
are described in Figure 1 from InfoSpider.com [see http://www.infospider.com/av/app/about_les
The recent decision
by Northern Light [http://www.northernlight.com]
to eliminate public access to its search engine (i.e., free searching)
and focus its efforts on enterprise customers was driven by strategic direction
as much as economics. A variety of joint venture activities, including
those with governmental and quasi-governmental agencies such as In-Q-Tel
the Central Intelligence Agency's independent, nonprofit company, should
keep the firm busy. (Early this year, Northern Light was acquired by Chicago-based
Divine Inc. [http://www.divine.com];
it remains to be seen how this will affect the product's development and
direction, but offices in Cambridge, Massachusetts, have already closed
and operations moved to a higher plane.)
Try to open up
and a pop-up message will appear on your screen: "WorldlyInvestor is no
longer available as a free site. However, the WorldlyInvestor columnists
and investment perspective will be offered as a paid newsletter ... if
investors like you are willing to purchase a subscription." You can begin
a 3-month trial of the biweekly e-mail newsletter for $7.50 per month.
14, 2002, access to The Motley Fool [http://www.fool.com]
discussion boards will cost $4.95 per month, or $29.95 per year. Thirty-day,
read-only trial memberships will be available. To assure that the active
and vibrant discussions continue from Day One, "over 1,000 complimentary
memberships to community members who have distinguished themselves in the
past" will be offered. The site will feature several enhancements, though
those listed thus far appear minor adjustments in terms of the number of
recommendations someone can make on any one day and the positioning of
promotional links. The creators assure members that dues will support the
continued provision of high-level service and the introduction of new enhancements
to the site over time.
For a comprehensive
and somewhat tongue-in-cheek analysis of why Netsurfer has shifted to subscriptions
(and how it settled on $20 per year), see "For-Pay Netsurfer Subscriptions:
Why We Did It" at http://www.netsurf.com/why_subs.html.
The move from free
to fee is often a gradual process. To test the waters, selected content
is sometimes made available to all and the remainder, often labeled "premium,"
restricted to "subscribers only." Transitions are enabled by the introduction
of reasonably priced tools, including password protection, list management,
and secure transaction processing. This article will explore the transition
process in general, with an illustrative case involving The Dismal Scientist.
Everything Is on the Web for
How many times
have you heard, "Just look for it on the Web, it's free"? Well, even if
the information was there before, it may not be now, or if it is still
there, the site may not allow you to access it. According to Peter Lyman
and Hal R. Varian of the University of California, Berkeley, School of
Information Management and Systems ("How Much Information?" http://www.sims.berkeley.edu/research/projects/how-much-info/internet.html],
the rate of growth for the "surface" Web is 7.3 million pages per day.
Some remain "as created," with no further enhancements or even basic maintenance.
Each year, sites
leave the Web (e.g., Contentville), not including subsites that all but
disappear as the parent organization is acquired and/or the content of
Web sites is merged. Domain names are not renewed or URLs change to something
quite different. How many times have you seen, "With much regret, we've
decided to close ____________.com, now posted at http://www.watchamacallit.com"?
During the past
year, several industry publications eliminated print editions, but, for
the time being, still maintain their Web sites. The Industry Standard suspended
print publication in August 2001, but the site remains available at http://www.thestandard.com.
How long before those sites become stagnant or are removed from the Web?
If you used a Web site in the past and can no longer find it available
on the Web, try searching the Wayback Machine on Internet Archive [http://www.archive.org]
to view its contents. (Links found on that archived page may no longer
"As the free alternatives
collapse, consumers will have nowhere else to go and will have to concede
that the free lunch is over." This is according to Steve Smith in "The
Free Lunch Is Over: Online Content Subscriptions on the Rise" (EContent
[February 2002], available at http://www.econtent.com).
One of the great
mysteries of the Internet Age has been how all those Web sites out there
sustain themselves. Well, as we know now, they can't always do so, and
the demise of a Web site may have nothing to do with how valuable users
found it. If its economic model is flawed and/or its marketing campaign
ill-conceived, all may be lost. According to Creative Networks Inc. [http://www.cnilive.com],
the average cost for establishing a Web site, including maintenance for
one year, is $109,000. After all, even free sites must pay their Webmasters.
Web Site Economics
In point of fact,
few Web sites actually pay for themselves, and their creators feel no need
to do so. They believe a Web site constitutes a necessary and integral
part of doing business in the 21st century. If viewed as a distinct product
of the organization with profit-and-loss distributed throughout the entire
line, some products may generate profit and others not. The pressure for
the Web site itself to yield significant profits would be reduced, though
obligations to minimize costs through effective use of resources (personnel
and technology) remain.
