Publishers are altering their CD-ROM strategies to take advantage of the Internet, seeing that CD-ROM no longer needs to be thought of exclusively as a standalone product. |
And for those publishers who really enjoy anxiety, there is also the tremendous growth of the Internet to consider. Many publishers don't claim to understand the Internet, its culture, or its offerings, but they know they need to have a "presence" on the Web, and they think that part of that presence should be directly tied to their CD-ROM products.
Publishers are altering their CD-ROM strategies to take advantage of the Internet, seeing that CD-ROM no longer needs to be thought of exclusively as a standalone product. Whether to increase CD-ROM sales and create new types of relationships with their customers or to extend the content of the titles outward, solving CD-ROM's limits of space, interactivity, and timeliness, CD-ROM publishers are increasingly pursuing the Internet as part of their publishing program. Though a visit to any computer retailer, bookstore, or direct marketing catalog yields only a smattering of hybrid titles today--InfoTech, a market research house based in Woodstock, Vermont, has counted some 350 or more by mid-1996 alone--the projections in the growth of CD/online hybrid titles can be quite spectacular. In fact, InfoTech, which has covered the industry for most of a decade, projects that there will be 3,500 hybrid titles by the end of 1997; other research houses seem less sanguine--Cowles/SIMBA estimates 640 CD/online hybrid titles for 1997--but the trend is clear. Fortunately, there are a variety of newer CD-ROM/Internet strategies to help both mark and navigate this path.
The emergence of a sense of urgency only highlights the basic questions: Why are so many publishers focused on creating hybrid titles? What strategies are the hybrid publishers trying to implement? And what are some examples of their implementation strategies?
Today's publishers seem to be reacting to one or more of the following stimuli: economic pressures, competitive pressures, product quality concerns, and strategic considerations. |
In as volatile a market as consumer CD-ROM titles, pressure from the distribution channels for the "Internet Ready" label could become a factor, of course. But today, publishers seem to be reacting to one or more of the following stimuli: economic pressures, competitive pressures, product quality concerns, and strategic considerations.
Darlene Stille, yearbook and online manager at World Book, thinks that although World Book will be including annotated Web links on its site, World Book Encyclopedia 97's competitive advantage in the 1997 edition will be the proprietary information included in its "Online Library" and "Our Century" Web site areas, which only owners of the CD-ROM will be able to access. The edition following Encyclopedia Britannica CD 2.0, from Chicago, Illinois-based Encyclopedia Britannica Educational Corporation, will also have an annotated Web-links feature as well as additional yearbook and other Britannica information, though its full-text Internet version will be kept separate and unlinked. Jim Oaker, Encarta's product manager, believes that what Encarta 97 will offer on the Web will help differentiate it from other encyclopedias: in addition to annotated Web links, Encarta offers an "Online Librarian" service, a Lexis/ Nexis-like service that Microsoft will be licensing from a third party; for a fee, Encarta owners can search for additional subject information in periodicals and other reference materials.
Publishers have largely emphasized multimedia enhancements over the past three years, with some of the best examples coming from Corbis. But asking customers to download lots of multimedia files from a Web site doesn't make much sense at current baud rates, according to Nana Quo, publisher at Corbis.
These same publishers may want their staffs to learn more about how CD-ROM and the Internet can work together and what their customers seek in an Internet site that complements a CD-ROM product. An early presence in the CD/online hybrid marketplace presents an alluring prospect to some publishers who are eager to position themselves for long-term gains from potential customers' anticipated expectations for CD-ROM/Internet links or Internet-only formats.
That lack of near-term payoff is all the more reason to consider new strategies. Publishers are increasingly turning to the CD/online hybrid title approach to amplify revenue, whether through selling more CD-ROM products by virtue of Internet enhancement, adding Internet-based ad revenues, developing partnership revenues, extending title shelf--and sales--life, building a franchise, or enriching the title value and experience in the hopes that the title with the higher perceived value will help enrich the publisher.
For example, many companies think they can sell more titles if the products are hybrids that include an Internet link, believing consumers perceive hybrid products as inherently better or more valuable than any CD-ROM-only counterpart. Some publishers who include an Internet component with their CD-ROM titles use their Web sites for selling more products; Discovery Channel Multimedia's www. beerhunter.com site enhances company sales through its connection with Discovery's Michael Jackson's World Beer Hunter CD-ROM title.
