In this episode we start to break down the taboo around discussing money, and also discuss what libraries are paying for services, and what they get for that money. Let's start to making pricing around publishing and library products more transparent.Enter your text here...
Episode 2: Let's Talk About Pricing Transcript
Heather:
Welcome to the Common Stacks podcast. This is the show where we do deep dives into the conversations that move libraries forward, talking about ways that libraries breaking down the phrase, “This is how we've always done it,” and are adopting new ways of serving their communities. So I'm Heather and with me as always Rob and Drew, and we introduced ourselves last time. So I don't think we have to go through all of that. If you want to know who we are, you can listen to the first episode, but basically we know stuff about publishing and libraries and stuff like that, right?
Rob:
Guilty as charged.
Heather:
This week we're going to talk about pricing, and this is probably going to turn into a series, but we're going to start off with scratching the surface today and talk about library, database pricing, publishing, pricing, aggregator pricing, all of that kind of stuff.
And how libraries kind of are dealing with that, and what libraries need to know. And some of that will be useful for libraries, maybe negotiating in the future. That's the topic today, pricing: one of a series. So the first thing we want to talk about is why do people find it so taboo, to talk about pricing. This is something librarians don't really ever talk about is like, why are we paying what we pay for X, Y, Z product? We're not going to mention any names. So Rob you're nodding and smiling.
More...
Rob:
It's a great topic. I think pricing has always been a difficult often taboo discussion, no matter where you are in the supplier value chain, the discussion of price is always met with, “well, you can't share it,” or “this is your price,” or “you can't put it into a website or you can't show it.” It's even contractually restricted, right? NDAs nondisclosures. And that tone has never really been questioned or pushed back on. We have accepted it from day one. And I'm hopeful that the changes that are in the market today and technology is, bringing a lot of exciting things coming to publishing and content creation that we could lean in the right direction where pricing becomes more transparent. You know, one of the comparisons I'll give is the streaming consumer streaming industry, right. Before the Hulu and the Netflix and the HBO Max, all of the premium channels were bundled into your cable content package.
Rob:
And nobody really saw those prices. Those really didn't exist. You don't know if you got a good deal or not. You know, you knew you had a certain amount of money to spend, and it's either you got HBO or everything else. So we knew through bundles what the premium was. And I think that's kind of a residual in our publishing space with content creators. They know what their premium content is, but they tend to bundle it elsewhere. Think of where we are now with all of the consumer streaming services. I could probably go on my phone and find 30 different prices in relatively 10 minutes. I could open up my email and find solicitations. The challenge I put out there is, go find five price files on the open web for any publisher, and see if those prices make sense. There's just no middle ground in this area. It's so taboo. We can't even find examples of pricing we believe posted online.
Drew:
Two kind of like secondary or related, you know, one, a little humorous, one, one very serious. When I first moved to Brooklyn, and I realized it's not only socially acceptable to talk about how much you pay for your apartment, but it's a badge of honor. And even if you're paying too much, it's a badge of honor. If you're paying, you got a great deal, it's a great badge of honor. And I wonder what we could maybe learn from that kind of social experiment to approach, to maybe making it less taboo about talking about pricing. But the other thing that's really relevant right now to bring up is there is a huge amount of movement going on in, in, in the American workforce where people are now talking about how much their paycheck is with their coworkers.
Drew:
And, and it's getting a lot of, it's becoming a huge kerfuffle right? Like it used to be assumed that you just don't talk about that. Right? And that you're not allowed to talk about it, but, but spoiler alert, there's no law that says that you're not allowed to talk about that, and people are realizing it. And, and they're now pushing better deals for, for employment. There was an app that I came across about maybe six years ago called The Blind. And The Blind is a chat app that you log into it using your corporate email address. But your profile is completely airgapped. And so your company doesn't know who you are and your coworkers don't know who you are, but it was made for this exact purpose. And it was big in the tech space, right? Like Silicon Valley companies are all part of The Blind and you go onto The Blind and you could talk to your coworkers about what your, your bonus package is, what your benefit package is, what your, you know, and it allows for this, the shift to occur, looking into other industries to try to figure out what can we learn there and how can we do things differently? Here is going to be a great way to make this less of a taboo subject.
