Wednesday, April 29, 2009

Pricing Wrong for Black's Law Dictionary on iPhone

If you work in the legal industry and you're an iPhone user, you've probably picked up on the fact that Black's Law Dictionary is now available for the iPhone or iPod touch. You may also be aware that West released the new application at a price of $49.99.

This post is not intended as a feature review. For that, I suggest you link on over to Jeff Richardson's iPhone JD blog for his comments which went up this morning.

What I'm curious about is the price point chosen. I think it's too high, and not because West doesn't deserve to make a profit. In fact, I think they've missed profitability equation on this new product entirely. Let me explain why.

As Connie Crosby points out in the comments on this Slaw post, a firm that spends a couple hundred dollars on legal dictionaries isn’t going to increase their budget to thousands just because we are now able to tether a digital copy to a smart phone. If you price the print edition and iPhone edition the same, you are inevitably asking for comparisons to be made. It forces an either-or decision.

That's not what West wants (or at least not what I think West wants...). The goal should be to avoid media format competition at all costs; especially when the possibility exists of selling their IP twice, once in each format.

West could have skipped the whole ‘firm budget’ equation and moved this purchase into being a personal expense just by lowering the price point below $30. Had they lowered the price to a discretionary level, many lawyers would skip the firm paying altogether and picked up the bill themselves.

The key, I think, is to create new non-competing markets. West is far better off, both short and long term, with $25 apps on every lawyer’s smart phone, over shared copies of print products. Any firm out there, even a two-lawyer operation, will logically make the decision to resource share when possible - thus reducing the number of purchased copies. This part's simple math - create the demand for a lower-cost personal edition, and you create a larger & more lucrative market. Moving shared product purchases to personal product purchases is just good business for West.

But equally important to the profit equation is to not let digital content - iPhone apps included - exist only for business consumption. Lawyers are also consumers, and individual purchases made outside of work will be a growing market for legal publishers - but only if they are priced low enough. Price it too high, and the personal copy becomes a questionable decision.

Additionally, if law firms aren’t picking up the tab, they will still see value (for the short term) in keeping a few print copies around. For West, that means an opportunity to sell the same content in multiple formats. It also means the original print market isn't disrupted by forcing it to compete for the same purchase dollars.

My apologies to my fellow law librarians. I had my machevelian hat on in writing today's post. There's a fallout to this type of content pricing for libraries, both positive & negative, but that's better left for another day, another post... and unfortunately, it kinda brings back memories of the print/CD-Rom days, ie. potentially paying twice for modest amounts of innovation. Group subscription pricing models will inevitably come along, but when is difficult to say. Until that time comes, however, legal pubishers like West are simply missing out on a window of business opportunity.


Blogger Doug Cornelius said...

Steve -

I think they put the decimal point in the wrong place.

It is economics 101 for pricing. Too high a price and not enough purchase, too low a price and not enough revenue. But in the digital world, once they created the application the marginal cost for the next copy is close to zero.

It seems that West merely matched the print price to the app price.

Too expensive for me to buy on my own and not useful enough to charge the expense to the business.

12:17 PM  
Blogger Connie Crosby said...

Yes, in a world where many of us only download free iPhone apps, and I think twice about downloading a $1.99 application, pricing it at $5 shows it to be a "high priced" app and still implies high quality.

I think Steve nails it--they should want people to not think twice and download it as an impulse purchase. If it had been $5 I would have bought it just for the novelty and to be able to try it out.

11:38 AM  
Blogger FrameLegal said...

Agreed. The price is much too high. Seeing that you can get most quality apps for less than $5, $50 for BLD is absurd.

10:24 AM  
Blogger Erin Anderson said...

I completely agree with these postings. I was doing research regarding which law dictionary for my iPhone would be best and after comparing the Black's Law to Barron's, I decided to go with Barron's. It was $15 which is a much better price than BLD. I highly recommend it.

8:15 PM  

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