An interesting marketing twist for selling more CD-ROM titles is to use the Internet to induce, encourage, and seduce Web surfers into buying the CD-ROM. One mechanism is offering teaser information about the CD on the Web site. The Books That Work Home Improvement site, for example, offers some--but not all--of the information available to buyers of the CD-ROM/online hybrid title; in fact, if consumers want access to the full site, they must buy the Home Improvement CD-ROM.
Not that publishers in either the disc or the online camps necessarily think alike. Dave Arganbright, president of Danbury, Connecticut-based Grolier Electronic Publishing, the company behind The Grolier Multimedia Encyclopedia, believes that putting ads in his company's CD-ROM encyclopedia could hurt the perception of objectivity, a key criterion for customers choosing reference titles. Ads on an encyclopedia Web site, however, might not threaten the perceived objectivity of the product.
Some companies, such as Seattle, Washington-based Multicom Publishing and Books That Work, include ads, or "infomercials," in their do-it-yourself CD-ROM/online hybrid titles. Advertisers such as General Electric and Armstrong Carpeting view this kind of participation as a way of increasing traffic at their Web sites as well as stirring up interest in consumers, according to Brad Grob, vice president for custom publishing at Multicom. Grob points out that users of Multicom's Better Homes and Gardens Remodeling Your Home can see an "all GE" kitchen in 3D. Multicom even has an Index page ad for Equal sugar substitute--or at least a sponsorship, with the message, "This Index screen sponsored by Equal"--for its Better Homes and Gardens' Healthy Cooking. Multicom's Web site connection is only a connection point to its sponsors--no added content.
Books That Work provides connections to various supplier and handyman-helper Web sites with annotations made by the editors, and the company updates their Visual Home CD-ROM quarterly, always adding new sponsors. The Web links themselves, however, are not advertising-sponsored, (nor, seemingly, are other publishers' annotated links).
For some publishers, the challenge to determine what type of ad may be most appropriate and least intrusive. For others, the primary ad question may simply be whether to include any, given that CD-ROM buyers are not used to having ads on entertainment and information discs. Although Internet surfers are getting very used to encountering ads on the Web, many CD-ROM publishers are afraid of potential customer backlash or remain unsure about what to charge for what type of ad, placement, and frequency. It remains to be seen if most CD-ROM/online hybrid title publishers will have ads on their sites, assuming a clear business model emerges.
Creative Multimedia has been creative in its choice of partners from fields much further away than music. In their forthcoming Family Doctor 5, Creative Multimedia, through an agreement with Access Health, a medical insurance provider, will offer users the opportunity to buy an emergency health policy for about $6 per month. Creative Multimedia will benefit from each policy sold, although it remains to be seen if the medical insurance-on-a-disc does much to sell more CD-ROMs.
This loosely structured access strategy is likely to change, if for no other reason than that publishers understand the advantages of online signup with email addresses. Assuming consumers come to accept the practice of email advertising and marketing, this could allow publishers to send product updates and new title information via email, with a great cost savings over direct mail and telephone marketing. Microsoft, with their Bookshelf title, attempts to capture user names through its subscription sign-up service. Bookshelf customers are guaranteed a low price on the following year's edition if they register for the service; when the next version is ready to ship, customers will be sent a direct email piece notifying them and asking for confirmation, after which the disc--and the bill--will be sent.
One of the first consumer titles to supply online updates--albeit at a price--was Microsoft's Complete Baseball, which rolled out in 1994 with the promise of daily baseball statistics. The reality--which was no fault of Microsoft's--was the longest Major League Baseball strike in history, proving that not even the strongest strategies can guarantee success.
