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September 06, 2010

On funding and sustainable services

I write this post with some trepidation, since I know that it will raise issues that are close to the hearts of many in the community but discussion on the jisc-repositories list following Steve Hitchcock's post a few days ago (which I posted in full here recently) has turned to the lessons that the withdrawl of JISC funding for the Intute service might teach us in terms of transitioning JISC- (or other centrally-) funded activities into self-sustaining services.

I'm reminded of a recent episode of the Dragon's Den on BBC TV where it emerged that the business idea being proposed for investment had survived thus far on European project funding. The dragons took a dim view of this, on the basis, I think, that such funding would only rarely result in a viable business because of a lack of exposure to 'real' market forces and the proposer was dispatched forthwith (the dragons clearly never having heard of Google! :-) ).

On the mailing list, views have been expressed that projects find it hard to turn into services because they attract the wrong kind of staff, or that the IPR situation is wrong, or that they don't get good external business advice. All valid points I'm sure. But I wonder if one could make the argument that it is the whole model of centralised project funding for activities that are intended to transition into viable, long-term, self-sustaining businesses that is part of the problem. (Note: I don't think this applies to projects that are funded purely in the pursuit of knowledge). By that I mean that such funding tends to skew the market in rather unhelpful ways, not just for the projects in question but for everyone else - ultimately in ways that make it hard for viable business models to emerge at all.

There are a number of reasons for this - reasons that really did not become apparent to me until I started working for an organisation that can only survive by spending all its time worrying about whether its business models are viable.

Firstly, centralised funding tends to mean that ideas are not subject to market forces early enough - not just not subjected, but market forces are not even considered by those proposing/evaluating the projects. Often we can barely get people to use the results of project funding when we give them away for free - imagine if we actually tried to charge people for them!? The primary question is not, 'can I get user X or institution Y to pay for this?' but 'can I get the JISC to pay for this?' which is a very different proposition.

Secondly, centralised funding tends to support people (often very clever people) who can then cherry-pick good ideas and develop them without any concern for sustainable business-models, and who subsequently may or may not be in a position to support them long term, but who thus prevent others, who might develop something more sustainable, from even getting started.

Thirdly, the centrally-funded model contributes to a wider 'free-at-the-point-of-use' mindset where people simply are not used to thinking in terms of 'how much is it really costing to do this?' and 'what would somebody actually be prepared to pay for this?' and where there is little incentive to undertake a cost/benefit analysis or prepare a proper business case. As I've mentioned here before, I've been on the receiving end of many proposals under the UCISA Award for Excellence programme that were explicitly asked to assess their costs and benefits but who chose to treat staff time at zero cost simply because those staff were in the employ of the institutions anyway.

Now... before you all shout at me, I don't think market forces are the be-all and end-all of this and I think there are plenty of situations where services, particularly infrastructural services, are better procured centrally than by going out to the market. This post is absolutely not a rant that everything funded by the JISC is necessarily pants - far from it.

That said, my personal view is that Intute did not fall into that class of infrastructural service and that it was rightly subjected to an analysis of whether its costs outweighed its benefits. I wasn't involved in that analysis, so I can't really comment on it - I'm sure there is a debate to be had about how the 'benefits' were assessed and measured. But my suspicion is that if one had asked every UK HE institution to pay a subscription to Intute not many would have been willing to do so - were that the case, I presume that Intute would be exploring that model right now? That, it seems to me, is the ultimate test of viability - or at least one of them. As I mentioned before, one of the lessons here is the speed with which we, as a community, can react to the environmental changes around us and how we deal with the fall-out - which is as much about how the viability of business models changes over time as it is about technology.

I certainly don't think there are any easy answers.

Comparing Yahoo Directory and the eLib Subject Gateways (the fore-runners of Intute), which emerged at around the same time and which attempted to meet a similar need (see Lorcan Dempsey's recent post, Curating the web ...), it's interesting that the Yahoo offering has proved to be longer lasting than the subject gateways, albeit in a form that is largely hidden from view, supported (I guess) by an advertising- and paid-for-listings- based model, a route that presumably wasn't/isn't considered appropriate or sufficient for an academic service?

Addendum (8 September 2010): Related to this post, and well worth reading, see Lorcan Dempsey's post from last year, Entrepreneurial skills are not given out with grant letters.

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Comments

Whilst it would certainly be unwise - and counterproductive - to unleash the full weight of market forces upon the selection process for future JISC-funded projects, there's probably value in ensuring that reviewers at least pause for a moment to wonder WHO will use something, WHY they will use it, and whether there's a good reason for the public sector to underwrite the work in the first place. That good reason could be anything from 'the area is too new/risky for the private sector to engage' through 'this is core infrastructure that the community needs to have built' to 'I could take or leave the service, but building it will address the following questions, which are quite interesting.'

Not everything needs to be 'viable' according to the subscription test you proposed above, Andy... but we certainly do need to ensure that we don't waste finite resources needlessly duplicating the efforts of Google et al.

Good post.

I remember in the days of the RDN someone (high up) saying they didn't think there was much future in Internet advertising, and that it would be a passing phase.

Not that advertising could have paid for the RDN/Intute, but it was a sort of mindset that influenced things.

Very early on in the ticTOCs project I had a plan to introduce adverts from journal publishers, and for these to eventually become very targeted adverts, given that ticTOCs would know the interests of particular users through the TOCs they stored. And given that journal publishers would benefit from a successful ticTOCs service. Every member of the ticTOCs Board, apart from myself, thought this was not a good idea.

There seems to be something about advertising that many people involved in JISC projects seem to think is dirtying their hands, or beneath them, or whatever.

When a JISC project ends, the funding usually ends abruptly. If a small amount of continuing (for a period, anyway) funding was sometimes available, it might help some projects transfer to a more commercial basis.

Six months, a year, or even two years is often not long enough to build a project, write all the reports, attend all the meetings and so on, plus build a big enough user base to transform into a viable non-public-funded service immediately after the funding finishes.

We have ideas to transform JournalTOCs http://www.journaltocs.hw.ac.uk/ into a much more popular service which could eventually be maintained through advertising, but there are currently not appropriate Calls which will allow us to do this. As a result, JournalTOCs crawls along, barely maintained.

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