Revenues vs. Margins in EDD-Land

My good friend and crack wordsmith Michael Clark of EDDix LLC is striving to break new ground in the world of publishing/distribution, by charging a pretty penny (>$2,000) for a conventional copy of his new book covering the landscape of Electronic Data Discovery, but also by distributing it in pieces across a number of blogs, with each piece free.  (See the EDDix site for the full story.)

Adam Smith, Esq. is pleased to be selected by Michael as a participant, and fittingly enough given our economic focus we opted for the section of his book dealing with revenues, margins, and growth strategies.  First, Michael's piece itself is here.

My take?  Beginning at the end, Michael encapsulates growth strategies nicely.  "Go for the low-hanging fruit."  'Nuff said.

The variance between revenue and margins is of far greater interest.  Here's how I would visualize it:

  As Michael implies, contrary to the received wisdom, leveraging IP assets through technology is not the profit driver it's cracked up to be, but personalized, human-touch consulting remains the fattest margin piece of the pie.  Why? 

• Technology is, at least in EDD-land, a commodity.  This is not quite the famous "IT doesn't matter" argument, but it's an argument that there is no competitive advantage to be found on the technology frontier.  No wonder margins are relatively thin.
• People, on the other hand, are a difficult asset to acquire (in the proper combination of quality and quantity, that is) and a difficult asset to replicate.  This is not just true vis-a-vis one's competitors in EDD-land, it's probably even more true vis-a-vis one's customers.  In other words, consulting services are the single most difficult piece of EDD "production" for a client to do for themselves.

Thanks, Michael:  Strong, good stuff.