A great deal depends
upon the purpose of the Web site, why it was created in the first place:
To some extent, the
economics of Web site development and management depend upon the size and
type of organization behind it. A not-for-profit organization that publishes
a scholarly journal will have very different requirements for its Web site
in terms of design than a daily newspaper publisher. A large public or
academic library (or even a small one within a larger system) can draw
upon the skills of an IT department, as can a special library serving a
As a mass marketing
tool for products and services?
As a way of making
a particular audience aware of information sources concerning a particular
As a productivity
booster by easing the staff's day-to-day involvement with information product
delivery by streamlining and automating processes and management?
As an educational
opportunity for staff to learn new techniques, software, and tools for
Web site development?
As a sales tool, for
delivery of content itself?
In large part,
the type and design of the Web site will depend upon the audience it plans
to target and the competition it faces. Much of this is expectation-oriented:
Visitors to the Web site of a for-profit entity will expect a higher degree
of polish in the design than they would from a small, not-for-profit. They
will also compare one site with others that serve a similar purpose to
judge how it measures up. When the public pays for access to a Web site's
content, the bar for satisfaction in terms of quality, reliability, convenience,
attractive appearance, and incorporation of superior technology rises considerably.
Some content providers
receive royalty payments for the syndication of their content, made available
on other sites that have yet to create their own content, Web-based aggregators,
or even traditional online database vendor systems. Providers who believe
they have material useful to other Web sites covering their subject area
should investigate this potential additional revenue stream ... money they
might then use to subsidize their own Web sites.
a Web site, such as a library's, can come from groups outside a parent
organization. Development of certain portions of a site may be underwritten
through grants, "friends of the library" groups, or even library membership.
Success depends upon the development of partnerships, both on the supply
side (e.g., information providers) and the demand side (i.e., the customer
Ties to customers
will likely be strong — the loyalty factor — where customers have a longstanding
relationship with an organization and a stake in its success. As a known
quantity, if what is delivered online helps customers, they might see it
as worth an investment. One reason that e-mail newsletters are extremely
effective is that readers exploring the site promoting the newsletter have
already declared their interest in the content provided. These potential
subscribers are a self-selected group interested in an organization's work
or the specific topic covered by the Web site.
Web Advertising Realities
If a site requires
additional financial support, advertising is an option. As stated in the
March 2002 issue of Searcher ("Getting From Print to Online: A Searcher's
Advice to Publishers and I-Commerce Concerns"), Webmasters should "consider
the quality of the products and services being marketed and their relationship
to the information content being delivered," avoiding "those dynamic HTML
ads that float over the page."
In addition to
any banner advertising, Webmasters may embed buttons and/or text with links
into the left/right navigation bars. For example, look at the left navigation
bar for the New York Times on the Web [http://www.nytimes.com],
where one day's advertising buttons included Orbitz, British Airways, Half.com,
and Juno. This is an extremely effective way to establish "click-throughs,"
particularly if the sites promoted relate to the originating site's content.
The New York Times'
Web designers understand that utilizing ad space on their own site to promote
their products can yield results. The final advertisements on the Times'
left navigation bar this morning were for 50 percent off home delivery
of the Times and, as an example of affiliate marketing, "Pick up
your New York Times at Starbucks." One word of caution: While some
marketing gurus say, "Ads that don't look like ads work extremely well"
(Matt Mickiewicz. "Case Study: What's the Most Effective Advertising Vehicle?"
no one likes to get fooled too often. What is delivered still has to live
up to user expectations.
Those who think
that carrying advertising on their site will answer all their financial
woes may need to reconsider. According to Tig Tillinghast's ClickZ article
("Why Online Media Should Sell for Less than a Buck. And Why It Doesn't,"
"The advertising industry appears to receive an average of $0.387 cents
for 1,000 impressions after subtracting serving costs and the amount due
the site.... The cost of serving 1,000 ads ranges from about $0.30 to $1.00.
This saps the brunt of the revenue from sites."
to on a Web site will also require some additional expenditures in terms
of server hardware to handle increased site traffic in-house or outsourcing
the project to third-party servers and software. (For a comprehensive list
of ad management software, see AdResource at http://adresource.internet.com/software/management/0,1401,,00.html.)
A visitor to a
Web site may not even notice the ads displayed. It's the number of unique
visitors advertisers most want to capture, not the total number of clicks,
taking into account that people tend to be curious about what is offered.
Repeat visitors to the site skew the results. Those developing the ads
might be interested in the number of visitors who don't click-through.
Was the ad poorly designed, or perhaps the message is just not compelling?
