Lexis Nexis – The Razor Blade Business Model

Selling a razor is good business. Selling the blades is better. The razor might last for years before its utility is done. Replaceable, disposable blades on the other hand have a life expectancy measured in days, or shaves, and the consumer is required to purchase new blades much more frequently.

A more au courant example of this business model is the standard printer for computer systems. These complex items of hardware are priced ridiculously low. But the necessary consumables, the ink packets, seem outrageously expensive in comparison. If you buy the printer, you are committed to buying the ink from the same supplier. What the supplier foregoes in revenue on the printer, it more than makes up with the sale of ink.

Now imagine you are in the legal publishing business, and you become smitten by this model. Can you adapt this model to improve your publishing business? Absolutely. Mostly what it takes is some chutzpah (read: shameless audacity, or arrogant presumption).

Lexis Nexis has this model down to an art. I explain with an example. Recently I wanted to buy a legal text book by an expert in the field. This was a real book. Not a looseleaf service. Not a book with a CD. Not an e-book. But an honest to goodness text book, nicely bound and covered. And even though 80%+ of the content was legislation lifted from a government web site, I thought it a bargain at $80.

I phone an 800 number to place my order, waited a week, and received the text by courier. About the same time I paid the invoice. The book was everything I had expected it to be.

A couple of months later, (2), I received something I did not expect. Lexis Nexis had sent me, by courier no less, another book. Superficially, it looked strikingly similar to the one I had just finished reading. A little closer inspection and I concluded it was strikingly similar. The title had changed though. Instead of the year 2014 appearing in the title, there was now 2015. Other than that, my quick survey did not reveal any other differences between the two texts.

The book came with an invoice. L-N wanted another $80. This was no bargain. So I asked my secretary to call up Lexis Nexis, and to tell them I did not order the book, and to ask them how they wanted me to return it. A straightforward task you might think. But not so.

Lexis Nexis insisted that I had ordered not a book, but a subscription. (They kept a recording of the original phone conversation to back up this claim the customer rep assured her.) I had ordered a perpetual subscription – however long that is. Apparently it is an annual subscription. A new book would be automatically sent to me, once a year – excepting that it might be as little time as 2 months in the initial iteration, seeing as how I had placed my order close to the end of whatever annual period they were using.

The L-N folk were quick to explain that I could return the book. And yes, I was responsible for paying for the return, and also the cost of shipping and handling to get the 2015 text to me. I figure that’s about $40., and of course the clerical time and energy to pack it up, and send it off, complete with correspondence cancelling my perpetual subscription. It occurred to me, contrary to first impressions, I had not bought an $80. text. Rather I had bought a $120. text complete with a side of aggravation and senseless effort.

From my vantage point the Lexis Nexis model is sleazy. We ought not to condone it. Rather we should call it out as scam (of course not a scam in any criminal sense lest one of my colleagues in the libel field get any untoward notions).

This is a personal viewpoint. Some readers may choose to differ, and give a tip o’ the chapeau to L-N, for their business acumen. And if those readers were solicitors, say in private practice, they might even aspire to emulate the Lexis Nexis approach.

Here then, is how a solicitor might adapt the model to her own practice. Consider  offering the Last Will not as one off document for your client, but rather a perpetual, revenue generating project. Draft an appropriate retainer. No need for the client to sign, just ensure it is delivered. The essential features would include: a low initial price, an annual review opportunity to be initiated by the client, and in any event an invoice annually at the same price as the original will. Provide for any time cancellation by the client upon very specific written notice – perhaps delivered in person. (Convenience should not be the hallmark of the cancellation policy.)

If you are tempted by this scheme but have some doubts, consider a test marketing of the approach. Send out a batch of promotional material to a target base of potential customers. If it were me, I’d start with targeting senior management at Lexis Nexis.