Introduction NCRI conducted a Future Mapping® workshop May 14-15, 1997 to address several distinct alternative scenarios for the evolution of the information content and services industries. Workshop participants included thought-leaders in the publishing, computing, information services, education, consulting, and software industries. New digital production technologies, combined with rapid growth of global data networks (such as the Internet), rapid price/performance improvements in storage and processing capabilities, and new security and rights protection systems promise to fundamentally alter the industry environment. Traditional distribution chains and value propositions are already beginning to be challenged as both new and old industry participants experiment with business models that were previously inconceivable. These structural changes will likely result in a new mix of traditional and transaction-based business models, including new forms of advertising and cross promotion. The rapid pace and uncertain outcome of both technological and business change across all information content industries present new management challenges, and require new ways of thinking about the future. To develop these new models and manage in this complex, rapidly changing environment, thought leaders and business unit managers need powerful tools that can help to drive the development of appropriate strategies and action plans. Future Mapping® is a scenario-based planning tool for understanding the dynamics of industries in the throes of change. This past May, executives and met in Boston to participate in a Future Mapping workshop on Information Commerce. Northeast Consulting Resources, Inc. (NCRI) has been conducting this public workshop, The Future of Information Commerce® (formerly, The Future of Publishing®) for the past seven years. As NCRI continues to work with clients in this arena we are aware of how rapidly the industry is changing, therefore, we entirely reworked the materials used in the public workshop. This year, the scope of the workshop was dramatically increased to include the electronic delivery of all forms of entertainment--movies, music, interactive games--as well as business information and financial services. Key Learnings Group discussion at the Future of Information Commerce® workshop highlighted the following issues and beliefs about the future: Major advances in Internet technology and function are virtually inevitable. These improvements are likely to erode the passive entertainment consumption paradigm (and accompanying advertising-based business models) that characterize traditional consumer "TV culture" in the U.S. An explosion in broadband technology and multimedia content, and a corresponding melding of new content forms and individual creativity will occur eventually. Full evolution of this model however, will likely take decades, as it depends, in part on the evolution and acceptance of new micropayment mechanisms such as digital cash. Editing, aggregation, and other value adding services will likely become as important as the creation of original content. Obstacles to on-line transaction security are more perceptual and habitual than technical. Content vending schemes that combine network and physical media (e.g., compact discs customized at point of sale) have been tried and have failed in the past. New attempts would need to offer compelling value to both content owners as well as consumers in order to be viable, and are unlikely to capture more than 10% market share in any case. Superdistribution will evolve more rapidly than many currently believe, and will be an important mode of distribution (and revenue source) for some forms of content in the future Background In the Future of Information Commerce® workshop, facilitators provided participants with descriptions of four alternative endstates. Each described the information commerce environment in the year 2002. Participants also worked with a diverse information base of 150 possible future events in the context of several structured, highly participatory, team exercises. Participants created new events based on their own experience and expertise. After a presentation describing the conceptual foundations of the Future Mapping process and the endstates, each participant joined a team. The teams were asked to complete a number of tasks. First, they selected events which they believed to be either highly likely or highly unlikely to occur. This exercise made explicit the conventional wisdom of workshop attendees. In the second exercise, each team advocated and defended one of the endstates. Each team worked to analyze the key events that must (or must not) occur for its endstate to come about. This exercise forced team members to think proactively about what it will take to make the industry evolve toward one particular endstate rather than another. It had the effect of making participants think carefully and creatively about the strategic issues that are most important to their own work as well as to the industry as a whole. Scenarios were constructed by teams in a role-playing mode; teams used their selected events to describe a scenario (or map) that leads logically to an endstate. On the second day of the workshop, each team presented its narrative, its rationale, and a summary of the key events in its scenario. Role-playing in this context allowed participants to set aside old beliefs and "try on" new ideas and points of view. The result is a shared awareness of the range of options for how information commerce might evolve over the next several years. Following the presentations, NCRI asked participants to rank the endstates, as