An equally inaccurate
measure is the number of "hits registered every time a text or graphic
file is delivered, whether advertising is displayed or not... An intelligent
agent, or 'bot,' could automatically visit a site every hour and inflate
a visitor count. Variations on intelligent agents include 'spiders' and
'crawlers,' which are software programs that visit virtually every page
on the Web to create indexes for search engines, but cause overcounting
of traffic in the process.... If a banner ad is large, it takes longer
to load, giving the visitor a chance to move on to another page or site
before it is displayed — yet the impression is still counted" ("An Advertising
Primer: Terminology, Traffic, Statistics and Usage." AdResource, http://adresource.internet.com/primer/article/0,,301_200681,00.html).
Tools such as WebTrends
DeepMetrix' (formerly MediaHouse Software) LiveStat [http://www.mediahouse.com/livestats/index.html],
and NetGenesis' NetAnalysis [http://www.netgen.com]
can help collect and generate reports that, properly analyzed, can reveal
behavioral profiles of a Web audience, pointing out areas needing improvement:
Given the seemingly
low response rates for online ads, now estimated at less than half a percent
— with "click-throughs" averaging 1-3 percent of total impressions or page
views — why should advertisers choose to use the Web as a means of promoting
their wares? Consider:
Number of unique visitors
to a site
Total number of visitor
Average length of
rates: Does IE x.0 deliver more completed transactions than Netscape?
Revenue per customer
Who visits a site
and where they come from.
What visitors used
on a site and why they left (e.g., glitches in checkout?)
and buyers during subsequent site visits
Traffic driven from
affiliate programs and sites
As they track conversions,
Web planners should think in levels, looking at the number of completed
actions (registration forms filled-out in their entirety and submitted
online; sale of a product; article requested; etc.). They should compare
that with the number of unique click-throughs as well as total. This will
tell how many people showed interest (by clicking through) but never completed
the action (by filling out the form or purchasing an item). Advertisers
must also take into account post-impression conversions: "Those who view
ads and later head to a marketer's site by typing the URL into a Web browser
or finding it through a search engine are 60 percent more likely to repeat
their conversions than those who click the ad directly" (Engage Inc. "Summer
2001 Online Advertising Report," 12 July 2001. Summary available at http://www.emarketer.com).
the relative cost
of ad development and sales via other channels.
the benefit to an
organization in terms of perception by others (that advertisers are "up
with the times").
potential for increased
efficiency and for upgrading the skill levels of staff, e.g., elimination
of in-house manual entry of data, increased accuracy, improved customer
service response time for fulfillment.
ratios typically range from "0.5-5 percent, with the majority under 1 percent,"
according to reports on Doctor Ebiz [http://www.doctorebiz.com].
So, of 100 visitors coming to a site, fewer than five will complete a registration
form or sign up for e-mail notification of some sort, including newsletters.
To help keep track of the number of visitors, Webmasters can install a
counter on their home pages. (Find a selection at 1001 Free Webmaster Resources,
Will They Buy?
The question remains
as to whether these conversion rates hold true for those registered for
a free service delivered via the Web. Will people choose to step up to
the next level of premium service if it means paying a fee? Even if they
will not, "User fees will not replace ad revenues in any substantial way
anytime soon. Perhaps, most importantly, fee-based models are most likely
to succeed or fail on a case by case, brand by brand, and sector by sector
basis. The task at hand is not necessarily 'retraining' consumers across
the board so much as retooling content offerings and merchandising strategies"
(Steve Smith. "The Free Lunch Is Over: Online Content Subscriptions on
the Rise." EContent Magazine, February 2002).
Factors that come
into play in making these types of moves include the following:
For one case study,
look at the free Web translation and dictionary tool launched in 1997 by
In May 2001, the firm started a pilot project to convert free users to
paying customers at a modest $17.95 for a 1-year license and $44.95 for
a perpetual license. (A 30-day free trial is available.) "Babylon said
it hoped that 10 percent of existing users wouldn't jump ship. Twenty percent
of Israeli, Australian, and Swiss users decided it was worth paying, 13
percent from the corporate market and 7 percent from retail. Over half
of Babylon's user base uses the application at work, and from reactions
the company has received, it seems that many users went to their bosses
to get a license." So said an article in Wired by Tania Hershman
("How to Translate 'Free' to "Fee," January 22, 2002, http://www.wired.com/news/ebiz/0,1272,49646,00.html).
to a discussion have a higher conversion rate than non-contributors who,
in turn, have a higher conversion rate than first time visitors. Also,
active contributors will visit a site more frequently, yielding increased
Type of subscription
— individual or organization (enterprise-wide). Individuals may remain
convinced that information should be free (or, at least, must be out there
and available elsewhere at no cost). Those who act on behalf of an organization
may feel the time spent searching for it elsewhere can be better spent
and purchase a subscription.
