Concluding Discussion of Business Models and Diversification

Jeff Grove: [0:03] Jeff Grove, ASTM. So yeah, looking at diversifying models. We spend an awful lot of time and an awful lot of resources at doing that. It's not simple. Training. Some organizations offset the loss in revenue sales through supply and training. [0:21] Well, there's an awful lot of organizations and industries out there that are already providing training to ASTM standards.

[0:28] Certification. We can move into certification. Guess what? Certification is a pretty heavily...there's already a pretty built up industry around certification. The problem is a lot more difficult than it sounds. We're looking at it everyday. We're spending a lot of time looking at how can we become more diverse, and how can we find better models to provide public access in ways that don't fundamentally disrupt what we do.

[1:01] For us, it's coming back to trying to remain reasonable, trying to be flexible, trying to provide access in ways that fit within our system. They still cause us difficulties. But things that we can live with, and meet the regulatory agencies, and the regulated public. Like the toy example that I mentioned earlier. So it's a challenge, and we're not going to get there by January 1st to help you with this but we're working on it.

Mary Saunders: [1:32] Can I just ask for, perhaps Joe, you could clarify one or the other, SDOs, about positive uses of the revenues that come from the sales of standards. I know some standards developing organizations fund participation. State and local officials using revenues. Others provide training. If you could speak about some of the current business models are not all about bringing money in, but the other uses of those revenues.
Jeff Grove: [1:57] And I'll just hit that before I get back to Joe. [2:01] Primarily where we've had this issue is in our consumer products work. In that case, you have organizations like Consumers Union, Consumer Federation of America, Safe Kids Worldwide. Well, we waive participation fees for those organizations because we need their voice at the table to reach good, high quality consensus-based documents.

[2:23] We provide travel support to get some of them to meetings when necessary to move the process forward. We also do an awful lot of work in the developing world with developing countries in providing a lot of our technical information. In fact, almost all of our standards are available to the governments of developing countries to help them in implementing an infrastructure that ensures safety, protects the environment, and those kinds of areas. So that's a major initiative within our activities and it's a major cost center for us as well.

Joeseph Wendler: [3:00] Joe Wendler from ASME. I hit on this before, but not all of our standards generate revenue. A lot of our standards, we might only sell five of them, but if those standards are in turn picked up by the likes of Wal-Mart and Sears, and enable them to kind of regulate products from reaching the marketplace, we're happy to sell five of them, because there's a conformity assessment process built in that protects the general public. [3:24] So we operate numerous other standards activity at a loss. It's not being operated by others. As part of our engineering mission, we also focus on the developing world. So the revenues that we use from standards development offset some of the things we do like focusing on a base of a pyramid for people who need access to water, electricity, power, and things like that. So we kind of have a humanitarian mission that is somewhat subsidized by our standards model.

[3:49] Like others, we're trying to diversify, but there's no good solution. If you hear people complain about standards, you should hear them complain about the cost to conform the assessment. People don't like to be regulated. They don't like to have more tests to perform. They don't want to be a $50 standard, they don't want to conduct a $2,000 test.

[4:12] We're looking at that, but that's also a tough road to go. As others said, with training and development, we are growing our training to help people use these standards, rather than just relying on selling them, but again, we are competing with private entities who have been doing training for workforce for a long time. We're slowly building up our competence in that area.

David Halperin: [4:35] David Halperin, representing Public Resource. A lot of the discussion has been about what will happen to the SDOs if this law is implemented, if this becomes a trend. I kind of resisted joining that discussion, because I think it's a little patronizing for me to tell you my opinion of what you ought to do with your business. [4:55] I do believe in SDOs, and they're intelligent people, capable people, very competent people. I will point out that CEOs of some of the SDOs make as much as $7 million a year, $2 million a year, so the talent is there.

[5:12] Again, I just want to say that as has been pointed out, this is not about making all standards available for free, just those incorporated by reference. As Maureen's presentation showed, people buy standards that are available online. People buy the books because they want a book in the field, because the book may be annotated, there are things, value you could add. There's also value that you can add online.

[5:36] The Bible is online. People buy Bibles. Shakespeare is online. Lots of public domain things, people still go out and buy a book for all kinds of reasons. I think that the fact that something becomes available doesn't mean that there aren't revenue streams around it.

[5:50] That's apart from all the other possibilities of other revenue streams. All of that, again, has to be weighed against the other side of this. All the benefits to all the other people who are not running SDOs and not working with SDOs, who benefit from access to the law, and again, our view that the law requires under the cases, and just under the idea that we have an open society, and a society that benefits from openness, making these standards available to all people.