Heather:
And, you know, it occurs to me that a lot of costs associated with the libraries are transparent because it's public money. So you can go on and look at what library directors make as a salary, and what libraries are spending on things. And all of that is public and available. And you can look at different salaries and all of that kind of stuff. It's interesting that libraries, then a huge part of their workday then is dealing with companies and products that are the complete opposite, where it is so secret. And it is such a taboo. And it seems like such a disconnect there, that spaces that are using public money and stuff that, that you can't get that information easily. Like, what do you think about that?
Drew:
It's interesting that the interface between something that has so much transparency then butts up and aligns against something that is so highly obfuscated had it actually considered it in that way and that-
Heather:
And when there's tax money and public money that's being spent on that product, it seems like such a disconnect.
Rob:
Yeah. I always think this conversation gets complicated because, you know, what are the funding sources? We use the word, the market shifts because that is advantageous to the consumer or the buyer. We use words like, disruptive. Disruptive to me is the word used by the owner or, or the, the, the content creator or the IP holder. There needs to be a balance between what's disruptive and a shift. And, you know, to me, the end of the day is, are we in a balanced industry? And I think that is one of the questions regarding pricing transparency or discussions is we're not really in a very balanced industry, that we are very polarized where in one market segment, you have Content Creator A that dominates. And then in another market segment, you have Content Creator B or aggregator B that dominates.
Rob:
It's going to, at some point show that that model, or this mentality of pricing is taboo. And we can't talk about it. It's going to run out of space because, because a trend that I see right now is a lot of new tech companies popping up on the scene. They have direct to consumer pricing direct to patron pricing, direct to faculty pricing. Maybe that's going to be a, a shift for us to start looking at this. And a great question for our audience to answer would be, is it acceptable for any library to come to the conclusion that, you know, this product is really value, but we feel it's better paid for by the learner directly rather than the institution. And that seems to be a very difficult conversation, but is it a bad conversation? Is it, do we push people in that direction?
Drew:
You touched on Rob about like the, the direct to library direct, learner, right? Like models that, that a lot of these, you know, tech forward companies are offering, the, the part that is missing is that, like, you could have a great platform with the great, um, business model and great pricing structure, but if you're not a content creator as well, then you need to negotiate those deals with the content creators. And they're, I think afraid to put their content into these platforms because they're not necessarily sure how that's going to impact their business yet. Right. And so I think that's why there still is the, the obfuscation of, of pricing and the tucking away of things into bundles for profitability purposes and whatnot.
Rob:
So therefore it would be easier to start, and create either new technology or new content and be transparent from day one with pricing versus expecting existing or established content creators, to head in that direction, right. Is open access, making things more but transparent when, when it comes to cost and price. I don't know. I think it's still getting solid here, but it just seems to me, whenever a content creator makes a directional change, the first thing they do is, you know, put their privacy filter on price.
Heather:
I think this is a, a longer discussion too, of having about the, the taboo nature of price and talking about money. And I think you're right, or there is like this societal thing of being open to talking about what we make and what we spend on things that we probably need to have. But, you know, Rob just started talking a little bit about the different costs associated with things, and I think it would be useful for libraries, especially who might not have ever thought about some of the costs that publishers and database provide aggregators actually have. And I, I think going into just having a light touch on all of those different aspects that we see, we saw as consortia people who are in the middle there, we kind of see what it takes to, to put these products out for all of the different products that we would represent. Can we get into some of those, some of those costs that, that providers have that maybe we don't think about so
Rob:
Much? Yeah. I think we could scratch that today. Um, but it would be an ongoing topic, you know, it's interesting because I bought my TV, but I don't have to spend any more money on it. Um, I have to continue to pay to have internet access. Um, so I know that call cost and I also know my cost for who. And I think that grounds me when it comes to understanding value, keeping within a budget, but also determining whether or not I want to continue with the service or not that the awareness of what's coming out of the budget or my pocket to have access to content, maybe is the world specific to me in my house, but I don't need force streaming services. I've canceled it. I, I needed two or maybe one. Um, so I think it's maybe a personal thing.