Price points: Payments
made via the Internet tend to be at the lower range, with big-ticket items
sold offline. (Consumers who buy online now average about $300 per month,
according to the Forrester Research Online Retail Index [http://www.forrester.com/ER/Press/Release/0,1769,678,00.html].
Business-to-business transactions are difficult to quantify on a per-transaction
basis, but industry consultants peg the amount at around $1,000.)
The degree of competition
at that price point (or even a bit higher). For instance, if you have to
pay $2,000 per year for organization-wide access to economic data delivered
via a popular Web site, will you explore free alternatives, even if a bit
less user-friendly? Will you investigate the more prestigious economic
powerhouses formerly out of your reach, which now provide end-user access
via the Web for, say, $3,000 per year? Is the reputation of these organizations
worth the extra $1,000? Will registrants rethink their search plans and
step up to a slightly more expensive service, but one that offers special
The Commission Junction
"open marketplace: provides visitor-to-buyer conversion ratios on advertisers
and publishers." It reported a 3.2 percent average conversion rate in its
network between January and September 2001. The following click-through
rates (CTR) include banner, text, e-mail, and other forms of online advertising:
Commission Junction Network CTR: 1.9 percent; Industry average CTR: 0.24
Document Search [http://premium.search.yahoo.com]
makes Northern Light's Special Collection documents available for a per-document
fee (prices for most documents range $1-4) and also a subscription basis
($4.95 for access to up to 50 documents per month). (Please note that not
all of the publishers participate in the "premium content" package. For
a listing, see http://www.help.yahoo.com/help/us/ysearch/premium/premium-05.html.)
This is another
example of a "move away from the "everything is free" model supported by
Web advertising to a "pay for what you get" model that allows Web companies
to prosper without consumers feeling ripped off."
Determining What to Charge
and Creating Convenient Options for Payment
to charge for material on a Web site relates back to the reasons the creator
built the site in the first place, what the market will bear (which depends,
in large part on the target audience and what competitors charge), and
how much the Web site needs to make to break even or generate a profit.
Unique content (i.e., content not readily available on other Web sites
or, at least, not in the same form) can be sold for a premium. However,
there remains the psychological barrier for individuals who either believe
information should be free, feel they can find similar information for
free elsewhere (on the Web), or have privacy and security concerns in purchasing
documents or data online.
The type of content
and the target audience will help decide whether to make material available
through an annual subscription or individual transaction. Web-based services
that maintain a longstanding and intricate relationship with users, such
as members of an organization or "friends" of a library, may find an annual
subscription a good choice.
schemes tend to be labor-intensive and may require extensive automation
for companies short on manpower. Also, the issue of price points comes
into play: Individuals tend to feel okay about spending $2.95 on the Net,
but may want to handle larger transactions, such as corporate membership
fees, offline or through deposit accounts.
of being able to pay via the Web, combined with "instant gratification"
in terms of delivery (order fulfillment), makes online a good choice. However,
e-commerce sites must have adequate technology in place to meet the concerns
of clientele vis-à-vis security and the ability to verify and process
payments. To assure secure transactions in-house, you must have a Secure
Sockets Layer (SSL) Server. Proof of security in the form of digital certification
can be obtained from Verisign [http://www.verisign.com],
or GeoTrust [http://www.geotrust.com].
The notion of Web
currency seemed promising just a few years ago and may be popular for shopping
sites, but is not in use to any great extent for the purchase of information
(at the article or document level). The closest the industry has come to
establishing a service that specializes in these types of transactions
is Qpass [http://www.qpass.com].
In the past year or two, we've seen a definite shift in the focus of their
business to wireless ("account, payment and billing solutions for mobile
commerce"). It's difficult to predict how many other publishers will make
their articles or individual reports available to the public on a per-use
basis using Qpass.
has been used by some publishers selling newsletters to information professionals
over the Internet. Using PayPal, anyone with an e-mail account can send
money to anyone else with an e-mail account, provided they both are members
of PayPal. The sign-up procedure is painless: "You pick the kind of account
you want to draw money out of and let money flow into. Any credit card
or bank account will do.... Send money and your account is debited; receive
money and it is credited," according to Ted C. Fishman's Esquire
article ("Services Like PayPal Are Going to Change What We Mean by Cash,"
March 2001, http://www.esquire.com/themagazine/market/010301_mma_electronic_1.html).
The drawback is that buyers who are not PayPal members must leave the site
to sign-up, which may leave e-commerce sites losing some purchasers along
the way. Also, transfer of money into a PayPal account may prove difficult
in some countries, which can limit international sales. On the other hand,
PayPal is an attractive option for the merchant, since it has no set-up
offers the advantages of an affiliate program and allows shoppers to pay
easily using a credit card. Third parties, such as Willmaster.com [http://www.willmaster.com/master/ecommerce.shtml]
have developed tools to help automate ClickBank orders — and automation
is the key to cutting the time costs of online sales. ClickBank charges
a $49.95 set-up fee, but the flat 7 percent fee on sales is pretty high
compared to merchant credit card costs, especially when sales volume increases."