Game publishers are particularly eager to expand their franchise games and are now moving to CD-ROM hybrids as the next evolutionary step. Mass market consumer title publisher Electronic Arts (EA), in fact, is creating its next Ultima title, Ultima Online, as a CD-ROM-based game that can only be played on its "virtual world" Web site, which they plan to populate with eight kingdoms and thousands of simultaneous players. By having a chat function integral to the program, EA hopes to continue to build loyalty and camaraderie among its customers, as well as to create a game that can be expanded with additional kingdoms as needed. EA spokesperson Pat Becker says the company will charge for the disc and may also charge for online time--with additional revenue possibly funneled into the site through advertisements--when the product is released in early 1997. Consumer publisher Starwave introduced another hybrid title, Castle Infinity, at $9.95 with four hours of free online playtime included in the basic price. Castle Infinity players then pay $30 for unlimited game access.
The Voyager Company's forthcoming Witness to the Future not only features content that documents environmental activism, it also promotes actual participation in supporting the cause by incorporating links to Web sites such as Greenpeace, according to Trisha Bowers, spokesperson for Voyager. MECC enhances its children's title, Mayaquest, with real-world links allowing kids to email travelers actually taking the trip simulated in the title. This type of engaging activity adds to the overall experience of the product by encouraging active involvement with the subject.
One of the most element-rich hybrid products is Dorling Kindersley (DK)'s 1996 release, Eyewitness Virtual Reality Dinosaur Hunter. Bror Saxberg, DK's publisher, is not intimidated going into a popular category already populated by several commercially available CD-ROMs. DK is not only creating a CD-ROM with a Web site devoted to it--with a mind to "keeping options open in both mediums," Saxberg says--but is also including multiple-media elements in the product's package, among them a 27" long Stegosaurus model and a book. In addition to the disc's core material about dinosaurs and their environments, DK also includes such "extras" as the "Dino Store," where kids can copy various graphics for dinosaur envelopes, invitations, masks, and "keep out of my room" doorknob hangers. On the Dinosaur Hunter Web site, DK includes a retail Dino Store (dinosaur material to purchase), Dino news and puzzles, and other dinosaur-related learning activities.
In the preferred use strategy, publishers include a browser and service provider such as AT&T's Worldnet, Concentric, Netcom, or Earthlink. Although publishers taking this approach claim it is easier to hook up to the site using the pre-made solution which has been optimized for it, they acknowledge that customers might not want to change providers and therefore allow full access through another browser and/or service provider. On some discs, the software actually looks for existing browsers and asks users if they want to use the one found for the connection.
In the user's choice strategy, publishers provide no pre-made solution, though they usually supply a browser and service provider. These publishers assume that customers who would go on the Internet have probably already signed up with a hosting service. The Windows 95 version of Mindscape's Chessmaster 5000, for example, has a discrete and easy-to-use Internet installation routine. Microsoft's Cinemania 97 provides an Internet "wizard" to make the Internet setup trouble-free if the user has already configured Windows 95 correctly. As Jeff Kumins, Cinemania's product manager explains, the title's product team only wanted to make changes to the product that "the consumer could notice," and one of the key ones was easy installation of the consumer's own service provider and browser.
Internet service providers give publishers a small bonus and/or royalty if their CD-ROM hybrid customers sign up and stay on their services for a given period (generally two to six months, depending on the provider). Both publishers and service providers acknowledge, however, that the potential profits from this type of arrangement are small. Revenues from service providers are not the driving force; providing easy access to value-added materials is. Hence, publishers are not sticking to an exclusive or preferred choice strategy for revenue considerations but rather for the technology challenges and customer support needed to provide access to such difficult customer setups as AOL and its early browsers.
Users find out, however, that when they want to make automatic downloads, the routines will look for a designated primary DNS string five levels deep in the TCP/IP settings page. Many publishers will probably face a steep technical support curve for implementing totally seamless integration.
Other publishers have gone to the other extreme by providing a dedicated site to the title. DK's Dinosaur Hunter, for example, wants to have its site as the center for exploring the Web for dinosaur material. Byron Preiss, in Timetables of Technology, a new title created with Intel using Intel's MMX technology, will have its own Byron Preiss/Intel managed site.
To achieve this end, reference publishers who offer new or updated articles online sometimes include an automatic alert button that is placed on the CD-ROM product's interface after the material has been downloaded. Other publishers make "new material on your hard disk" buttons at the article level.
