The library world, especially those interested in library linked data, was surprised today by the announcement from the Talis Group telling everyone they were shutting down Talis Systems to allow a greater focus on their education sector products, i.e. those from Talis Aspire. The announcement bears repeating so we can further analyze it:
“Over the last few years Linked Data has been going from strength to strength. Many more organisations are now seeing the benefits of applying semantic web technologies to help publish, share, and create value from data. As part of the Talis Group, Talis Systems has invested an incredible amount of time and effort in playing its part to help foster the vision of a web of data. Over the years we’ve had many successes, creating a flexible data platform and building a world-class consulting team. We’ve worked with many different organisations across many different sectors and seen some exciting projects bear fruit.
But there is a limit to how much one small organisation can achieve. In our view, the commercial realities for Linked Data technologies and skills whilst growing is still doing so at a very slow rate, too slow for us to sustain our current levels of investment.
We have therefore made the decision to cease any further activities in relation to the generic semantic web and to focus our efforts on investing in our growing Education business
Effective immediately we are ceasing further consulting work and winding down Kasabi. We have already spoken to existing customers of our managed services and, where necessary, are working with them on transition plans.”
Of course, everyone wants to parse the statement about the market growing at too slow a rate to sustain investment. What does that mean and more specifically does it have meaning for libraries? Furthermore, for all those working in this area, are they missing an important indicator here; are they wasting their time and resources?
To answer this, I want to refer back to a post I wrote about Library Linked Data, almost a year ago, when I was still with Ex Libris, and it can be found on this blog at this location. Some very important parts of that post bear repeating:
“What you’ll see is best described by the E.M. Rogers, “Diffusion of Innovations” Bell curve which was later enhanced by Geoffrey Moore, when he introduced the concept of “Crossing the Chasm” into the model. It’s a fascinating description of how technology goes from being an idea to a product on towards the end-of-life. Rogers does this by dividing the technology market for any product into five segments. Moore introduced the chasm in the model, into which many technologies fall and fail if they can’t successfully clear the gap between the first two segments and those that follow. For the purpose of this discussion, let’s focus on those first two segments as they are particularly relevant in the discussion of Library Linked Data at this point in time:
• Innovators, or Technology Enthusiasts. This is the “bleeding edge”. Typically about 2.5% of most markets. Organizations here comprise the initial leading edge of the curve. They represent those who like to be the first because they believe it will improve life. Organizations in this group rarely have much money.
• Early Adopters or Visionaries. About 13.5% of organizations. These are the revolutionaries, those who will actually break with the past and embrace a new future. They also like to be known as visionaries, so they’re very good about talking about what they’re doing. Better yet, in most markets, these organizations have money to implement their vision. However, these organizations also want products customized to meet their needs, sometimes asking for things few other organizations will want.
Those two groups together constitute what Rogers/Moore calls the “early market”, i.e., the leading thinkers. Together they constitute about 16% of any technology market segment. The other 85% are called Early Majority, Late Majority and Laggards. Each bears its own behavior patterns and descriptions (and if you want to read about them, Moore’s book is excellent). The point is this; that 85% form the majority of any market for a product/service. For a vendor, taking the technology across the chasm between the leading edge and the market majority is the key to being successful and clearly it is no easy task. It’s a combination of timing, development and management and certainly even an element of luck.
So, if I take off my librarian hat and put on my businessperson hat and look at what the Talis Group has done and apply the market analysis by Rogers/Moore, it makes perfect sense for Talis Group to do what they’ve done here. First, let's remember they weren't focused exclusively on Library Linked Data, but Linked Data in general. Furthermore, they’ve stated their reasoning for this decision in what appears to be perfectly clear and straight-forward terms. They’ve got limited resources (as does any company/organization) and in looking at where they can invest those resources and realize the best return on their money (which also usually means in a reasonable time frame) they can see the education marketplace offers far better odds than that of the linked data marketplace. I understand this, and in fact mentioned this factor in my last post on cloud computing and although I was not talking about linked data the model is the same. In my example, I pointed out that firms serving libraries set growth goals and those numbers are typically much larger than the library marketplace growth rate (or that of new technology within the market). As a consequence, they must shift their resources to a market where their growth goals can be achieved, particularly when you're talking about a small-medium size firm like that of Talis Group.
Does this announcement mean that linked data as a business will fail or that it doesn’t make sense or that the business models surrounding it won’t work? Does it mean the people working in this area missed an important indicator?
My view would be that this is simply affirmation of what I said in my blog post a year ago. Which is that it is too early in the technology life cycle of Linked Data to make money on it. It is still primarily an area of research and development and as Moore describes, one where there are resources to be dedicated but not money to be spent. So for those organizations that are trying sell services, products, etc. based on this technology and that are for-profit firms, if they can’t carry out investments where the return is way down the road or, if they must make money now in order to survive, it means tough decisions have to be made. In this case, to stay the course would mean Talis Group would have had to wait for this technology to move out of the stages described by Rogers/Moore as “early market” and into that called “early/late majority”. That point where sales will support a return on investment. We are NOT to that stage yet. If I were to fault the Talis Group at all, it would only be to say that they didn’t do their market analysis and business model work as thoroughly as they might have before making the massive investment they did. Still, as a business, pulling the plug now is a much wiser decision that continuing to invest in something they realize they can’t support until it reaches the stage of return-on-investment. That was a smart decision.
We’re now seeing a lot more working models/prototypes emerging and we’re seeing some major organizations like OCLC announcing starting steps for supporting this technology. However, there still remains a lot of other unanswered questions that I raised in my original post. Particularly this one:
"Let’s start by going back to the critical need to answer the question about the problems being solved for the profession by the use of this technology that can only be solved by using this model? To answer that, I’ll repeat what customers tell us all the time when we bring them new products, services and ideas: “Show me”. Yes, it can be frustrating to face that question. However it is the nature of this marketplace. Not without good cause. We understand that the majority of this market is buying products/services with money that is entrusted to them to be spent very wisely. As a result, the profession of librarianship is very careful. They want to see what they’re buying before they buy it. The challenge becomes to develop some working demonstrations of Library Linked Data, that can be widely shared, widely used and clearly and easily demonstrate the remarkable benefits. If one of the main benefits is “unleashed innovation”, how do you show that? Not easy, but we do need at least a few really good examples. This will help to fuel the interest in moving this technology forward. One possible answer? For the innovators; technology enthusiasts, early adopters and visionaries to bind together and develop some working examples of the innovative possibilities. Use a limited set of data, but develop some demonstrations..."
All these issues (the one above and the other questions I raised) need to be answered before we can expect to see systems suppliers making massive investments in Library Linked Data as salable products or services. I expect that will happen. It’s just not the right time yet.