Access to free
content on the Web continues, with many sites offering premium services
to those registered; for a modest fee, some provide value-added services.
"is a free weekly newsletter covering developments and news in the world
of online research." For $20 per year ($15 for students, educators, and
librarians), you can get the regular ResearchBuzz newsletter e-mailed to
you, minus the advertising (which is really not obtrusive and often acts
as a helpful reminder to the reader); an "extra" edition covering news
and happenings in the search engine/online information world, as well as
more resources excluded from the free edition; plus an article covering
different aspects of searching. (For a sample copy, go to http://www.researchbuzz.com/extrasample.html.)
Many readers of
magazine will know about Free Pint [http://www.freepint.com],
the "online community of information researchers whose members receive
a 'free newsletter every 2 weeks packed with tips on finding quality and
reliable business information on the Internet.'" In addition to the biweekly
e-mail newsletter, registered subscribers can gain access to the archives
going back to 1997. Individuals considered "core subscribers" have also
signed up for the Bar Digest, a posting of Web-related questions and discussing
issues with other members e-mailed three times each week. At the beginning
of 2002, the newsletter had over 45,000 subscribers and the Bar Digest
had over 7,000. Currently, over 450 individuals have signed up for weekly
alerts to new jobs matching their profile in the Free Pint Jobs Database.
(There were 85 jobs listed in the database on 01/30/02.)
Free Pint's Pub
Crawl, a weekly round-up of articles covering a wide-range of information
and Internet-related topics, is delivered via e-mail to Free Pint "Regulars,"
as their Premium Service subscribers are dubbed. (Redistribution rights
can be obtained for a bit extra, and William Hann, creator of Free Pint,
has indicated that the redistribution license "has been taken up by many
corporations, government organizations, and business schools, as well as
individuals.") Mr. Hann remains somewhat puzzled as to why "few have taken
advantage of the 10 percent purchase discount and only a handful of Regulars
have added their profile entry to the Directory of Regulars." As with any
good product manager, he is rethinking the focus of the Regular subscription
service. The cost for this Premium Service is $85.
Services on some
sites remain free, but the Webmasters encourage donations, even suggesting
dollar amounts for contribution.
Some groups maintain
two sites running in parallel: one for free and one "For Subscribers Only."
This was the case for two Web sites covering the economy: The Dismal Scientist
and FreeLunch. Both were mentioned in the November/December 2001 issue
of Searcher, "Economic Statistics & Forecasting Data via the
Web: A Master List" (Table 5, Investing Plus!, page 66).
Economy.com's The Dismal Scientist
Network consists of Economy.com [http://www.economy.com],
a collection of data and analysis on the world's economy; The Dismal Scientist
providing economic analysis; and FreeLunch.com [http://www.freelunch.com],
containing a collection of free economic, financial, and industry data
series that can be browsed, searched, and downloaded. Underlying all of
this is a database of economic statistics, known as the Databuffet.
provides access to all of Economy.com's historical data. "Using only a
Web browser, users can choose among millions of economic and financial
time series without having to know mnemonics or databank names. Since the
entire system is Web-based, users never have to worry about software upgrades
or storage issues. Data can be downloaded into many formats, including
Excel, Access, XML and many other text files.... The historical datasets
... cover all aspects of the world economy. The databases include geographic
data for the U.S. covering National, State, Regional, Metropolitan Areas,
Counties, and ZIP Codes, as well as international coverage for Canada,
South America, Europe, Asia, and the Middle East. Sources range from government
agencies such as the Bureau of Labor Statistics, Federal Reserve, OECD,
and the Bureau of Census, to private firms such as R.L. Polk, Moody's,
The Conference Board, National Association of Realtors, and the Motion
Picture Association of America. All time series have the original data
source stored as an integral component of the series." A publication/database
update schedule is posted on the Web site indicating when each was last
updated and when the next update/email will be distributed [http://www.economy.com/dbase/schedule.asp].
Some have described
DataBuffet as a bit "clunky" to use, but this might well describe other
economic warehouses delivering data via Web sites. Paul Getman, president
and CEO of Economy.com, views the new Global Insight Inc. [http://www.dri-wefa.com]
entity that combines both Data Resources (DRI) and WEFA (formerly known
as Wharton Economic Forecasting Associates) as his main competitor. For
sophisticated data analysis, DRI & WEFA certainly have superior name
recognition, resulting in great credibility in terms of the marketplace.
