The National Academies Press has a duel mission to disseminate the findings of the National Academies as widely as possible but also break-even financially. The presentation serves as a case study of using freemium as a business model but also of maximizing dissemination.

1. Free@
The National Academies Press
Barbara Kline Pope, Executive Director for Communications
and the National Academies Press

2. Agenda
• Introduce you to the National Academies
Press
• History of Free
• Research to Guide Business Model
• Transitions
• Free Now

3. The National Academies Press
Mission
To Disseminate the Books
from the National Academies
as Widely as Possible
While Being Completely Self-sustaining

5. • About 200 reports each year
• 4,000 “in print”
• Print, PDF (full, chapter, bundle), Page-
by-page formats

6. Original Web Model—1994
Leading the Way in Free Content
Before Amazon. . .Before Google. . .Before PDF
• Early Model
– Free browsing of
full text (2,500
books)
– Fully searchable
pages (550,000
pages)
– Charge for
printed copy

7. The Research
Winner of the INFORMS Society
for Marketing Science Practice
Prize 2007
• How much could we give away for free
and still break even?
• What would be the impact of pricing policy
options including free PDF on
– Revenues
– Dissemination

8. Group A Short
Survey (B)
For Free
Consumers
Totebag
with Books in 2nd NO
Shopping Cart (No PDF
Go back Reduce PDF
Price to One
No Print)
1st Level Lower
Intercept and Would you
Present Details Like to Order NO
Group B Of PDF book PDF Now? 2nd
JUST PDF NO
BOTH PDF JUST PRINT
Consumers & PRINT
Browsing Books
Complete Complete PDF Complete
with PDF Available PDF Order Print Order
& Print Order
Short Short Short
Online Survey (A) Survey (A) Survey (B)
For Add’l. For Free For Free
Choice Discount Shipping and Shipping
Add’l. Discount
Experiment
Continue Checkout Process

9. Online Choice Experiment
• 500 titles for which PDF format available
• Print format price fixed
• PDF prices
– Six levels relative to Print format
– 110%, 100%, 75%, 50% 5%, 0% (Free)
– Prices randomized across
• Subject category
• Price Levels of Print
• Popularity of the title (number of visits)

10. Data for Developing Policy Options
110
58% of those
offered free PDF
90
bought Print. Net Impact on
Sales Revenue
70
Predicted Sales 50
Revenue as a Cannibalization Impact
Percentage of on Sales Revenue
of Sales Revenue 30
Market Expansion Impact
Prior to PDF on Sales Revenue
Introduction
10
42% of those -10
offered free PDF
took it instead of 0 20 40 1 60 80 100 120
the printed book
they planned to PDF Price as a Percentage of Print Price
buy.

11. Implementation
• April 2003--PDF format introduced
– Charged for PDF
– Starting point as we allowed time to pass in
order to validated the research
– Free PDF to NAS/NAE/IOM members,
volunteers, Congress, journalists, sponsors
for all 3,000 titles
– Free full-text page by page still available
– Authors could subsidize free PDF by title
(33% of potential sales)

12. Implementation
• June 2003—Free PDF to people in 144
developing countries
• February 2004—Free PDF of
“Compass” titles to the world
– 1,500 of the total of 3,000 titles on line
– 100 of the 200 new titles each year
– Research Validated in 2005—33% lower
sales of printed Compass books with free
PDF

13. Upward Trend in Free PDF; Unit Sales of
PDF Flat; Unit Sales of Print Decreasing
Units Distributed
Free PDF, PDF, Print
550,000
500,000
Number of files or books
450,000
400,000 Free PDF
distributed
350,000 Unit Sales PDF
300,000 Units Sales Print
250,000
Developing
200,000 Countries All
150,000 Free
Free
100,000 “Compass”
50,000 books to All
0
2003 2004 2005 2006 2007 2008 2009
Year

14. Page Views Major
Redesign
120,000,000
100,000,000 Updated
N um be r of P a ge s
Pages in Discovery
Engine
80,000,000 XHTML
rather
Podcasts ,Exact
than page
Target, Outreach
60,000,000 image
40,000,000
Research Tools---Skim,
Reference Finder, Web
20,000,000 Search Builder
-
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Year

15. Invested in Sophisticated Online Tools

16. More Free and Self-Sustainable
through Cost Efficiencies
2010:
Total Units Distributed (Books and Files) Outsource
Warehouse
800,000 Outsourced Printing Stronger inventory
Operations management—more Warehouse
print on demand efficiencies
600,000
Number
400,000
200,000
0
Free PDF
01
02
05
06
08
03
04
07
09
Year
20
20
20
20
20
20
20
20
20
Total Net Unit Sales

17. Increased Dissemination Over Time
Visitors/Page Views/Total Units (book/pdf)
Distributed
120,000,000 800,000
Visitors/Views/Rate
700,000
100,000,000
600,000
80,000,000
500,000
60,000,000 400,000
300,000
40,000,000
200,000
20,000,000 100,000
- 0
Visitors
19
20
20
20
20
20
20
20
20
20
20
Page Views
99
00
01
02
03
04
05
06
07
08
09
Units Distributed
More Free Access + Reduced Costs = Self
Sustainability
Next up? New comprehensive analyses to determine
how to get to full free PDF and map out the transition

18. New Formats

19. Social Media
Promotion and
Research
Blogs
Widgets
Rating Sites
Bookmarking
Sites
• Compare customers acquired
through social media with those
obtained through other channels
• Track widget use and determine
which sites are most productive

20. Following the Mission
• Increasing emphasis
on free
• Increasing comfort with
reading our free
content on line
• Strategic direction for
electronic content
• New cost models
• New analysis in
progress for getting to
full free PDF

21. Questions? Write to bkline@nas.edu
Want to read the Marketing Science paper?
http://www.nap.edu/staff/barbara_kline_pope/marketin
gsciencepaper.pdf