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Membership Fees Will Increase, Causing Greater Inequity
The Belly and the Members
by Aesop
One fine day it occurred to the Members of the Body
that they were doing all the work and the Belly was having all the food.
So they held a meeting, and after a long discussion, decided to strike
work till the Belly consented to take its proper share of the work.
So for a day or two, the Hands refused to take the food, the Mouth refused
to receive it, and the Teeth had no work to do. But after a day or
two the Members began to find that they themselves were not in a very active
condition: the Hands could hardly move, and the Mouth was all parched and
dry, while the Legs were unable to support the rest. So thus they
found that even the Belly in its dull quiet way was doing necessary work
for the Body, and that all must work together or the Body will go to pieces.
The standards development process is similar to the "Body". Volunteers,
SDO coordinators, SDO members, and paying users all play an important role
in the process. If paying users suddenly ended their financial contribution,
the process would break down.
In the current state of affairs, most SDOs depend on operating revenue
from one of two sources: standards sales and annual membership fees.
In order for organizations to meet their annual operating budgets, they
must obtain sufficient funds from one or both. Therefore if standards
sales decrease, membership fees must increase. As long as SDOs have
cut costs wherever possible, there are no alternatives.
Companies and individuals that invest in membership have a strong voice
in the standards development process, leading to standards that are more
favorable for their particular product or service. They often benefit
from a reduced cost for purchasing standards. Standards users who
opt not to become members and do not participate in the development process
still gain significant benefits from standards; they incorporate standards
into their products or services and gain market acceptance through the
use of the standards. The cost of standards represents users' contributions
to the development process. The harmony of standards sales and membership
fees offers a fair and equitable way for members and non-members (or paying
and non-paying users) to jointly support the standards development process.
But what if standards were free to all non-members? What if the
companies and individuals that previously paid their way by purchasing
standards were no longer required to do so? If this were the case,
companies and individuals would sit back and be spectators in the standards
development process yet still have every right to incorporate the resulting
intellectual property into their product or service thereby gaining market
acceptance.
What if users paid nothing for the considerable advantage gained in
the marketplace? First, the cost of membership would rise.
As described above, if sales revenue consistently declines, membership
fees would have to make up for the loss. According to figures published
for 1997, ANSI's publication sales make up approximately 65% of total revenue,
while membership fees total about 20%. If standards were free, ANSI
would have to raise membership fees over 30% to recover the lost revenue
from standards sales. Consequently, in any association, fewer companies
and individuals would maintain their memberships, and it would be more
difficult to attract new members.
Furthermore, as membership fees rise, a greater inequity of benefits
would become apparent. Standards users who pay nothing for membership
or participation and obtain standards free would gain significant benefits.
Members who do pay the increasing membership fees would gain a voice in
the development process, but they would also begin to fund the standards
use of all non-members. As time goes by, the disparity in contribution
versus benefits would become more apparent, creating bitterness among paying
companies. More companies would drop their memberships due to rising
fees, and an increasingly smaller percentage of the commercial population
would be funding the standards development process. This situation
is a downward spiral that would lead to increasing anger among the paying
companies, less revenue for standards developers, and less participation
by standards users.
An analogous situation already exists at ANSI. Members of the
ANSI Federation have been funding the international standards programs
for many years, but they are no longer willing to pay for the participation
of those who receive the benefit of national or international participation
without paying their fair share of costs. In 1995, the ANSI Board
of Directors established an Ad Hoc Group to study the factors affecting
the Institute's short- and long-term financial well-being. One of
the Group's Agreements in Principle was: "The value of ANSI shall rely
on meaningful participation and useful information, but that value shall
not be given away. Those who directly benefit from a given service shall
be required to pay for that service." (http://web.ansi.org/public/ansi_info/funding/background.html)
Companies and individuals have to accept the fact that in order to gain
benefit from standards, they must participate in and help pay for the development
process. Not every company can afford the costs of participation,
but most companies can afford the cost of purchasing standards.
The Bottom Line: Be Rational!
The standards funding and development process is not ideal. Instead
of cutting our nose off to improve the look of our face, we should give
ourselves a nose job; we should be dreaming of novel solutions. One
solution is to fully exploit the Internet. When the Web first reared
its pubescent head, it was immediately apparent as an excellent medium
for exchanging ideas and delivering information. Yet even now, only
a few SDOs have taken advantage of all the possibilities available to them.
We should also take a step back and view standards as a product marketed
to users. What do users want and what have we given them? Apparently,
users are unhappy with the status quo. Delivering straight content
is not enough anymore; the key to future success is offering value-added,
content-rich business solutions with a choice of format and pricing models.
We need to maintain users' participation as well as their funding, which
can come with streamlined methods of development.
We should all agree on the importance of standards sales revenue and
the equity that standards sales bring to the funding and development process.
The pricing of standards may very well need an examination to determine
if it is fair and financially sound. But the common rationale for
eliminating the fee-based system is a myth: the cost of standards is not
prohibitive to their use, nor will the elimination of fees jumpstart the
global standardization process for companies who are not already involved.
The negative consequences of free standards are clear and compelling: under-funded
SDOs, less innovation in distribution and access, reduced value placed
on standards information, increased copyright violations and greater inequity
in the funding process. Let us now turn to our alternatives and work
together to materialize the solutions. Otherwise, standards publishers,
purveyors and purchasers might begin to see "For Sale" signs affixed to
the "homesteads" of many SDOs and third-party standards providers -- to
the detriment of us all.
Please send questions
or comments to Andrew Bank at: andrew.bank@thomson.com.
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