“Vertical” versus “service”: semantics, nuance, or dueling metaphors?

Andrew Savikas of O’Reilly Media and I definitely agree on some things, the principal one being that it is going to get harder and harder for people to get paid for content. And it is going to become more and more necessary for a publisher to be branded as “of value to the community” to have any business at all. But Andrew sees the governing paradigm as “service”, and he, sometimes very logically and sometimes tautologically, can explain content purchases as actually being service purchases. And, indeed, sometimes they are.

We all are prisoners of our experience and Andrew draws heavily on O’Reilly’s. O’Reilly is a unique publishing company because its audience — its community — is as tech-ept as the publisher itself. O’Reilly has a coherent product offering, which is, in and of itself, a “service.” It is also, in and of itself, a “vertical.” And that’s where Andrew and I differ in our interpretation of what we’re seeing when we look at the same thing. O’Reilly is actually serving a vertical (so we’re both right). But the question for the larger publishing world is, “which (”service” or “vertical”) is the real core concept?” Which is the one that best enables other publishers to visualize and build a business model that will work for them?

Of course, either paradigm breaks down if you try to suggest it is universal, and particularly that it is universal today. To defend the “nobody pays for content, just for service” meme, Andrew must attribute your willingness to pay for a movie as the price for a social experience, or the price of having somebody put it on a big screen for you and sweep up the popcorn that you spill while watching it. I’d say you’re just buying the content in different forms whether you go to the movie or rent the DVD, but that wouldn’t fit the meme.

The clinching metaphor in Andrew’s piece is that we aren’t actually buying food when we go to a restaurant (because, if we were, we’d just buy it at the grocery store.) This is tricky, because, indeed, you do want that hamburger cooked and served on a bun and you want a place to sit while you eat it and maybe some ketchup supplied. So, in fact, you’re buying both food and service. You wouldn’t patronize the restaurant if they didn’t give you the food, so it seems a bit of a stretch to say it isn’t what you’re buying!

But Andrew wants to explain a phenomenom he sees over and over again at O’Reilly: that they are able to sell their content even though it is available free in some other form. He sees the indispensible component that allows that to happen that the content is somehow packaged to be more useful and therefore performs a “service.”

I’d say the indispensible component is that O’Reilly has a trusted brand in a community, which means the community looks to O’Reilly for answers. That enables the company to sell their content in contextual ways that would not be accessible to a publisher that had the same content but did not have the same community attention, the same brand.

Andrew believes that service is what the O’Reilly customer “is paying for when they buy one of our Cookbooks (which contain “Recipes” for how to accomplish specific tasks with a particular computer language or technology, often culled and curated from material and techniques previously published in blog posts, mailing lists, or help forums). I asserted that rather than the content itself, people are paying for the preparation of that content, to the extent that it helps them solve their problems more quickly and conveniently. When you think about what we do as a service business, then it makes perfect sense: readers are paying us for the service of finding a bunch of great and interesting stuff, and putting it together in a convenient package. It’s the convenience of not having to find it themself, and the concise package that saves them from having to dig through a bunch of web bookmarks or search results.”

First of all, distinguishing between “paying for content” and “paying for preparation of content” is a pretty fine line. Every piece of content bought and sold in the history of man has been “prepared” in some way. Repackaging, recombining, and repositioning content — selling the same content with different preparation — is within the experience of every publisher of any size.

And it is also nothing new for content to provide a service (and, it is not necessary to be cute about it, like claiming it provides the “service of entertaining you.”) It isn’t a stretch to say that any Dummies book is providing you a service, just like any other how-to book. A book that shows you how to get start a corporation or get a divorce is providing a service. Those books had been around for decades before there was an Internet.

But how does the capability of O’Reilly to sell that content (as a service) look when viewed through the “vertical” lens? Like a natural, I’d say. When you’ve got the attention of a community, you can present the same things to them in different ways and at different price points, in context, because you are familiar with them and their needs in a very immediate way.

Andrew’s piece concludes with a lengthy quote by Kevin Kelly defending the enduring role of PSLs (publishers, studios, and labels) in a paragraph that starts, rather confusingly, with touting the value of two aggregators who are not Ps, Ss, or Ls (Amazon and Netflix.) The point to the graf is that creators (of content) need aggregators “for the distribution of the users’ attention back to the works.” Kelly and I are in solid agreement on that: the publisher’s main job (and “service” to the writer!) is that the publisher makes the user aware of the work.

So Kelly’s point, which is the final summation quote from Savikas, is about marketing, not about service. And marketing, as we have said repeatedly, most recently and elaborately in the Shift speech, is the reason that publishers have to get vertical.

The distinction between what Andrew is saying about “service” and what we say here about “vertical” is nuanced. Rarely can”service” be delivered broadly; it has to be targeted so vertical becomes a sine qua non. And anybody really trying to build a vertical will do it by offering service and tools, which they would hope would also lead to the ability to sell content.

Our vision has been that content should be used as “bait” to attract community members and, indeed, that services are a key component to keep communities involved. We believe that, before long, very few publishers who don’t have real brand identification to communities will be able to profitably sell content.

Without disparaging the notion that service needs to be a much more important component of publishing thinking that it has ever been before, I am still convinced that the “vertical” lens, rather than the “service” lens, is the place publishers have to start to understand how their businesses will be changing in the 21st century.

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