Coverage of international economies must also increase for Economy.com
to compete head-on with Global Insight Inc. (GII).
between the two firms appears to be the target subscriber market. GII is
used primarily by companies which have ongoing requirements for economic
data and query the service on a fairly regular basis. The database underlying
the Economy.com Network and the price of its standard reports is really
designed for use by a company or individual with an occasional need for
specific types of economic statistics and forecasts. The new site is a
convenient one-stop shop from which to pull the data.
is the forecast equivalent of DataBuffet.com, offering forecast time series
covering the states, metropolitan areas, counties, and industries. Core
Forecast Databases are designed for clients who need access to broad categories
of forecast data on a regular basis. "Each month, Economy.com's staff produces
a consistent set of forecasts with a quarterly periodicity and a 30-year
forecast horizon for the U.S., all states, and 315 metropolitan areas.
Forecasts covering over 3,100 counties with annual frequency are updated
each quarter. Core Forecast Databases provide users with broad forecast
coverage of all major economic sectors: employment, income, demographics,
credit quality, residential, and nonresidential construction." Specialized
Forecast Databases (Detailed Employment & Output) have been developed
for clients who need a high level of detail. Data access is offered at
a fixed price that depends on the database and number of users. Industry
Services ! Buffet features highly detailed forecasts for employment and
output for the U.S., all states, and over 300 metropolitan areas.
is "to be the premiere destination on the Internet for anyone seeking high-quality
information, data, or products on the world economy." Its clients have
access to a staff of 35 economists (out of a total of 70 employees) via
phone, fax, conference calls, e-mail, and 2-day conferences held semi-annually.
(For those unable to attend, the conference books and presentation files
can be downloaded from the Web site.) The purchase of documents involves
some drilling down until you arrive at precisely the data or report you
need, but it's quick and painless — a simple "point-and-click" process,
with no chance of getting lost along the way. The order processing is smooth
and delivery near instantaneous.
Mr. Getman describes
the genesis of The Dismal Scientist in 1997 from being a marketing tool
for distributing reports issued by RFA ("a loss leader") that evolved into
a highly successful venture. (Certainly, the shift from RFA to Economy.com
as a corporate name is a move in the right direction.) With little effort
put into marketing, the business press began to highlight The Dismal Scientist
as an excellent Web site to consult. As word of the service spread, use
of the Web site increased, straining corporate resources. For a time last
year, in-house economists couldn't even get onto the system!
Arguably, it was
poor planning in terms of the amount of traffic the site would have to
support, but this seems the right way to transition "from free to fee."
As opposed to some companies that simply saw the Web as a money-making
venture, Economy.com appears to have needed to close its site to the public
to control "overuse." Subscribers are now assured 24/7 access to the databank.
At the beginning
of 2001, the decision was made to take the year to transform The Dismal
Scientist into a fee-based service. Forecasts as to the number and type
of subscribers were made and prices for access to the data were set. On
November 29, 2001, The Dismal Scientist converted to a paid subscription
site. Three weeks later, The Dismal Scientist was doing the level of business
the company had believed it would take a year to reach. (One hopes that
their economic forecasts are better than their predictions of Web site
If you seek economic
news, analysis, and data around the entire world, this was one of the best
places to go on the free Web. While the fee-based service promises expanded
"international and industry analysis ... additional tools and special features,"
its competition has now changed, and its target audience may demand that
the new site deliver what has been promised.
other free services may not have been so stiff. After all, anyone can put
up a Web site and say it's a good economic site. It took the public quite
a while to discover RFA (now Economy.com]. Competition may now come from
economic powerhouses that have been in the business of collecting and forecasting
economic data for years. The problem with powerhouses was always that you
had to buy access at a substantial price; the Web has permitted users to
identify and pay for precisely what they want each and every time. Improvements
have been made as these companies moved from legacy systems to the Web
and now pricing structures are beginning to reflect the new realities.
Perhaps the most
direct competition for Economy.com will come from EcoWin [http://ecowin.com],
a Web-based provider of economic and financial time series, to develop
a database of indicators and forecasts on major and emerging markets. EcoWin
has just teamed with The Economist Intelligence Unit (EIU), a world leader
in country analysis and macroeconomic forecasts. EIU will integrate its
international economic and financial forecast and historical data, EIU
with EcoWin's flexible time series data. The Windows-based platform will
better serve the needs of busy, networked executives by providing a single
source for retrieving, charting, and analyzing the latest market data and
subscriptions are quite reasonable and, if you found The Dismal Scientist
useful in the past, there is no reason why a charge of $16.95 per month
would stop you from subscribing. If your need for economic data is constant
throughout the year, you can save money on an annual subscription ($159).
Groups of 10 users pay $1,095 per year (only $110 per user), and site licenses
are available at $2,995 per year for up to 500 users. (That's $6 per user!)
