Wednesday, December 05, 2012

Showrooming in the Knowledge Economy

In the knowledge economy, service providers often give away selected portions of their intellectual property, in the form of webinars, white papers, blogposts, free downloads or whatever. They then hope to generate revenue from other products and services. So the free IP acts as a kind of showroom.

Many knowledge consumers regard this as an open invitation to a kind of knowledge showrooming, surfing the web and mopping up enough pieces of knowledge to avoid ever having to pay for knowledge products and services. Meanwhile, most large employers have clamped down on all expenditure, so it is often easier for well-paid staff to spend several hours fruitlessly browsing the internet than to get approval for $100 to buy a report or a subscription.

(Meanwhile, many people have even given up reading real books, and some kids seem to expect to go through college without ever opening a book, hoping that they can make do with the garbled summaries they can find on Wikipedia and elsewhere. Unfortunately, this tendency is reinforced by the fact that an increasing number of real books seem to have been researched in the same way.)

I confess that I have avoided paying for things sometimes. For example, if I can find a working draft of a paper online, I am generally reluctant to pay to read the final version, especially as (a) it may be almost indistinguishable from the draft version and (b) the author is unlikely to see any of the money.

Here's an example of knowledge showrooming. Supposing you want a method and a tool and some templates and some training and some support. If you get them all from the same company, you should expect to pay for at least some of that. But if you can find one company that lets you download a free software tool, and a second company that publishes its method on its website, and a third company that is offering free training events (probably funded by companies that are trying to sell tools and methods), this seems to offer a tempting solution.

Of course, having spent several hours finding this stuff, it may take you a lot longer to get all these disparate pieces to work together; and even if you succeed, your productivity using this mashed-up solution may leave a lot to be desired. However, time is generally valued less than money, so many knowledge consumers and their bosses may be quite satisfied.

On the supply side, given that there is absolutely no prospect of any agreement between knowledge providers as to which elements should be free and which should be charged-for, knowledge providers are effectively undercutting each other.

(I have unhappy experience of this myself. In the late 1990s, I developed a detailed methodology and associated training for developing component-based business solutions. Although I did sell some training, the software vendors started giving their methodologies away for nothing, in order to sell greater volumes of software. Even though I thought my methodology was better, I just couldn't compete with free.)

Universities are now struggling with the implications of publishing lecture notes and other course materials online. Does this undercut the value of a real degree? Or can they construct some kind of remote/online learning experience and expect to charge serious money to distance learning students?  @RogerShank is sceptical, and so am I.

Roger Shank, Why are universities so afraid of on line education? (November 2012)

See also my post Showrooming and Multi-Sided Markets (December 2012)

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