People have difficulty assessing the value of a non-tangible asset like knowledge. How does one grasp the breadth and quality of a knowledgebase contained in an encyclopedia, especially when it is built within a website and spread across thousends of webpages? Superficial as it may sound, the look of the book volumes of an encyclopedia served consumers as an easy and immediate cue to grasp the amount of knowledge in the series as a whole and in each volume. Of even greater import, a prospect buyer could turn pages back and forth, get impressed by the many entries in a book volume, and have a quick read or glance at drawings and photos to asses the quality of content. Turning paper pages in a book does not feel quite the same as ‘jumping’ pages on a website.

Now as before, one may gather additional information on the editorial board, choice of contributors, and the editorial process of the encyclopedia for greater assurance of the quality of knowledge it offers. But it is not certain that people have appreciation for  those assurances of the quality of content and expertise of contributors. Wikipedia, the free online encyclopedia, changed the way such a knowledgebase is constructed on the Internet and created much trouble for the old-class encyclopedias like Encyclopaedia Britannica. It has particularly put into question the value of the traditional editorial process of an encyclopedia.

On the other hand, digital technologies, first on CD-ROM and later also on the Web, introduced consumers to new features and associated benefits in searching for information and browsing content in encyclopedias. Such features include primarily search engines, advanced navigation tools (interactive graphics), hyperlinks, and multimedia capabilities like hearing soundtracks and viewing videos . The tools for using knowledge are becoming more valid sources of value that publishers are able to price rather than the content of knowledge.

Last month the Encyclopaedia Britannica announced that it was ending its print edition after 244 years since its establishment. The last edition is the 2010 version which contains 32 volumes and entails entries on contemporary topics as global warming and the Human Genome Project. From now 0n the publisher will concentrate on the web-based encyclopedia. The president of Britannica, Jorge A. Cauz, says it is continuously updated, is much more expansive, and includes multimedia (1). A DVD version is also available. Many if not most entries are already available for access free-of-charge on the Web. The paid-for online edition also offers, for instance, links to external websites trusted by Encyclopaedia Britannica, accsess to an archive of historical documents, atlas and maps, and statistics.

The Encyclopaedia Britannica takes pride in 4,000 experts carefully chosen by the editorial board for writing articles in their domains of expertise. Furthermore,  Britannica (as well as World Book or Groiler)  publish scholarly peer-reviewed articles as acceptable in academic literature. Wikipedia in contrast is a “crowd source” knowledgebase where almost anyone is invited to write an entry ; other members in the community of authors enter comments and corrections or may add information. The whole process is subject to approval by an editorial supervisor. Nonetheless, the inclarity regarding the credentials of authors sometimes shows in incoherent articles that are complex yet poorly structured, featuring occasional inconsistencies, and including frequent notes demanding clarifications or corroborative citations. Wikipedia often appears excessively dynamic to the extent that an intelligent reader may feel uncertain in relying on its information. Any encyclopedia is best referred to as an initial source for becoming familiar with a concept, but learners should then look for additional and more comprehensive sources of knowledge to develop their own knowledge of the domain and obtain more perspectives. With Wikipedia it is imperative to seek other information sources on the domain of interest (e.g., learning for general knowledge beyond a basic idea, writing a school/college paper, preparing a work project).

The advantages of the traditionally composed encyclopedias may be obvious to their editors and publishers but they seem to be much less clear to their audiences. Moreover, users of knowledge sources online are not so willing to pay for those advantages as information is abundant on the Internet for free and the users, especially the younger ones, lack either the skills for critics and scrutiny or the motivation to apply them properly.

The print edition of Britannica is offered for $1,400 [£1,200](2) and is purchased in recent years almost solely by institutions. The DVD version is sold for $40 [£40]! Annual subscription to Britannica Online stands at $70 [£50].  Even if we assume that a DVD is adequately accurate for three years, buying three editions over a period of 10 years will come to a nominal cost of £120, tenth of the price of a print edition which may be reliable enough for the extended period of time. Meanwhile, buying ten annual subscriptions to a continuously updated knowledgebase would cost us at present prices nominally £500. Take into consideration that the present value of payments made years ahead is lower than their nominal monetary values given above, that digital sources include many dynamic features unavailable in print, and that fresher information can be obtained online, then one realises how much less consumers are required to pay for the content of knowledge in Britannica in the new digital media compared with the old print medium.

Let us clear-up the price differences between media a little further. In the 1990’s it cost  $250 on average to produce a set of books (3). It has left approximately $1,000-1,200 of selling price to account for the value of knowledge delivered in Encyclopaedia Britannica. Scholars and experts have always been strongly interested in writing entries in Britannica, willing to receive just small fees. This can explain in part how it will have been possible in coming years to reduce the price to consumers. But if in those years  knowledge was possibly over-priced, now knowledge may become under-priced.

