Support : Publications : Chronolog Archives : July/August 2001

Dialog Announces New Pricing Initiatives
DialUnits Revisions and Connect Time Pricing Introduced

Dialog has announced the first in a series of new pricing initiatives to be rolled out during the next two years in which Dialog will develop and implement new pricing programs and options across all three product lines—Dialog®, Profound®, and DataStar™.

"Since our acquisition by Thomson in 2000, we have reviewed our business model and listened intently to our customers," said Dialog President and CEO Roy M. Martin, Jr. "Our customers told us that our breadth and depth of content is unmatched in the industry, and have consistently noted our precision searching and response speed as competitive strengths of our products. However, they also voiced frustration with our current pricing model."

To address pricing issues, Dialog established a team of its senior executives to develop a long-term pricing strategy to make significant, customer-driven changes in the way the company conducts business. Customers have been involved throughout the process in advising and reviewing the changes being announced.

"A pricing strategy involves more than simply rewriting algorithms," Martin explained. "It drills to the very core of the value proposition of a company's product and content development, and matching them to customer needs. Over the next two years, we intend to create a palette of pricing options and to develop alternate charging mechanisms as we correlate price levels with customer value."

Dialog also appointed Brian Holland to the new position of senior vice president of pricing. Holland joined Dialog in 1998 as the general counsel. In his new role, he will lead the effort to examine, develop, and implement new pricing models.

Customer feedback indicated that frustration with Dialog's pricing began in 1998 with the implementation of significant pricing changes. Customer concerns have been centered on the manner in which these changes were made; confusion surrounding how Dialog's pricing works; a lack of predictability and standardization across Dialog's various product platforms; and a lack of choices. Additionally, customers have expressed concerns over the complicated nature of Dialog's current sales contracts. After further analysis of customer input, Dialog determined that the feedback pointed to two over-arching issues—trust and value--which will become the basis of its future approaches to pricing. "We are prepared to make the changes to our pricing which will restore customers' trust, revitalize our relationships with them, and make us an even more valued partner in their daily work," Martin asserted.

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Revising DialUnits

Dialog's first three pricing initiatives, announced in June, have signaled the beginning of greater choice and clarity for Dialog customers. The first initiative is the revision of DialUnits. Introduced in 1998, DialUnits originally were intended to combine a number of pricing elements into one transaction fee. Variable costs such as the price for content searched and CPU processing based on the complexity of the search were bundled into one fee. This allowed users to avoid lengthy connect time charges by establishing a price based on the unique nature of the transaction, or search. At the same time that DialUnits were introduced, Dialog eliminated its connect time option.

Currently, when users execute the same search on different Dialog platforms (DialogClassic, DialogClassic Web and Dialog®Web), results can vary, depending on how each platform processes some of the commands. Beginning in July 2001, Dialog implemented the first in a series of changes to DialUnits to create a more simplified measure of search activity and greater consistency across different Dialog interfaces. By October 2001, variability of DialUnits pricing will be virtually eliminated, allowing for significantly enhanced predictability of Dialog pricing.

"Fundamentally, DialUnits is a good concept whose implementation went awry," Martin commented. "It was introduced as a way to measure the isolated system load created by a user's request. DialUnits accrue only when a customer uses Dialog's system resources. It is essentially a measure of the processing resource. The processing fee (DialUnits) plus output charges are basically what make up the data charges for Dialog."

When using DialUnits, customers are not charged for their "think-time" online. They can consult help screens and Bluesheets, browse and view title lists, review search output, configure Alerts, and establish delivery options and user preferences, all without charge. Customers who search unfamiliar topics and browse results online are those who benefit greatly from the DialUnits pricing, and for whom DialUnits-based pricing remains a high-value option.

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Launching Connect Time

A second initiative addresses the issue of pricing alternatives. Although Dialog provides immeasurable value each time customers locate mission-critical information and data, Dialog has not provided pricing options for the products and services that deliver such data. Addressing this issue head-on, Dialog will launch connect time pricing in October 2001. Price levels for files and databases as well as other rollout plans are currently being evaluated. In customer feedback sessions conducted during the past few months, Dialog customers have widely supported plans to re-launch connect time pricing, an option currently offered on the DataStar product platform.

"In the recent past, we have provided only one pricing option for our Dialog customers--DialUnits," Martin said. "While we fully support the DialUnits pricing model, there are some cases in which it is not the best value-based option for our customers. The introduction of a connect time option will enable Dialog customers to choose among pricing methods tailored to their skills and search methods, as well as their search needs."

Customers who may find the connect time alternative more appealing would include those searching for a specific document with a known citation, title, or author or those with significant system expertise. With the DialUnits and connect time options, customers can choose between the "clock time" of connect time, which can be tracked by the minute, and the "work-time" of DialUnits, which can be estimated by commands used and actual searches conducted.

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Simplifying Contracts

The last of Dialog's first three initiatives announced in June is the simplification of contracts for all current pricing plans. "We realize that our contract language can be difficult for customers to understand," Martin explained, "and that can make it difficult to do business with us. We have evaluated our current contracts and have made them clearer and easier for customers to interpret. We will begin introducing the simplified contracts in July."

The three initiatives just announced are only the start of price enhancements at Dialog. During the next two years, Dialog will address customers' concerns with a series of methodical and structured changes to its pricing, supported and framed by frequent, continuous customer feedback. Under review presently are new discount programs that vary prices based on customer usage patterns, changes to the Dialog minimum fee program, and evaluation of different fixed price options for Dialog customers, including subscription pricing. "We are committed to making fundamental changes in the way we do business and to strengthening our customer relationships by establishing a foundation of trust, value, and understanding," Martin said. "As we continue to develop more alternatives, customers can expect to see additional pricing options introduced throughout 2002."

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