they did before the workshop. The ranking metrics were probability and desirability. The shifts from before to after rankings formed the basis of a discussion that concluded with a comparison of issues common to the most probable and most desirable endstates. At this point in the workshop, facilitators presented an analysis of the key commonalities and differences among the scenarios. By comparing the choices of different teams, we found events that were common to all scenarios. These can be seen as especially critical, since they are required in a wide range of possible futures. The final task of the workshop was for the teams to develop endstate systems. Endstate systems show how the endstates fit together over time. They helped participants fully understand the dynamics of the industry. Conventional Wisdom In the first part of the Future Mapping process, participants were asked to vote (in small teams) on the likelihood of each of 150 possible future events based on the opinions and knowledge of team members. Highly likely events were those believed to have greater than 80% probability of occurring, while highly unlikely were those believed to have less than 20% probability. Events on which there was more consensus within teams were recorded as highly likely or unlikely. Events deemed uncertain resulted from either disagreement among team members, or uncertainty by several team members. Those events that were seen as highly likely (or unlikely) by at least three out of four teams made up the "conventional wisdom" for the workshop. In general, the group was very decisive. For example, team A only voted 27 out of 169 events as uncertain. The major themes of the conventional wisdom were: High bandwidth will be widely available, affordable, and in demand by large segments of the population fairly soon (2-3 years). User interfaces will become both intelligent and friendly. Voice recognition, wireless connections, and smart sensors will all combine to make technology more friendly to new legions of non-technical users. Services such as agent technology and filters will play an important role in popularizing technology. New technology will lower barriers to entry and allow for many new competitors in content creation, while other advanced tools will threaten rights management. Rights management and payment mechanisms will be well established and will encourage the wide proliferation of on-line content. Strong encryption was seen as a must have, but teams were divided on what types of technologies will be used and in what timeframe they will be available Books will survive and thrive in the new multimedia environment. Publishers' margins will decline for all but the most exclusive "coffee table" books, as titles compete with new media rich offerings. Legislation will not have a major impact on how customers redefine their relationship with suppliers. Advertising and shopping will subsidize the advance of technology into homes and businesses. While there are many ways to pay for technology, advertising will offer the advantages of being well understood and easy to apply. Overall, the conventional wisdom shows a growing acceptance of the Internet and the Web. Previous seminars tended to question whether the Web was just hype. In 1997, there is general agreement that the Web is here to stay. It will not be a revolution, but a layer or a companion to existing technologies and traditional forms of information commerce. One attendee supported this by citing the recent Library of Congress conference where the focus was on business models and delivery rather than content. A recent Future Mapping workshop in Europe offered similar insights. However, Europeans are expecting a quick leap into new business models, not steady progress. They were surprisingly bullish on virtual reality, multiplayer gaming, and networked multimedia. Scenarios This section summarizes the four scenario presentations that were made on the second day of the conference. Each team was given an endstate (see below for the full text of the endstates) describing the state of information commerce in the year 2002 -- its competitive structure, technological advances, market situation, and resulting implications for end users. The team was then asked to develop a scenario that leads to the stated outcome. In the Future Mapping process, a scenario is a list of events that leads to an endstate. The events used are the same 170 events used in the conventional wisdom exercise. In addition, the teams were encouraged to write new events that were needed to explain the logic of their scenarios. Each team then put together a twenty minute presentation that summarized the key points of the endstate, and the critical events that must happen or be prevented from happening in order for the endstate to occur. Scenario A: Flowering of Distribution Team A described a world in which distribution channels proliferate and evolve rapidly, but consumers still get most of their content delivered in physical form. The contractual relationships between rightsholders and distributors are the focus of rights management, with content protection based on physical packaging. The team described a world that is the height of customization -- people only pay for the information they use. There are many new ways for customers to shop for media. Distributors get information from the superhighway and carry no inventory. Final conversion into physical media occurs at distribution points. This endstate requires no great technology breakthroughs. It can be seen as a logical, incremental extension of the world of 1997. Advances in POS production technology, DVD, and reloadable books all