market facing digitisation

A MARKET-FACING VIEW OF DIGITISATION

25.03.09

Why Digitise?

What is your ROI?

The Product Development Cycle

The market for your content

How Consumers use Digital content

Bringing content to market

Costing the breakeven point for your content

Constructing a Business Case for your Digitisation project

ContentsContents

“In recent years, a growing understanding of the costs of digitisation, in terms of both time and financial resources, has placed a greater emphasis on developing digitisation initiatives and programmes which realise tangible and strategic benefits for the institution and its users, rather than opportunistic or short-term projects that are limited in their scope or focus.”

The trend for market-facing Digitisation...The trend for market-facing Digitisation...

Digitising Collections: Strategic Issues for the Information ManagerLorna Hughes

Facet Publishing

• Arts & Humanities Research Council changing priorities to place greater emphasis on user benefit and sustainability.

• Museums, Libraries and Archives Council (MLA) developing Digital funding programmes which require evidence of user demand.

• i2010 Digital Libraries Initiative places emphasis on Digital Cultural Content contributing to the Digital Economy.

• Digital Britain report emphasises the return on investment of public content and services driving Digital literacy and stimulating demand for Broadband.

Regarding public investment in Digitisation as capital investment which will generate both an economic and a public benefit return...

Funder priorities...Funder priorities...

Internal Drivers

•Confidence•Management•Preservation•Efficiency•Increasing access•Improving search/browse capability•Supporting education services

External Drivers

•Availability of Project Funding•Strategic/policy directives•Pressure from stakeholders/funders•Enquiries from users•Profile-raising

Why Digitise?Why Digitise?

These are unlikely to satisfy funders in future...the perception is that the Return on Investment on internally-motivated Digitisation isn’t sufficient, and that internally-driven projects lack a focus on delivering user benefit...

These are unlikely to satisfy funders in future...the perception is that the Return on Investment on internally-motivated Digitisation isn’t sufficient, and that internally-driven projects lack a focus on delivering user benefit...

What constitutes a satisfactory Return on Investment for your Digitisation?

•Whose expectations are guiding your project?

•What targets/PI’s are you working to?

•Are they qualitative or quantitative?

•Do you have a clear end-goal to work towards?

•What will you have achieved if you reach that goal?

•If project funding weren’t available for Digitisation, would you fund it from core? More so than stock purchasing or staff salaries?

What is your Return on Investment?What is your Return on Investment?

• Idea generation• Idea screening• Concept development & testing• Marketing Strategy• Business analysis• Product development• Test marketing• Bring to market• Evaluating

Ideas are generated based on the organisation’s objectives and what it believes about user demand.

Ideas are screened on the basis of the actual demand, the likely return on investment, the length of time to achieve a return and the state of the market.

The Product Development CycleThe Product Development Cycle

Reasons for developing products:

• To expand a portfolio of products and services• To replace products for which the demand is declining• To increase market share• To build competitive advantage• To attract new audiences• Diversify into new markets

Digital asset is a product – which of these reasons is driving your Digitisation?

What is the USP of your content which differentiates it from other digital cultural material?

The Product Development CycleThe Product Development Cycle

• A highly competitive industry spanning broadcast, publishing, music, press, film, mobile content platforms, games development

• Rapidly reaching saturation point – smaller providers tending towards integration

• Unit transactions are being replaced by downstream revenue, subscriptions, author-pays and a variety of other non-economic value transactions

• Widespread abuse of Intellectual Property undermining the principle of the economic right of the creator

• A traditional market: differentiating on quality, reach or niche

Which is your collection?

The Market for Digital contentThe Market for Digital content

• 98%/2% rule

• Our throughput is rarely sufficient to generate advertising revenue

• We do have a loyal user-base and access to a range of demographics

• We have a trusted brand

• We have expertise in curation

• Nobody is going to get rich on Digital cultural content

Monetising contentMonetising content

= ££?