On a cost basis, subscribers to any of the Economy.com products and services
get a true bargain.
Only 10 percent
of paid-service subscribers are individuals; corporate subscribers include
major investment, money-center, and central banks. The Dismal Scientist
now pulls in half a million dollars a year; another half-million comes
through the purchase of reports. Costs are low, with no salesmen required
to explain the database or contents of the reports. Credit-card processing
makes the sale of data and reports easy and convenient for both buyer and
seller. When data is downloaded in error or reports don't meet the expectations
of users, refunds are granted with no questions asked.
A seemingly separate
service — but appearances can be deceiving — FreeLunch.com [http://www.freelunch.com]
provides free access to over 1,000,000 economic and financial data series,
"which can be charted and downloaded in a number of convenient and customized
formats." Browsing the directory, you have your choice of 14 categories,
each extensively organized with subcategories that make sense to both the
economist and the layperson. The site's search engine is good, generally
yielding accurate results on the first try. Advanced searching is available,
limiting the search phrase to a particular state, date, frequency of data
release (daily, weekly, monthly, quarterly, annually, or all), and order
of results (MSA, start, > or < a year between 1900 and 2025).
Visitors are encouraged
to register for access to the site. Benefits of registering include access
to Research@Economy.com, offering "hundreds of analytical reports covering
a wide range of industry, macroeconomic, regional, and international topics.
In addition, there are thousands of preformatted historical data reports
available in Acrobat or Excel format covering all the states and U.S. metropolitan
areas, and specialized forecast reports on detailed employment and occupation
trends." Some of the reports are available free of charge; the others cost
from $20-1,000 apiece, with the majority of the reports selling at the
the day's economic releases, including the indicator and time of release.
Links for "Analysis" and "View Series" open a new window, as do "Hot Downloads"
and "Data in the News," and the new window is actually on The Dismal Scientist
Web site. Registered users have access to these data. They may also elect
to receive e-mail notification apprising them of the release of major data.
Time alone will
tell how The Dismal Scientist fares as a fee-based service. Management
remains confident that it can sustain this level of interest in its current
product as it explores improvements in terms of joint ventures, reciprocal
data arrangements, and the introduction of new economic reports. Joint
ventures such as with Consensus Economics, Inc. to deliver economic forecasts
is certainly a step in the right direction.
The decision to
move from free to fee should not be taken lightly. When made as a pure
business decision in terms of how the income generated could improve operations
and the products and services delivered, it can be viewed as a wise choice.
the scenes must be seamless and efficient, providing customers with convenient
and easy mechanisms to get at what they need when they want it, with a
minimum of effort. There is a psychological component to "shopping" online,
whether on a per-transaction or subscription basis, that requires further
study. What is clear, however, is that when a free site goes fee-based,
customers must understand why the decision has been made and witness promises
of improvement being honored. Sites will not succeed by simply instituting
charges for that which was once retrieved for free.
In today's competitive
environment, limiting use of the Web may not be an option for many Web
planners, but they must choose how to play in this neighborhood quite carefully,
taking into consideration the nature of the goods and services provided,
as well as target customer bases. Selection of quality partners for online
ventures — content, technology, transaction processing, sponsorship, and
advertising — is critical for success.
Have Technology, Too
now available that blocks some types of ads from appearing on-screen. For
example, Adsubtract software [http://www.adsubtract.com]
blocks banner ads, thereby speeding up the loading of pages onscreen."
To view a recent and appealing innovation, click on to the business section
of the Washington Post Web site [http://www.washingtonpost.com/wp-dyn/business/].
The banner ad at the bottom of the screen can be closed by a simple click
on the x.
Software that minimizes
the number of ads that pop-up on your screen can be found at Pop Up Stopper
[http://www.panicware.com], Pop Up Killer [http://software.xfx.net/utilities/popupkiller/index.html],
and Webwasher [http://www.webwasher.com]. If you find yourself on a Web
site that tries to block browsers equipped with "cockroach ad" killers,
just shut down the pop-up filter. For an interesting discussion of why
"Google does not allow pop-up ads" on its site, including a link to at
least "one program that attempts to detect and uninstall pop-up programs,"
For an overview of ad-blocking software, see Junkbusters at http://www.junkbusters.com/guidescope.html.
Some browsers permit
you to turn graphics off to speed up delivery of pages, sometimes replacing
a graphic banner ad with a text message. "Industry estimates place "graphics
off" browser usage at 6 percent," according to AdResource.
If the level of
purchases made through a site rises above what the site's owner feels their
technology and manpower can handle, they may outsource both the content
distribution and transaction processing. Assistance for e-commerce activities
is available through a number of different types of Web sites. Some will
act as hosts for your online store; others as your online bank.