exist in this environment. There are incremental increases in home PC capacity and long haul bandwidth, but there are still no reliable, scalable, big pipes going to the home. Retailers focus on extending their offerings by becoming small communities with coffee shops and playgrounds. Consumers enjoy the ability to pick and choose information content and are delighted to have free sample materials loaded on their DVDs. Companies such as Time-Warner, who own content, now have many more channels of distribution open to them. Copyright income increases because smaller, individual units of content are being sold at a higher cost (like glasses -- as opposed to bottles -- of wine in a restaurant). The greatest threats to the future of this scenario are the existence of high bandwidth to the home, inability to service POS CD pressing equipment, and the lack of hands-on browsing. (It will be important to retain key selling tools like "top 40" songs and the New York Times' Best Seller List.) The team thought that winners in this scenario included retailers (who have lower costs and higher margins), customers (who pay for just what they want), content creators (who are selling more content), and supporting players such as AT&T and the disk suppliers. The only losers identified were the smaller retailers who are unable to scale up to the new prevailing business model. Scenario B: Service-Enhanced Content Team B described a world in which information commerce is the biggest sector of the economy and knowledge workers and affluent consumers suffer from information overload and time scarcity. They will pay for services that select, organize, customize, and synthesize information. Raw/free information is plentiful, but seldom useful. Complex ad-hoc value chains are mediated by software, and there are a wide variety of subscription and transaction-based business models. In this world, new tools have been developed to help manage information. Agents, filters, on-line and on-demand news feeds, and intelligent answers to questions help stem the tide of the information flood. Affluent consumers and businesses welcome the development of standard user profiles and the delivery of personalized information. There are many new technologies that allow for full, mobile access. In addition, many advances have been made in user interfaces. Meta data and advanced search engines are refined and offered as services for a fee, or as a complement to other services (e.g., subscriptions to the Wall Street Journal.) In business markets, it has become important that information be seamlessly integrated into the work flow. A significant breakthrough that allowed this world to come about in the consumer space, was when consumers began to allow suppliers to build personal profiles to better deliver relevant news and information. The key to the new levels of service available in this scenario are digital and legislative protections for everyone in the value chain. Consumers, suppliers, creators, and distributors all benefit from a system of commerce that protects their profits, privacy, and methods of payment. Superdistribution expands rapidly under this model as micropayments, rights protection, and broadband distribution channels allow consumers to become creators, aggregators, and distributors. The 1997 concerns over security and privacy have been replaced by the 2002 demands for personalized and intelligent content. The only losers in this scenario are the major players who refuse to quickly adapt to the digital world. They will be like the buggy whip manufacturers caught off guard by the advent of the automobile. Scenario C: Profusion of Multimedia Team C described a world in which consumers drive an explosion of multimedia content. Bandwidth is plentiful, widespread, and cheap, and there are many new types of network access devices -- many are wireless. There are multiple business and revenue models, including usage-based, context-dependent micro-fees and subscriptions. A key to this world is a demographic shift to a new generation that prefers multimedia over text, and information flows over discrete works. Team C acknowledged that this environment may be hard to imagine, but they described the magic that enables this world as being massive growth of bandwidth and processor power; even beyond the projections of Moore's Law. Relationships occurring within endstate C are transaction based. All products are individualized and the buying public is as comfortable with radical multimedia as they are with the real world. This view reflects a flowering of creativity based on increasingly fine-grained economic incentives and diverse business models. Demand for digital content skyrockets, as does the supply of available content. The broad premise here is that wide segments of the population embrace the rapid advances of computer and network technology. This is a free market scenario with limited government interaction. Advanced transaction systems are important as they remove the traditional bottlenecks and distribute the profits more evenly through the value chain. Again, this endstate requires tremendous advances in technology to manage, move, encrypt, and decrypt the flood of digital content. The team also made the point that 50% of workers are knowledge workers. This trend starts in America and spreads globally. The technology and the technical comfort of users in homes and businesses vastly increases the scale of information commerce transactions. The chaos that results is accompanied by an increase in the velocity of money, real time cash, and on-line, real-time auctioning of goods and services. This endstate challenges many, if not most, of the