Real competition has finally arrived in the market for legal information. The existence of alternative product offerings from multiple sources has shifted the legal information market in Canada from a seller's to a buyer's market. Making matters worse from the perspective of a commercial publisher, although not from that of the legal profession, is the dramatic growth in the number of free sources of online legal information.
To simply stay in the game, commercial publishers will have to offer more content for less money. This shift in the nature of the business is something new in the world of legal publishing and presents a major challenge to all of the publishers. Canadian legal publishers are accustomed to charge on a cost plus basis, with regular annual price increases imposed on subscribers to maintain or increase profit margins and cover any revenue losses from declining subscription lists. Adapting to a world in which costs are fixed or increasing, while prices are stable or falling, may prove difficult for some legal publishers.
From "an occupation suitable for gentlemen" to big business
Not that long ago, legal publishing was considered to be an occupation "suitable for gentlemen". That was the message that I was given by a member of the Maxwell family of Sweet & Maxwell when I was originally hired by The Carswell Company Limited. Later, when I joined Butterworths, the final interview was over lunch at the Garrick Club in London. In keeping with the nature of the industry at the time, Canadian legal publishers rarely competed directly with each other head on, but preferred to specialize in particular product types or subjects in which the other legal publishers chose not to publish.
This genteel world came to an end when a handful of multinationals decided to buy up the smaller players and offer comprehensive collections of legal information online. The new owners believed in the future of online legal research as a commercial venture that would generate substantial revenue and profit. It was this belief that triggered the large investments that the major commercial publishers have made in the development of both the content and the technology required for easy online access to the legal information required for the practice of law in the modern era.
The shift from a seller's to a buyer's market
The belief in the commercial potential of online legal research is now being questioned. The success of the multinationals in creating one-stop sources of legal information has produced a situation in which real competition now exists for virtually all legal information products online, from aggregations of public records, to value added and secondary content. The legal profession no longer needs to purchase the same content from multiple sources to ensure that they have all of the information that they need, but can generally rely on the product offering of only one company.
The recent economic downturn has accentuated this trend as customers who cannot afford to buy multiple copies of the same content from different legal publishers make choices. In a video presentation shown at recent sales conference, competing sales reps from two companies were calling on the same customer, one after the other. With every visit, the customer was offered a better deal than he had just been offered by the sales rep from the other company. With each visit, the price got lower and lower. Ultimately, the two sales reps were offering to pay the customer to take their product. While a bit extreme, the video nonetheless illustrated a serious problem facing the industry.
Even more significant is the growth of the open access movement and free online access to public records such as court decisions and legislation. One of the most profitable parts of legal publishing has always been the recycling of of public records. The commercial value of that information is clearly less than it was just a short time ago. We are fast approaching the day when a customer will expect that public records are offered as a loss leader as part of a deal to acquire value added and secondary content online.
Is the shift a good or a bad thing?
One thing is clear, a major shift from a seller's to a buyer's market is underway, accentuated by the current economic conditions. Choices exist for almost everything. Many sources are free. No single supplier can expect to dominate the market as Quicklaw did in the recent past. Prices are falling as deal making replaces the passive acceptance of the "list price".
Is this a good or bad thing? From a customer's perspective, it means lower prices. From the perspective of the legal profession, it is less clear. Will major investment in new product development decline as online becomes a less attractive investment opportunity for the commercial publishers? Personally, I think not. Major investment in new product development will continue as forward looking individuals conceive of new ways of gathering and distributing legal information, and find the means to do so. It just may not be the existing players who get the job done.