For a step-by-step
guide to becoming eCommerce-enabled, including a comparison of Online Transaction
Providers, visit the eCommerce Guidebook at http://www.online-commerce.com.
began building Web sites in 1993, quickly establishing a catalog management
tool for displaying and describing products sold on Web sites. Bigstep
acts as a merchant account, accepting credit-card payments for items deposited
into shopping carts and managing incoming and outgoing orders.
will help set up an online storefront. In addition to the basic store,
premium services are available to help promote and manager commercial operations.
Card Processing [http://www.cardservicenewaccounts.com]
provides credit-card processing services for Internet business transactions.
Over 120,000 merchants currently use the service as an intermediary between
customers and their banks.
of Publications Available from Economy.com.
Acrobat PDF format, the three- to four-page products all have the look
and feel of an S&P tear sheet or Moody's Industry Review. Sample reports
from each of the services outlined are available for download from the
publication's Web page [http://www.economy.com/rfa/prodserv/<productname>.asp],
where <PRODUCTNAME> equals state, macro, industry, etc.).
outlines current and expected economic conditions of 10 countries, though
individual economic statistics and forecasts available in DataBuffet cover
many more. Each report covers a single country in detail, including a 5-year
forecast of GDP, employment, industrial production, trade balance, population,
prices, and exchange and interest rates. Short-term and long-term outlooks
appear in the written analyses; each country's strength and weaknesses
and forecast risks are also detailed. Reports are available for single
purchase ($200) or subscription ($500 for the current report + two updates).
The product may change slightly when Economy.com introduces its new World
provides a thorough coverage of the Canadian economy as a whole, four provinces,
and five of the top metropolitan areas, including 5-year forecasts, risks,
economic, and demographic indicators. Published three times each year,
this product is only available via the Web.
provides an overview of the U.S. and regional economies, financial and
international markets, labor markets, agriculture, business investment,
consumers, energy, housing, government, and forecast risks. Each chapter
includes extensive analysis plus four charts (with commentary). Recent
performance is illustrated through 250 economic and financial data points,
and a 5-year quarterly forecast for over 200 key variables appears in each
workbook. Published monthly, reports are available at $750 per report or
$5,995 for a year's subscription.
offers concise yet comprehensive research on the current and expected economic
conditions of 63 U.S. industries." Forecast detail for 40-50 financial
variables is included in each four-page report, updated three times per
year. Cost is $200 per industry report for single purchase; $500 per industry
offers extensive coverage of all major facets of the consumer economy.
Nineteen separate reports, each updated three times per year, include extensive
analysis of current and anticipated trends, charts with commentary, and
5-year forecast detail. The tables include approximately 150 economic and
financial data points. Cost is $200 for a single purchase; $500 per annual
covers the 50 U.S. states, plus the District of Columbia, Guam, Puerto
Rico, and the Virgin Islands, offering detailed reviews of the prevailing
economic conditions and 5-year forecasts for major indicators. Statistical
tables are presented in standardized format to permit easy comparisons
among states. State ranking tables for all states are included in each
report. Costs are $200 per state report or $500 per state subscription,
which includes the initial state report plus the two updates. Discount
packages are available for those purchasing 10, 25, or all 50 states.
covers U.S. metropolitan areas. Reports cover a single metro area in detail,
providing 5 year's data of gross metro product, employment, income, population,
housing activity, migration flows, and personal bankruptcies. "Written
analysis details the metro area's recent economic performance and short
and long-term outlooks. Each area's strength and weaknesses and forecast
risks are also detailed.... Each report includes regional and national
overviews, forecast assumptions, metro area ranking tables for all MSAs,
forecast tracking, and user's guide at no extra charge." Each report is
three pages in length. Cost is $200 per metro area report for single purchase;
$500 per metro area report subscription. Special rates are available for
packages of 10, 100, and all 321 areas.
the user to access the underlying data for any of these reports, selecting
their own regions (e.g., state, metro, etc.) or industry and criteria.
Reports are $200 and up, depending upon the number of data elements generated.
Review "covers the U.S. economy in all its dimensions: Macro; International,
Regional; and Industry.... The Review offers in-depth analysis of topical
issues highly relevant to business planning," such as e-commerce, the mortgage
credit outlook, and an examination of risk-adjusted returns by industry,
to name but a few. The discussion of major developments and changes to
short-term forecasts for states and metropolitan areas is supplemented
by over 60 tables offering historical statistics. Available at $1,295 per
report or $8,995 for a 1-year subscription (12 issues).
a joint venture product with Equifax [http://www.equifax.com]
"combines more than five years of credit data with key economic indicators.
The result is a unique online forecasting database of economic, demographic,
and credit variables. This allows you to examine, segment, and stratify
credit risk and economic data for over 232 geographic areas in the United