Rob:
I, I would hope this can be a topic that we start to see show up in library programs and library schools, where the economics of information is talk or examined, or even put into an evaluation process. So costs are everywhere. And I think the biggest view from a consortium perspective or a licensing perspective is we always wanted to work with the content creator. Cause we knew who the royalties sat with. And traditionally that that's where the balloon cost is in the royalty and from a kind of building a portfolio perspective. we knew the differences in price. We knew the rate card shuffle, you might call it, because the royalty was king, right? Whoever held the intellectual property was the one who could control cost or shape cost. And to finish that out, you know, as we've shifted to, you know, an ed tech boom and software as a service, you know, what's up there now alongside of well what's, the royalty fee is, well, what's the bandwidth charge, what's the server capacity, right? And let's be honest. We both know if you have a pretty savvy technology sales individual. And they know that small library a probably is not going to generate a lot of server activity. That's where the pricing discussion comes in and that's where they can be so somewhat negotiable. So there are current targets and moving targets when it comes to price, they
Heather:
Say knowledge is power, right? So libraries, if they have this knowledge and they understand this stuff, I think it gives them a little bit more power in negotiating. So that's why I think the overall kind of point of this is to, to let people on all sides know where the costs are so they can, so they can come at it and reach pricing agreements from a knowledgeable perspective.
Drew:
Rob, you said something earlier on, um, that really struck a chord with me and, and I'm sure you guys saw me like digit and whatnot, but you were talking about the streaming services that you have in the house. Right? How do you measure the value that you receive that your kids receive know that your family receives from having those streaming services and how do you compare that value to the cost that you're paying for those, those services? We've talked about this a lot, right? We've talked about value, right? And so much of our conversation has revolved around the fact that like, everyone's talking about cost, but nobody's talking about value. Nobody has a way for measuring value. Maybe that's a way to, to help, to diffuse the taboo of talking about cost is to shift it back to value, right? Like, are you getting value from these products?
Drew:
Well, how do you, if you're getting value or not, right? How do you measure value? We want to shift the conversation of what's the value that your technology team is producing on a weekly basis. And how do you measure that value? And, and so in order to figure out value, you've gotta get out of your office and walk and sit with your customers and figure out are they enjoying your product? Are they getting value and helping them to figure out how to measure value? So I really want to, you know, peel the onion back on value as we're talking about these things as well.
Rob:
It is, it's a great question. And it's hard for me to come up with examples of where we have a healthy and robust, platform for people to talk about the, the value they get in products. Cause I think it's tied to cost and I think there's a suppression on talking about cost. So therefore there is reluctance to start to talk about value. Oh, I got a great deal, does not speak to value. And that just perpetuates the, taboo of, we don't want to talk about price and you know, that's why the, you know, HBO, you know, is very transparent with price because they realize once you find the value in it, you know, there's that dollar increase, you're not going to fight. And that $2 increase, you're not going to fight. And I drew, it's a great point because there's always pushback when the price goes up by a fixed annual increase. But if there was a focus on value and establishing value, you maybe that pushback wouldn't be there, maybe they would say, Hey, we're getting even more
Drew:
Valuable content. I love HBO H my, my time at HBO, I look back at that. So fondly, I was so I'm, I'm really proud of the work that I was involved with at HBO, right. We, um, the work that I was working on there was the content did distribution pipeline, right? How does HBO ingest content from not only their own studios, but the studios that, that we licensed content from edit that content create all the metadata required, the rights royalties and permissions show, um, cast and crew, um, metadata data, and then be able to then distribute that content to HBO go, or now max, um, to Amazon, to all of the streaming services providers out there in a cost efficient way, right? Because if we could do it in a cost efficient way, we could drive down the price. So it better aligns with the value that HBO subscribers are, are demanding to be able to get HBO max.