comfortable and familiar ways of doing business. People sell and suppliers shop: i.e., the public posts a message stating that they are interested in buying a late model import with low miles, a CD changer, and a geo-positioning system for under $30,000. Car sellers respond, hoping that their offer is better than the many dozens of other car dealers also making offers. This is a radical departure from today's markets. It was described as an adolescent "twitch game" filled with constant action and interaction, but mature buyers also want to partake because of the benefits of mass customization. The team acknowledged that this endstate may be the most difficult to attain, but was also one of the most desirable. Some participants suggested that this endstate describes a layer (i.e., pop culture) that sits on more traditional markets and media. It may indicate a future direction, while not describing the most pervasive model by 2002. Scenario D: Broadcast Culture Persists Team D described a world in which broadcast models prevail over interactivity models. While the number of choices expand, most content is standardized, and consumers resist paying by usage (advertising is the key). Special-interest content thrives in niches and lots of important content is local. Cost structures are severely challenged by digital networks and the success of new, streamlined intermediaries. Described as the endstate of the couch potato, the team cited Newton's law that a body laying at rest tends to stay at rest. This sense of atrophy tended to hamper the acceptance of new models of information consumption, as well as new technologies. There is slow consumer change, low technology adoption, and steady growth of the Internet as an information source. But there is also a resilient market for passive, TV-like entertainment. Brand identity is important because people really don't want very much choice. Lethargic consumers want reliable, trusted providers of entertainment, goods, and services. There is also a high end, fast-moving sector of the market being pushed by firms like Bloomberg, and Dun & Bradstreet, but it is a niche market. The Web is a tool, but not one that people want to use when they go home. The services here are oriented toward businesses and possibly college students looking for research. The large sector of consumer goods does not migrate to the web because consumers don't want the extra work of searching across the web when the real world mall is just down the road. A fundamental dynamic here is that consumers want to come home to passive machines as a break from the high levels of interaction at work. In contrast to the other endstates, D was marked by many events that must not happen. The team acknowledged that for this endstate to come about, many current Internet developments will need to stall. While seen as easy to defend, most presenters felt this was unlikely because people tend to want more choice, more information, more entertainment, not less. Endstate Rankings Rank Interest in Analyzing Attainability By Industry Desirability 1 A A C 2 B B B 3 D D A 4 C C D Figure 1: Endstate Rank Order -- Before Meeting Rank Attainability Desirability 1 D B 2 B C 3 A AD 4 C AD Figure 2: Endstate Rank Order -- After Meeting After the team presentations, participants were asked to re-rank the endstates on both desirability and attainability. It was interesting that endstate A ("flowering of distribution") was ranked most attainable before the presentations, but was ranked third in terms of attainability after the presentations. Many participants felt that this model has already been tried and shown to fail. After the presentations, endstate D ("broadcast culture persists") was ranked most attainable, by a wide margin, with endstate B ("service-enhanced content") ranked second in attainability. Participants believed endstate D requires the least amount of change from current trends and social norms. In desirability, endstate B moved from second place before the presentations to first place afterwards. Endstate B was thought to provide larger market shares for many information commerce players. Endstates A and D were ranked far below B and C in desirability after the presentations because participants felt they would encompass only niche markets. Composite Scenarios As a final exercise, the teams considered ways of combining the four scenarios (e.g. sequence over time, application by segment, dominance, profitability, etc.). Teams created diagrams that described how each endstate might fare over the next five years, and how the endstates might fit together. The readouts were very similar, enough so to justify a single summary. The group appeared to agree that: Endstate A is a temporary phenomenon. It blossoms fast, but lacks the strength to run the full race. Endstate B is an interim stage and a foundation for later stages of information commerce. B is essentially an extension of D, but adds a level of richness to the consumer experience. Endstate C is almost science fiction (as that team chose to defend it. C is too far-fetched to command serious respect within the five year window considered here. Five years ago however, network-based publishing was viewed with a similar degree of skepticism by participants in this conference. Endstate D is unlikely. This endstate is too passive, too staid, and too blind to what technology will enable, to be considered a real alternative. D is where we are today, but doesn't reflect a viable five year future state. Common and Critical Events We found 12 events that at least three out of the four teams said either "must" or "must not" happen in order for their scenario to occur. These common