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Electronic distribution: a French model.

Electronic software distribution schemes haven't fared well in the U.S., but a surprisingly different story has emerged from the French market. We recently dropped in on an 18-month-old software distribution service called VIF, which--with 15,000 active customers--is fast becoming a serious sales channel for software in France.

VIF operates through the French Minitel system, a nationwide network of inexpensive terminals that the state-owned telephone company has given away to six million consumers and businesses as a replacement for printed phone books. The Minitel network has been a magnet for hundreds of videotext and on-line service entrepreneurs, who sell everything from soft porn to software.

VIF general manager Patrick Le Granche, who showed us how the system works, points out that the Minitel is a relatively primitive 7-bit terminal, so VIF has to give its customers 8-bit conversion software as well as a PC connecting cable. "Right now, our customers have to be more clever than average to link their computers to the Minitel," he says.

Despite the technical obstacles, however, VIF seems to have convinced a good many customers and software vendors that electronic downloading is a workable concept. Predictably, VIF's hottest titles tend to be utilities and games (Le Granche says 40% of his volume currently comes from Windows utilities), which are both inexpensive and easy to download. But VIF also seems to reach buyers of mainstream productivity applications: Recently, VIF moved "nearly 200" copies of Lotus's Ami Professional, even though each copy took six hours to download. -That's very good sales for France," Le Granche says.

Moreover, VIF generates these sales with a minimum of discounting. Prices for VIF titles are set either at list price or near street price (20%-25% off list), with purchases charged automatically to the customer's phone bill as telephone connect charges. (To make sure that the customer's connect charges equal the price of the software, VIF uses five different in-coming telephone numbers, each with a different per-minute rate, and can compress or expand a file to fit" the right amount of download time.) "We don't think there is much comparison between a price in the shop and the price in our system," says Le Granche.

VIF also operates with a very different economic model than its storefront competitors. VIF pays the French phone company 12% to 29% of the money that consumers pay in connect fees, then gives its software vendors half of the balance. (If VIF plays an active marketing role, however, the standard payout to a vendor is 26% of gross connect charges.) In a sense, VIF is a reseller's dream: no retail rent, no inventory, no salesforce, no credit department or cash registers--just customers.

Le Granche's one frustration, he admits, is that he wishes he knew more about why those customers are using VIF. "We think our customers are individuals in big companies, but we don't know if they're buying for the company or for their personal systems,' he says. "When we know the answer, we can make the market even bigger." Patrick Le Granchel general manager, VIF, 5 rue de Bassano, 75116, Paris, France; (33) 1-47-20-02-16.
COPYRIGHT 1992 Soft-letter
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Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:distribution of software; VIF
Date:Feb 22, 1992
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