Drew:
Right. And so the thing that I wanted to talk about there is that, you know, back in the day, the day when I, um, you know, Ben Franklin had his printing press, right, there was a cost associated with that. He had to have a printing press. There was cost for the press, for the ink, for the font, right. For the paper. And at the end of the day, he would print out however many, you know, pamphlets he could generate in a day and he would go go to the town square and you would put them up on the town square, maybe, you know, hand them out. Right. But there really wasn't this idea of distribution yet. Right. And the, the demand didn't mean that he needed to create 10,000 units per day or whatnot. Right. Um, um, then the evolution of a publisher, you know, came about right then the evolution of a distributor.
Drew:
And so we're talking about a supply chain for a physical product right back in the day in a near term day. Now, um, the seventies, the sixties, um, if you had any of these products, the content products that we're talking about that were printed, you needed all of the along the line in order to get them to the libraries. Right. And now we're talking about a digital product and a digital supply chain is very different than a print supply chain. And so I'm going to lay this gauntlet down and just say that, like, one of the reasons why costs are probably high right now is that are still, we're still using the same mindsets, um, and approaches that we needed for a physical supply chain for our, our digital products. And, and that the, the thing that HBO got right, right. HBO was not a born digital company. Um, they cer certainly weren't like a, a Ben Franklin DNA, you know, print company. But, um, they looked hard and fast at their supply chain from a standpoint of how can we efficiently move digital content through, to all the places that we want to be able to distribute it so that we keep our costs low and align it with our value.
Heather:
So much of what we see in vendors, but also all over in the last 20 years is people, um, trying to replicate this physical world in the digital space, cuz that's like what we understand. Right. We understand these supply chains. We understand the idea of buying a CD or buying and, and not quite grasping yet how to price things where you don't have those, those costs where it's not like that. And, and it doesn't, it, it's not something that you just take the physical world and then say, okay, but we're going to call it a file now instead of a, a book or whatever. And, um, and I, I just wonder Rob really quick, you know, if I'm a library and I subscribe to X, Y, Z provider that say a big aggregator, like, what am I actually paying for? Like what, when I get that bill, what, what am I getting?
Rob:
<laugh>, it's a, it's a good question. And I don't think I've ever come across anybody. That's come to the table with some type of high chart graph that breaks down the dollars, going into a certain lines of the cost. And look, we're all relatively speaking of, you know, the, the print business rules, right. And, and, and how print business rules created print pricing structures and whether that's residue in the system or reality. I think it's both. but it is a great question, right? It's like how much of that subscription to, product includes underwriting live event costs, um, C -level compensation, keeping the VPAT current, so accessibility audits are done successfully. There are so many components to this there's royalty there's, product creation, marketing there's sales team compensation manager, compensation, there's marketing costs. Um, I'm sure there's legal costs.
Rob:
There's maybe royalties paid out to silent ownership in products that there are so many people, there are so many, ways in which those fees get cut out, that nobody I think has had the ability to clearly state, well, 50% is royalty or 20% is, is platform. And well, 5% probably goes to like product training or, you know, other components, but look, library infrastructure is a requirement in this space, right? You have to keep V AATS current, you, you have integration costs. You have to keep your knowledge base running. You know, you, you have to be in compliance with state standards for curriculum. You, you have to be, you know, in state regulations and procurement requirements. So it's really two sides, right? It's both the buyer and the seller. They both have a set of needs and costs. Um, but nothing really has been transparent. So it's, it's a really good question. And, and it's an area that we should dive into touching on that real quick, right? Like all of those factors that you put in there, the more platforms that you need
Drew:
To support you in a unique way, the more times you're going to have to pay all of those costs. Right. And so one of the things that I've noticed is that there's a ton of platforms out there, right? And there's, there's a ton of platforms that are owned by this same company. And we've talked about this before. I don't think I said it on podcast, but, you know, you could push, you could pull and you could lift, and you could do cardio. Those are the four attributes of any exercise, right? Um, there's lots of different names for fancy exercises, but if you distill any fancy exercise down, it all distills down into a push pull, lift, and cardio the same holds true in the digital space. Right? So if you think about like a search engine, there's only so many ways that you can interface with the search engine to be able to search for something, right.
