For Westlaw and Lexis, an AOL Moment: Fastcase's Ed Walters on LAW.GOV

In response to LLB's open invitation to legal vendors to answer the question, "What does LAW.GOV mean to you?" Fastcase's CEO, Ed Walters, has answered the call with the following perspective. As with all vendors that do so, this guest blog post is published in full without any commentary on our part but readers are invited to comment on the post. [JH]

In 1996, AOL owned the Internet. Okay, nobody really “owns” the Internet, but America Online was the Internet’s first truly dominant player. AOL was the Internet’s one-stop-shop: the internet service provider, the e-mail provider, the instant messaging service, the front door to the Internet, the browser, and a major supplier of content. Subscriptions were AOL’s business, and to keep people subscribing, it created a kind of parallel Internet, seeded with AOL original content available only by subscription. Its “walled garden” approach was designed to keep users hooked on AOL’s subscription content, which was popular (if only because it was promoted on the first page of most people’s online experience). In 2002, AOL had 26.7 million subscribers, and its brand was the best in the business. AOL’s lead looked permanent and immutable.

And yet, right around 2002, two major things changed, and AOL began to stall out.

First, HTML content authoring tools began to make it easier than ever for people to create original content on the Web, and the amount of content on the public Internet began to flourish, dwarfing AOL’s subscription-only content. Original content, the raw materials of the early Web, was being democratized, and outside of the AOL network.

Second, companies smaller than AOL were innovating in search tools and in the distribution network. Google had an entirely different, and more open strategy to become the Web’s front page, and an advertising business model that made its search free (to users at least). And companies such as Verizon, Comcast, and AT&T were building better distribution tools, with DSL and cable broadband that were much faster than dial-up at comparable prices.

AOL was trapped by its own success. It couldn’t cannibalize its subscription content, and it couldn’t abandon its dial-up empire, even as content was democratized and competitors built better and more compelling tools. It tried acquisitions as a way to protect the empire, (including, most notoriously, its acquisition of Time Warner in 2000) but no acquisition could change the core business model.

Monday-morning quarterbacks from business schools can point (in hindsight) to dozens of things AOL could have done differently. But the fact remains that the world changed much faster than AOL was able to, and instead of permanent and immutable, it’s walled garden became a museum of the early Internet.

AOL was built to thrive in an economy of scarcity. Democratization of the Web created an economy of abundance, where competition was less about mere access, and more about values like innovation, efficiency, and value. So while AOL had mastered the scarcity market, it was the innovators who would dominate the market of abundance.

Westlaw and LexisNexis have built an AOL-like lead in legal research. They have built compelling, subscription-based legal research products, and through acquisitions built a suite of workflow and management tools around them. Their brands are the best in the business. Their dominance in this market feels permanent, and immutable.

But the exact same market forces that were at work in the Internet in 2002 are at work in legal publishing today. Law.Gov is democratizing the underlying content that the traditional publishers have offered at high subscription prices. Bulk access to primary law materials holds the promise that there will be as much or more legal data outside of the walled gardens as currently exists inside.

Legal publishing will move from an economy of scarcity to a market of abundance.

Further, innovators in the legal research market are building smarter tools for legal research. My company, Fastcase, has been building the broadband research of the future, with compelling mobile apps, citation analysis integrated into search results, disruptive partnerships with state bar associations, and beautiful, elegant data visualizations of search results.

One of the best versions of the U.S. Code isn’t inside the walled gardens, it’s in Cornell’s Legal Information Institute. Some of the most interesting collections of international law are coming from Justia and vLex. And a new generation of innovators is working with government data to make it more compelling, more interesting, and more usable outside the paywall than it ever was inside. Data.gov and Federal Register 2.0 are good examples of the government working to facilitate this kind of experimentation and innovation with research tools.

In an abundance market, legal publishers will compete not on mere access. They will compete to build tools that make research smarter, to innovate nimbly, to provide terrific service, and to price it transparently and fairly. It’s a competition that our team at Fastcase has been gearing up to win.

The greatest potential for Law.Gov is an end to inevitability and an end to duopoly (and an end to the prices and practices that they foster). Westlaw and LexisNexis, like AOL in its day, have literally created the industry. Their innovations have been inspiring and important, and the legal publishing industry owes them much. And as AOL remains a powerful digital publishing company today, no one should expect to see the “end” of the traditional publishers. (I suspect nobody really wants to see that, anyway.)

But Law.Gov’s democratization of the raw materials of legal publishing presents a great opportunity for the rise of the next generation of innovators, the Googles and Facebooks and Twitters of legal publishing. The next competition won’t be about mere access – who can offer the largest menu of databases – but about which tools work most intelligently and affordably to do the work of legal researchers, a real competition with many new players.

-- Ed Walters, CEO, Fastcase.