Sybil Parker, a publisher at McGraw-Hill, for example, says that some forthcoming CD-ROMs will have buttons connected to Web sites. Voyager has article-specific buttons indicating the URLs in its forthcoming Witness to the Future. Both Microsoft's Encarta 97 and Cinemania 97 have buttons at the article level which can appear or disappear depending on what has been downloaded or changed at the Web site. Encarta's buttons even indicate whether the new material is an updated article or yearbook material.
But the customers will catch up quickly, and by the end of 1997, CD-ROM/online hybrid titles will likely have made great strides beyond most such products available today, both technologically and content-wise. And the questions of why a publisher would pursue CD-ROM/online hybrid projects, or why so many in the industry are rushing to do so, will have been rendered largely moot. As John Mayo-Smith, programming manager at publisher Byron Preiss says, "A year from now, we won't be having this conversation."
Few would have guessed in the early 1990s that some good might have come as a by-product of CD-ROM's well-publicized and much-lamented lack of retail space and title market glut. But as the latest wave in electronic publishing approaches its crest in the coming years, publishers, retailers, and consumers alike will have much to gain from this strategic migration as an ever-increasing number of CD-ROM titles are enriched by Internet connections.
Byron Preiss Multimedia
24 West 25th Street, New York, NY 10010;
212/989-6252; Fax 212/989-6550;
http://www.byronpreiss.com
Corbis Corporation
15395 SE 30th Place #300, Bellevue, WA 98007;
206/641-4505; 206/643-9740;
http://www.corbis.com
Discovery Channel Multimedia
7700 Wisconsin Avenue, Bethesda, MD 20814;
301/986-0444; Fax 301/986-4827;
http://www.multimedia.discovery.com
Dorling Kindersley Multimedia
95 Madison Avenue, New York, NY 10016;
212/213-4800, 800/356-6575;
http://www.dk.com
Electronic Arts
1450 Fashion Island Boulevard, San Mateo, CA 94404;
415/571-7171; Fax 415/570-5137;
http://www.ea.com
Encyclopedia Britannica Educational Corporation
310 South Michigan Avenue, Chicago, IL 60604;
312/347-7952; Fax 312/347-7903
Graphix Zone
42 Corporate Park, Suite 200, Irvine, CA 92714;
714/833-3838; Fax 714/833-3990;
http://www.gzone.com
Grolier Electronic Publishing
90 Sherman Turnpike, Danbury, CT 06816;
800/285-4534, 203/797-3536; Fax 203/797-3835;
http://www.grolier.com
InfoTech
Box 150, Woodstock, VT 05091;
802/763-2097; Fax 802/763-2098;
infotech@valley.net
Macmillan Digital USA
1633 Broadway, 6th Floor, New York, NY 10019;
212/654-8500; Fax 212/654-4844;
http://www.macdigital.com
McGraw-Hill, Inc.
11 West 19th Street, 3rd Floor, New York, NY 10011;
212/337-5904; Fax 212/337-5038;
http://www.books.mcgraw-hill.com
Microsoft Corporation
One Microsoft Way, Redmond, WA 98052;
206/936-1260; Fax 206/883-7329;
http://www.microsoft.com
Mindscape
60 Leveroni Court, Novato, CA 94949;
415/883-3000; Fax 415/883-0337;
http://www.mindscape.com
Multicom Publishing, Inc.
1100 Olive Way, Suite 1250, Seattle, WA 98101;
800/850-7272, 206/622-5530; Fax 206/622-4380;
http://www.multicom.com
SIMBA Information
11 Riverbend Drive South, Stamford, CT 06907-0234;
203/358-9900; Fax 203/358-5825
Virtual Entertainment, Inc.
200 Highland Avenue, Needham, MA 02194;
617/449-7567; Fax 617/449-4887;
http://www.virtent.com
The Voyager Company
578 Broadway, Suite 406, New York, NY 10012;
212/431-5199; Fax 212/431-5799;
http://www.voyager.com
World Book
525 West Monroe Street, Chicago, IL 60661;
312/ 258-3700; Fax 312/258-3950
John O. Cole is president of Cole & Associates, a Stockton, New Jersey-based firm which helps publishers plan, develop, and market CD-ROM and Internet products. He has been in the electronic publishing business since 1982, when he helped form Grolier Electronic Publishing.
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