When Encyclopedia Britannica finally issued an encyclopedia in digital format on CD-ROM in 1989, it was done under the name of its “sister” Compton (i.e., in fear of diluting its own brand). The CD was provided free to purchasers of the print encyclopedia, but offered at a hefty price of $895 to those interested only in the new digital format (4). The cost of the physical CD is immaterial and so $900 may account for the value of knowledge (including writing, editing, plus configuring content in a digital, multimedia format). That was not received well by consumers who thought it was much above its value to them, and even more so under the name of Compton. Microsoft who were interested in publishing a digital encyclopedia, but not in writing one, were rejected by both Britannica and World Book before associating with a failing encyclopedia (Funk & Wagnall). And yet its multimedia CD-ROM Encarta sold successfully in the mid 1990 for just $100 (5) (it was also distributed as a free add-on to Windows). Lesson: Consumers were appreciative of the entertaining and user-friendly technology at least as much as the informational content of the encyclopedia. The result was a new low benchmark for the pricing of encyclopedias in the digital world.

Different methods can be considered for pricing encyclopedias online, each raising special concerns. For example:

• Subscription fee for a set period of time — The custom period is one year. Britannica offers however a short-term option of one month [£7]. It is sensible to allow subscribers to commit in advance to 2-3 years at a reduced rate as do some news magazines (e.g., Time, Fortune).
• Subscription fee for a fixed number of entries accessed — Entries may be reached via search or cross-hyperlinks. Note that people often examine multiple related entries during a single research assignment. A quota should be set below the number of entries users are expected to access during a given period of subscription (e.g., 3-month period) to make a periodic subscription attractive to the heavier users.
• Number of visits (“log-ons”) — Similar logic to setting an entries-quota yet more flexible. The duration of a visit when a user stays logged-on should be limited.
• Bundling with add-on resources — Britannica is already offering its subscription plan as a bundle with access to additional resources such as atlas and Webster dictionary. Another option is to allow choice between standard subscription to a restricted bundle and an enhanced subscription with a larger range of resources.

The apparent erosion in the perceived value of knowledge, as captured in particular in encyclopedias, and the consequent growing challenges in pricing its usage online call for careful and detailed research of consumer preferences, values, and willingness-to-pay for such knowledge-based services. A focal aspect of interest is the trade-off or balance in value between assurances for high quality and reliability of information and advanced tools for searching, navigating, and viewing articles. Due to the difficulty of consumers to evaluate knowledge, it is advised to use multiple research techniques to obtain and compare measures from several angles (e.g., Price Matching, Contingent Value Analysis, Conjoint Analysis and Choice-Based Conjoint).

We may need to recognize that most consumers are likely to value the contribution of scholar methods for achieving higher quality of knowledge less than the experts advocating them. For that reason it is especially important to segment consumers to  identify what groups of consumers (users and/or buyers-parents) have greater  appreciation for ensuring higher quality of content and willingness to make paid-subscriptions. That may prove essential to allow Encyclopaedia Britannica to sustain those methods for which they have won their high credibility and reputation.

When making its announcement in mid-March, Britannica had 4,000 sets of its last 32-volume print 2010 edition of its encyclopedia left in the warehouse out of 12,000 sets produced. But by the beginning of April 3,000 sets of the remaining stock were already sold. They were ordered at a pace of 1,o50 sets a week similar to the peak selling year of 1990 and compared with the slow recent pace of 60 sets a week (6). This late surge does not signal a return to the print encyclopedia; it is attributed to an awakened sense of nostalgia and an immediate opportunity some buyers may have identified in acquiring the print sets for making a fortune on them in future. Meanwhile, Encyclopaedia Britannica is said to be preparing to launch its mobile edition-app for iPad tablets at a subscription rate of $2 per month (7). That will surely make Encyclopaedia Britannica easier to carry around. However, with the effort to make it more accessible, more pricing challenges promise to follow.

Ron Ventura, Ph.D. (Marketing)

Notes:

(1) “Stop the Press: Britannica Abandons Print for the Web,” Julie Bosman, International Herald Tribune, 14 March, 2012

(2) Prices in $US are as published in IHT (ibid. 1) and posted in the US online store  of Encyclopaedia Britannica (store.britannica.com). Prices in £UK are as posted on the British online shop (britannicashop.britannica.co.uk). Please note that prices are not equivalent according to the respective currency exchange rates!

(3) “The Crisis of Encyclopaedia Britannica”, a case study at Kellogg School of Management, 2006 (accessed 12 April, 2012)

http://www.kellogg.northwestern.edu/faculty/greenstein/images/htm/research/cases/encyclopaediabritannica.pdf

(4) Ibid. 3

(5) Ibid. 3

(6) “Encyclopaedia Britannica’s Last Print Edition Has a Sales Boom”, The New-York Times Online, Media Decoder Blog (Julie Bosman), 1 April 2012 (accessed 13 April, 2012)http://mediadecoder.blogs.nytimes.com/2012/04/01/encyclopaedia-britannicas-last-print-edition-has-a-sales-boom/

(7) “Apple Power: Encyclopedia Britannica Takes Form of an iPad App”, techleash.com, 30 Sep. 2011 (accessed 13 April, 2012), http://techleash.com/2011/09/apple-power-encyclopedia-britannica-ipad-app/ (techleash.com is a UK-based blog on technology, social media and business)