events describe a set of issues that all players in information commerce should be considering the consequences of today. They are: 50% of publishers in alliances with multimedia production houses Creative pricing schemes overcome resistance to content controls Secure transaction processing widely available on Internet Smaller electronic and paper publishers proliferate New world-wide EDI standards agreed Satisfaction growing with inexpensive information providers Information delivery systems turn into sophisticated transaction systems Magazine brands weakened on the Internet Majority of news is delivered based on personal profiles Superdistribution commands a major share of information services payment New generation of user interfaces greatly expands the market On average, 30% of home entertainment is interactive It is interesting to note that three of the events: Smaller electronic and paper publishers proliferate Information delivery systems turn into sophisticated transaction systems Superdistribution commands a major share of information services payment were also voted as highly likely to occur. All three support (i.e., were voted as "must happen") endstates B and C--the endstates voted most desirable in the final round of endstate ranking. No event voted as "must not happen" for endstates B and C was voted as highly unlikely to occur. Thus, to some degree, participants believed that information commerce is on the right track. Endstate A: 2002 Markets: End-user customers still get most of their content delivered in physical form. The transfer of content from rightsholders to retailers, however, is done mainly over networks. This has simplified and reduced the costs of getting content to market. Retailers drawing from vast libraries of titles are licensed to produce perfect "just-in-time" copies onto blank media (i.e., paper, CD, video, or audio tape) in response to customer orders. More efficient shipping and logistics (an outcome of broad acceptance of electronic commerce technologies and business practices) have also improved the economics of traditional physical content distribution. Innovative content resellers such as Amazon Books have emerged to address both niche and mass markets. Many offer customers options for electronic or physical delivery, along with rich value-added services to aide in shopping. As the "inventory" of most distribution channels has become essentially infinite, some publisher/producers have experienced a resurgence of interest in back-list and 'classic' material. Some small-format resellers cater to global niche clientele in specialty genres, while others cater to bargain hunters, provide high levels of convenience, or a special shopping atmosphere (e.g., espresso bar, live performances, book signings, etc.). Industry Structure: Distribution channels for content have blossomed to serve a wide range of customer segments and buying preferences both on-line and in traditional retail locations. This has been particularly popular in markets such as music and college textbooks. In-store, and free-standing kiosks are popular shopping and dispensing venues. These channels provide many new options for commerce in both old and new content forms, often taking advantage of marketing and delivery opportunities opened up by electronic commerce practices pioneered in other industries. Creators, publishers, producers, and other information providers have more choices than ever for how to get their "goods" to market. Understanding and carefully managing the marketing and promotion of their content through this increasingly complex array of channels is critical to success. Starting up a net-based distribution business is relatively easy, and the number of content resellers has exploded. However, many content consumers are loyal to particular channel brands. Technology: End-to-end network delivery of content has been slower to emerge than many first imagined. Consumer level bandwidth bottlenecks are a major cause. Telcos and others have been reluctant to invest the large sums necessary to upgrade the "last mile" of high bandwidth networks out to homes in all but the most affluent areas. Instead, most audio, video, and multimedia content are delivered to end users on portable media. Improvements in storage density and miniaturization, as well as a large installed base of reader devices such as PC's, CD players, and VCR's have continued to make this attractive for most consumers. In venues such as airplane seats, bathtubs, and beds; the lack of a convenient, inexpensive network connection, combined with "human factors" have kept content tied to physical packages. Business Models: Contractual agreements between content owners and their authorized distributors and retailers remain the primary focus of copyright management activity. Many music, video, and even news outlets often allow customers to "mix and match" content at or near the point of sale. Secure, trusted POS systems track royalty allocations and help to ensure compliance with these agreements by delivering frequent electronic activity reports (and funds) directly to copyright owners. Sophisticated, granular transaction-based rights management technologies that track peer-to-peer, ad hoc copying have turned out to be much less important than once believed. Passive deterrent and copy prevention techniques, based in and enforced by law, have been sufficient to convince most rightsholders to participate in digital content commerce. Endstate B: 2002 Markets: Busy managers and high-end consumers have too little time and too much complexity in their lives. New info-services "make sense" out of the torrent of easily available information from