Drew:
You can search for something, using different bullying operators, you can bookmark your searches, right. Um, you could add certain modifiers to it and whatnot. You could add a filter to that. You want to see results that are within certain date, date ranges. And, and so what I, I would propose is that we have too many digital portal products that are out there and that the costs are high because we're supporting so many of them. Um, we were talking earlier, in the day about the idea of, of, um, various rules around, accessibility, right. That might exist regionally, right? Whether that's domestically or internationally, and in, in the software space, what we realized is, is that rather than build platform as a monolithic structure, right. We now build software where using what's called a microservice. And so we would have an accessibility module, right. Or microservice, and that, depending on the region of the end user, it would apply the accessibility rules to that, that, um, instance of that user's login set.
Drew:
So that this way, if, if I logged in from the us, it would apply my, my us accessibility rules. If I log in from south America, it would apply those rules as well. Right. If I log in from south America, with the VPN and I'm tunneled into the us, then I would get the, the us rules. Right. And so, but the thing that that does is that if we want to update our accessibility rules, we just have to change the accessibility module for that one platform. Right. Um, and we don't have to do it for 20 different platforms. And that's true with so many things within these products.
Rob:
I think there's one issue that, you know, I heard subtly things alls about engagement, right? are, are people going to take, engage and take ownership of some of this content is, are these products configured optimally, are they encouraging, their community, their learners to log in and, and create an account, right. If, if research is done casually, then it's just a platform. But if there is a connection and there's personalization, that's going to keep people coming back to a certain platform. And I think that's why you're finding content creators that traditionally we're in 5, 10, 15 different distribution agreements, have their own platform. Now they have their own platform because they understand they are not a print public anymore. They have their own platform because they want to enrich their experience. They're investing and understanding their platform. When, when we first started out, print was transitioning to online and content creators or publishers, they certainly had no clue of what an interface would be like and depended upon the aggregator. So I do think there's a natural progression where content creators can look at technology and provide that individual with a fantastic experience, but also be able to monetize that revenue, advertising eyeballs. I do think it's a slow grab, but more content creators are coming to the table going, wow, we're controlling our experience and enriching our, you know, users, research by coming to our platform. Because we're creating that platform.
Heather:
Very good. So we are at, at half an hour right now, you guys, it has flown by, it has flown by. So to, you know, we touched on a lot of different things, but I, and we weren't sure when we started this, where, where we were going to go and we were going to see what happened. Right. And I think we, we touched on some important things around being open to talking about pricing. You know, maybe that something libraries could push back on these NDAs or, you know, say they want a little bit more transparency in their pricing and how the pricing is, is come up. How created, there we go, what, what the costs are, being able to understand what the costs are, what they're paying for. Um, and I think that's the next point that you, you talked about and, and drew talked about is just these costs that, that content providers have, that we might not even really think about the royalties, the server fees, the training, accessibility, all that kind of stuff that goes into pricing, these products. Um, so I think there's room for us to dig way deeper into this, into each of these different areas. But I think for right now that was a good kind of overview. What do you guys think?
Rob:
I think we were definitely, that was, the Vegas buffet of pricing. What effects pricing in this industry?
Heather:
There you go, hashtag vague buffet, vague buffet. Um, we'll end it there with some Rob, do you have any final thoughts?
Rob:
You know, I think the narrative really needs some injection of confidence. There needs to be a little more time in our day to talk about price, because once we get comfortable with this, I think the door opens to the discussion of value. And I think that's really important and will be a constant discussion in an endpoint in our conversations is we want to help libraries find value. We want to help content creators find value and to do that. We just have to get to some transparency, and overcome what's been a difficult space. So I'm looking forward to more conversations in, in extending the narrative as well.
Heather:
Very good. So thank you for listening for watching, depending on how you're taking this in and we will be back.