Direct transactional:

• Subscription or one-off payment• Pay-per-use• Contributor pays

Indirect transactional:

• Institution funds• Corporate sponsorship• Advertising (Search, Display, Classified)• Philanthropy• Content/value exchange (barter)

Business Models for Digital ContentBusiness Models for Digital Content

Different modalities of use for different elements of a modern lifestyle

•Home-based leisure/entertainment content

•Content to support self-directed research and learning

•Mobile content, and context/location-sensitive content

•Device convergence leading to cross-platform content

•The reduction in barriers to entry and the rise of the prosumer

•Looking for content which is embedded into daily experience

•Tendency for content to be free at point-of-use or used as a loss leader

•Tendency to move from ‘sit back’ (TV) to ‘sit forward’ (Internet/console)

How Consumers use Digital ContentHow Consumers use Digital Content

The demand is fundamentally for content which works with the grain of user behaviours – embedded, integrated, free and available irrespective of context or platform...

The reality for the vast majority of libraries, archives and other cultural providers is that we don’t have the capacity, reach, infrastructure or resources to bring our content direct to market.

A big part of the future picture is likely to be working to supply mainstream media with content to be incorporated into public service broadcast and publishing.

How Consumers use Digital ContentHow Consumers use Digital Content

Content is nothing without a vector

The product is the end-user experience, which depends on the integration of content and platform (viz. iTunes, iPlayer, 4OD)

The current model is web-publishing, moving into web-syndication.

In future, a Digital asset is likely to be pretty useless unless it is packaged into a usable artefact and made available for delivery by 3rd parties – which means your costs go up.

A challenge to a sector in which PI’s and authority depend on bringing users into a controlled context.

Future funding is likely to be dependent on content being re-purposable (including licensing) by 3rd parties such as aggregators and content channels

Bringing Content to MarketBringing Content to Market

A traditional breakeven point is the point at which you have exactly covered the total costs of production through sales revenue.

It marks a critical transition from a liability to an asset

Balancing an equation between:

•Fixed costs (which don’t vary with production, eg. salaries, rent and rates)

•Variable costs (which do, eg. raw materials, scanner time)

•Revenue (the surplus of income over expenditure)

You can adjust a whole range of variables such as fixed costs, volume, period of return...

Costing a break-even point for your contentCosting a break-even point for your content

Costing a break-even point for your contentCosting a break-even point for your content

£

Units

Total sales

Total cost

• What is the cost of producing a Unit?

• What is the return (value) expected of each Unit?

• How many Units do you need to sell to recoup the total production cost?

Depends on:

• A standard product with a uniform value

• A measurable transaction

Or the per-unit calculation...Or the per-unit calculation...

• We tend to take fixed costs as read (or subsidised)

• Our upfront variable costs are dictated by project funding

• Our volume is usually arbitrary (or collection-specific)

• Our period is usually arbitrary (or project-specific)

• The total cost of ownership is (theoretically) perpetual

• Our Return on Investment is intangible

• The value varies between each asset

So...when is your Digitisation project successful? How would a funder know?

Except, in our case...Except, in our case...

• Use full economic costing

• Connect Digitisation with the ongoing strategic objectives of the organisation

• Monitor usage over time

• Prioritise value over volume

• Set targets based on known demand/patterns of use

• Assign a tangible value to each user interaction with a digital asset

• Assign a tangible value to the increased profile of the organisation

• Create a feeback loop leading to better-informed strategic prioritisation of digitisation resources

We can...We can...

Demonstrate:

• The need which triggered the Digitisation

• That the need originates from outside the organisation

• How your content is differentiated from other providers

• Your understanding of the total cost of ownership

• A realistic expectation of the return in terms of public value

• A strategic organisational commitment to sustaining the content

Constructing a Business Case for your DigitisationConstructing a Business Case for your Digitisation

Sustainability and Revenue Models for Online Academic Resourceshttp://www.jisc.ac.uk/media/documents/themes/eresources/sca_ithaka_sustainability_report-final.pdf

Digitising Collections: Strategic Issues for the Information Manager (Hughes, L)http://www.facetpublishing.co.uk/reading.shtml

i2010: A European Information Society for Growth and Developmenthttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52005DC0229:EN:NOT

Deciding to Digitise (JISC Digital Media)http://www.jiscdigitalmedia.ac.uk/crossmedia/advice/deciding-to-digitise/

Key referencesKey references

Contact...Contact...

Nick PooleCEO, Collections Trust

www.collectionstrust.org.ukwww.collectionslink.org.ukwww.culturalpropertyadvice.gov.uk

Nick PooleCEO, Collections Trust

www.collectionstrust.org.ukwww.collectionslink.org.ukwww.culturalpropertyadvice.gov.uk