an ever-expanding array of sources. A large volume of "free," advertising-supported information flows across networks to consumers and businesses. The content that users pay for is typically customized, enhanced, or bundled with value-added services such as personalization, special formatting, expert opinions, enhanced graphics, or interactive features. Making sense involves helping these customers relate new information to what they already know, what they have decided they must learn, and what actions they must take. Important services include summarizing, translating into the language and cultural context of the receiver; and creating custom indicators such as statistical validity ratings and on-the-fly data analysis. Alerts and reminders, not just of predetermined events, but also relevant surprises in the news are common. Many customers expect a customized visual display that relates new information to what's already known and tracks all documents and multimedia messages on multiple, personal criteria. Tracking other recipients of a particular piece of information and noting what a customer's colleagues are receiving is also common service. High-end consumers use similar services for entertainment and enrichment, however, these applications are only an adjunct to business uses. Industry Structure: The power of pure, branded distributors who package and resell content with minor modification has diminished. Major developers of content processing and filtering tools work together with value-added service providers to develop customized tools for content refinement. Publishers, producers, and rightsholders then use these development environments to build and offer their particular kind of enhanced information service or product. Raw data is widely available (and is incorporated into bundled services), but margins are much lower than for enhanced information services. Technology: Virtually all enhanced content services rely on software to increase value at reasonable cost. Powerful visual workstations and software tools allow dispersed sources of raw information to be blended seamlessly. Many service providers also make extensive use of human content experts to summarize and interpret mass programming, sometimes inserting graphic highlights (branded sprites) into programs and texts that link to recommendations and related information and allow consumers to "fast-forward" through only the recommended segments of programs and publications. Powerful rights protection technologies are available and are used to track the multiple sources and experts who contribute to an information service. Some publishers provide real time video, audio, or interactive programming; their highest value service channels. Live event/conference and expert messages are also systematically repackaged and indexed to support automated custom services. Business Models: Sales of reusable information (e.g., digital music, books, some video) are significant but dropping as a percentage of the total information business. The growth of revenue from advertising supported information has also stalled. Customers pay for information services through a variety of subscription and transactional models, using a variety of different payment mechanisms. Differential pricing is offered for minimal or no-advertising options. The growth leaders in this environment are trusted knowledge developers who have merged the creation and enhancement of traditional forms of content with the design, implementation, and delivery of the high-performance services than enable customers to use it well. Endstate C: 2002 Markets: Consumer entertainment and educational markets have led an explosion in multimedia content and a flowering of new content forms. As a new generation of media-savvy employees enters the workforce, this revolution is beginning to effect business markets as well. Videogames and the web have conditioned this new generation to think of content as dynamic streams and flows more than as fixed, discrete works or titles. Multi-player network gaming is extremely popular, and interactivity has become an important feature of other forms of content as well. Many games employ virtual reality features, and some leading edge providers are even experimenting with physical feedback and smell to add to the total content experience. Cultural and entertainment venues abound in cyberspace (e.g., museums, theaters, sporting events, etc.). Users' ability to access multiple high-quality views of these events is often so compelling as to reduce attendance at the actual events. Industry Structure: Information forms have increasingly metamorphosed into a rich mixture of image, audio, video, software, and text that defy traditional categories. Boundaries between the film, recording, television, software, and information industries are also blurring. Cross-media mergers are commonplace. Several large media conglomerates are doing well as the long awaited "convergence" phenomenon unfolds. They are able to leverage vast libraries of content to create characters and stories that cut across multiple content types and generate incremental sales. Technology: In most parts of the developed world, bandwidth is plentiful. Compression, caching, and buffering technologies have also improved substantially. This allows for delivery of multimedia content straight to most users on request, with negligible delay. Both wired and wireless network infrastructure buildout has been rapid. In addition, low earth orbit satellite systems have emerged to provide lower cost high-bandwidth (assymetric) delivery. Network access is no longer restricted to expensive, complex PC's. Many new and easy to use