[6:24] I think that in some ways, it is a constructive thing to look at implementing in implementing this law, how do the SDOs thrive in an environment where the law is implemented?

[6:34] But I don't think we should lose sight of the fact that this is not done for no reason. Congress did it for a reason, which is, they see the benefits and in some ways the imperatives of putting these standards online and making them available to first responders, citizens, nonprofits and businesses.

Roberta Winters: [7:00] Roberta Winters, League of Women Voters of Pennsylvania. One of the things I was taken by in all the panels was the discussion about the private and public partnership that exists within this regulatory framework. [7:15] I was wondering if, as so many people try to generate more revenue, if along with a link from the regulation to the SDOs, if there might also be on the SDO sites advertising. That's one way that many nonprofits are making revenue. So, I'm wondering if we could use private advertising within the SDOs? Thank you.
Oliver Moghissi: [7:47] The answer is, I think...I'll speak for NACE. We sure do. We have advertising in the magazine and website and everything, and there's lots of different kinds of revenue. [7:57] I guess the first answer is, we make money on some things and we lose money on some things. For NACE, our purpose is to protect people, assets, and the environment against the effects of corrosion. Remarkably similar mission or purpose as to PHMSA.

[8:15] We do a lot of things that lose money, exactly because it serves that mission, that purpose. We like to have our standards referenced by federal regulation. Why? Because it serves the mission. If more people use the best available corrosion technology, we feel that our mission is best served.

[8:32] That's all a very positive thing. The real comment I want to make is maybe about, I don't think anybody should feel sorry for standard development organizations. Right? I can guarantee you, being the president, I know what the executive director makes, and it's nothing like that. I can guarantee you that.


Oliver Moghissi: [8:57] I'm sorry. The point is that we don't feel sorry for the SDOs. But rather, those are the people that are now creating the best available technology containing documents. And if those SDOs don't provide that service anymore, or can't make their business work, then we'd lose that resource of technology that's used in a uniform and consensus way.
Neal Eisner: [9:20] If I could explore the last few comments, put them together and ask the question this way. Everybody appreciates the fact that if these documents were available for free on the web, we'd be much better off. [9:33] I think everybody agrees that we're all better off by having the SDOs developing these things. At least some of them. Let's not say that every one of them does an excellent job for us. I know there's some concern about that.

[9:43] But if you take the best of the best, we want those standards. We want to be able to use them. They'll be better than we could put together, they could be done more quickly than we could do it. How do we balance those two things?

Neal Eisner: [9:55] makes the point that this is supposed to be available for free. You make the point that these are very valuable standards. So, if we were to say...let's assume we had the ability to work out some kind of a compromise here. Is time a factor? Because Joe, you were for example pointing out you're trying to develop alternative revenue sources. [10:12] So, if instead of January 1st of 2013, the deadline was January 1st of 2016 or 2018. At that time we had to cut off the use of those standards and go to our own, would you think that by that time you would have a business case that would allow us to post them online for free, or link directly to yours?

[10:33] Is there some solution here where we are all...are you all heading in that direction? I realize we don't have everybody in the room. But it looks like a lot of you are, if not there already able to provide them for free, you're trying to change your business models a little bit and get there.

[10:49] Again, you may not be comfortable in a public forum addressing that. But I'd like to know where there's room for us to work out a solution, if at all possible.

Maureen Brodoff: [11:03] Maureen Brodoff, National Fire Protection Association. I just think that the jury is out on that, whether we could ever create a business model that would replace the current business model in a way that met our resource needs, and then also, enabled us to have the kind of independence that we desire. [11:26] That said, for some organizations, we can provide free access, but it has to be rule-bound and limited. And give us the flexibility going forward to explore how much we can expand that free access, and still derive copyright protected revenues.

[11:47] The point about advertising is an interesting one. I personally find it depressing that all valuable intellectual content should be used as a premium to sell advertising, which seems to be the model that many people advocate.

[12:07] But there is one example on Cornell Legal Information Institute provides a lot of free content in terms of actual public domain rules and regulations that have been adopted by governments. I noticed in the last year or so, they have tried to add advertising through Google ads and the like, as a sidebar to the code of federal regulations or whatever they post. I don't know what their success has been with that, but it is one way to at least try to make some additional revenues.

[12:38] It's not something NFPA has done or been all that anxious to do. But again, that kind of flexibility in terms of how you define the kind of free access you find acceptable would be important in terms of us figuring out going forward how we could at least offset the loss of revenue from any additional free access we provide.

Unofficial Transcript Provided by Public.Resource.Org