hybrid consumer electronics devices have become network access points, including evolved and combined versions of TV's, PC's, PDA's, stereos , mobile phones, and network computers. The move from analogue to digital has been faster than many anticipated, driven in part by demand for better sound and image quality. Improvements in multimedia development tools have raised the bar on production values, making it possible for small new entrants to easily produce professional quality work. Such tools have also helped to create rich, complex entertainment "spaces" that stretch the capabilities of both multimedia production techniques and interactive software. Business Models: New business and revenue models abound in order to take advantage of the ability to effectively levy micro-fees on content usage, and to vary pricing by user, time, quality, and other market variables. The media industry, while consolidating at one level into a few global mega-conglomerates has at the same time empowered a broad new class of small, creative content developers. Copyright management technology and copyright law have evolved significantly, fueling rapid changes to traditional content forms, categories, practices, and business models. The ability of even small creators to enforce their rights and ensure payment for works in digital form has become increasingly important in this highly networked environment. Cross-media agreements for rights management technology standards have helped to facilitate dynamic network-based enforcement of rightsholder terms for usage conditions and payment parameters on a wide variety of content objects and streams. Endstate D: 2002 Markets: Mass/shared culture is still an important driver of consumer media choices. The number of channel and publication choices has continued to expand, however, the vast majority of information consumers are still relatively passive. High levels of interactivity and infinite layers of choice are simply not as popular as browsing 50-500 channels of structured programming. New forms of advertising have blurred the lines between "pure" content and marketing. Infomercials, product placements, sponsored publications, and simulated articles are often hard to differentiate from the "real thing." A large fraction of content remains local -- responsive to local language requirements, legal dictates, and cultural norms. Individual consumer power is low; collective consumer power is high. Polling companies such as Nielsen, retain a critical role in helping publisher/producers decide what content to offer, and help advertisers decide where to place their material. Industry Structure: The economics of electronic content delivery have severely challenged the underlying business models of publisher/producer organizations. Existing content industry structures and brand names, however, have proven remarkably durable, transferable, and adaptable as new networked content delivery vehicles have emerged. Editorial imprimatur and long-standing trust of information sources are critical differentiators as business and content consumers are barraged with an increasing array of information and entertainment choices. Revenue mix varies considerably across geography and media type (as it always has), however, the mix of revenue sources for most publications and content forms has evolved relatively slowly. Advertisers have added electronic marketing to their mix, and subscribers have added electronic access as a value-added option. Granular transaction-based pricing is becoming popular among businesses as a way to more closely track information usage and flow, and to control costs. However, most consumers, have been resistant to these new transaction-based models, and as a result, the integrity of most works (e.g., books, music albums, etc.) has been largely preserved. Technology: Traditional content "middlemen" have had to re-invent themselves by shedding costs and nurturing separate divisions more responsive to a fast-moving electronic world. Business content suppliers in particular, have had to adapt to demand for new terms and pricing arrangements from their customers' most of whom are wired. Evolution of electronic content delivery in the home, by contrast, has been relatively modest. The penetration of PC's has leveled off in the US and Europe at under 50% of households, and low-cost alternative access devices have failed to fulfill their promise. The information-empowered consumer uses the web in a manner more similar to the telephone than to the TV. Personal and community-based communications are important, but the PC has not changed enough to become a compelling vehicle for accessing entertainment or leisure-oriented content. Business Models: Copyright protection has had the most rapid evolution in the business environment. In particular, demand for more flexibility (e.g., the right to cut, paste, and resend the text of important articles) has been high. This requirement has coincided with the need on the part of many companies to more closely manage the flow of information and access rights of employees, partners, suppliers, and customers across Intranets and Extranets. Evolution of copyright management therefore, has been driven primarily by the evolution of business-to-business electronic commerce networks and business practices. Larger content providers have had to learn how to manage multiple business models, cost structures, and internal cultures in order to respond to new electronic opportunities while continuing to preserve traditional delivery channels and mechanisms. A complete written copy of this report is available upon request. Please call 617-654-0600, or request by e-mail.