Jul

8

Over Niagara in an eBook

Filed Under B2B, Big Data, Blog, eBook, Education, eLearning, Industry Analysis, internet, mobile content, Publishing, Search, semantic web, social media, Uncategorized, Workflow | 1 Comment

The ineffable Shatzkin reports (www.idealog.com/blog) this week on an innocent story with dramatic implications. It seems from his calculations from Hachette UK releases that if eBook sales are indeed now 25% of total sales (and 30% for fiction), then over 50% of sales in all are “online” (print and eBook), and for “some genres and authors, close to two-thirds”. Given that 80% of online in any format in the UK is Amazon, the book trade have acquired an intermediary who can, at any point, tilt the table with offers to authors that no other player can match. In short, the rules of the game can now change radically, the inflection point has been reached, and the “over Niagara in a barrel” experience of the music industry is about to be repeated. So let me, amidst the angst and heartbreak, the invocations of Longman in the 1720s or Murray 1 in the 1820s, the competition law actions, the desire to retain territoriality in a global market and all the other things which will inevitably follow, issue a plea for one small concession? When we have thrown out baby, bathwater and all, can we please throw out the ancient, encrusted law of Copyright as well, and then start over?

Its not, of course, that I despise Intellectual Property. Far from it. Intellectual ownership is hugely important and should be respected at all costs. The ability of individuals to ensure that their creativity is recognized and acknowledged is of paramount importance in a society where intellectual creativity has to be honoured and represents the only we have of saving ourselves – from ourselves. Nor do I baulk for a moment at the thought that individual creators, and their licensed intermediaries, should be able to make investments in the processes by which ideas and entertainment and education are released into society, and seek a good return on those investments. In short, the activity of the book trade, and every other IP based industry, could go on as it is for ever and I would not turn a hair. True, Book publishers (I was one for 20 years) have mostly been rascals, untrained for anything but with a nose for the money. Byron had it about right when he asserted to Murray that Barabbas was the first publisher. His faith in this would have been confirmed when his publisher burnt his memoirs to protect the Byron brand. Allen Lane and Jonathan Cape were sublime marketeers and I suspect that the editors who added lustre to the trade, like Max Perkins or Dick Seaver, realised a lot less out of it in terms of capital accumulation. Today it is a business of Super Corporations, and they must come to terms with Amazon in their own and various ways. Small publishing, the work of individuals to culture and develop excellence in unlit places, will flourish as honestly in the low cost start-up environment of the web as it always has elsewhere.

I know that the leadership of the publishing industry globally fear that Copyright is being eroded at every point. Trade associations reach for the adjectives to tell governments how vital it is to protect the existing framework of law. Fair Use must be protected – or rejected – according to where you live in the world. Educational re-use is a string back of exceptions and deceptions which enable publishers, librarians and teachers to persuade themselves that they have got the best of the deal in subclause 3(e) and thereby assured the protection of life on Earth for another generation. Meanwhile, copyright breach is an unpunished, apparently victimless crime, as sinless as speeding, whose conscious abusers claim that they are “liberating knowledge” while 90% of their brethren do not even know or realise what they are doing when streaming a downloaded book. Apparently victimless, but actually the whole system must be lubricated with cash to make it work, and the victims threatened are of course users themselves.

So, why don’t we step back from “Copyright”, desert the word with all those archaic suggestions of unfairness to learners or the poor, cease to talk about “monopoly” rights and thus invite the enmity of every competition lawyer on the planet, and begin in an new place with a new approach matched by a new language. In my own years of lobbying the European Commission, as junior delegate and bag carrier to the great Charles Clark, my Leader produced the new line in argument “The answer to the Machine must lie in the Machine”. How true, but so far we have not produced an answer half worthy of the Machine. Surely, in a machine age, where every network connection of any sort is known to the network, and every one of us is known as a user (and the National Security Agency plus GCHQ know what we use) we cannot be very far away a universal licensing regime? One that existed at several levels, to accommodate one to one, one to many, many to many forms of licensing. The latter may even be a levy on broadband or a network licensing scheme. Then we could move to global licensing organizations with real clout collecting funds which really were worthwhile to those whose Outed content is so vital to the remashing of information and content and data into new service environments. Which is how the internet operates.

But inside the Internet we are still trying to operate the Book Trade as if the Internet did not exist. Something here has to give. At a guess, at this moment, it will not be Amazon.

Jun

20

How Do You Grow STM?

Filed Under Big Data, Blog, data analytics, eBook, eLearning, healthcare, Industry Analysis, internet, Publishing, semantic web, STM, Uncategorized, Workflow | 2 Comments

Two events this week turn us back towards this perennial question. One is the purchase of Springer by BC Partners after a prolonged affair and a lover’s tiff which forced the price up a notch to $4.4 billion, but left 10% of the equity in the hands of the sellers. The other is the latest set of results from Wiley, covering the fourth quarter and thus the complete picture in 2013. While Wiley is the larger company, by virtue of its major presence in education markets, the two are very comparable in size terms in the science, technology and medical sectors. Both have STM units of plus or minus a billion dollars, and both have STM market shares of around 3% each. And they have another shared characteristic: neither of them is showing much by way of organic topline growth, and there are some very good reasons for this. Global recession and library budget cuts do not suggest growth, and nor do the consequent falls in book and journal purchasing. But both companies have gone digital to the extent that print declines are largely offset by eBook and eJournal supply, though often at lower revenues (and greater margin). This again does not indicate growth, but confirms a view of settled publishing environments in fairly stable markets with high margins: the impression that they like to give, and which analysts and investors like to believe. But underneath the surface, I believe that these markets are now boiling over with activity, and that both of these companies, and all of their peers, now face challenging growth targets if they are to deliver to private equity investors and shareholders real growth in returns in recovering economies, as well as investing in retooling for a digital data age.

In the first instance, digital transition from print is now over. Nothing more marks the point than the news this month that Elsevier the sector leader in journals, is to outsource its eJournal transaction completion to Atypon. This then is just a cost, and each player will seek opportunities to drive it as low as possible. Journal articles are getting commoditized and will be universally available before long, so this is not a growth area. Wiley’s growth in its Research sector – its new name for STM, was -1% in FY13. It is hard to imagine that Springer was more than low single digit, and indeed it is possible that the industry average is less than 2%. Given current constraints on price increases (between 5 and 9 % across the sector) and it is easy to imagine that we are suffering a market contraction. Yet private equity investors cannot do financial restructuring all the time and shareholders expect dividend growth as markets come back. So what are the growth strategies which will deliver that?

It seems to me that there are two current hopes for sustainable long term growth. Neither will be new to these two companies, since in a number of ways both of them are experimenting here. Both involve investment, but in both cases the investments will lead directly to productivity gains, and to the possibility of very rapid new product development. Neither is a long stretch beyond the current managerial capacity of these players, since both have strong and capable technology strength. The key question is whether they are flexible enough in managerial terms to embrace a future beyond the formats and business models on which they were reared and upon which they have grown comfortable in historical times. The two directions both rely upon the data they already hold, and data which they can obtain by alliance and joint venturing with third parties. They can be described as the development of workflow tools for the processes of research on the one hand, and the building of analytical tools and datasets/knowledge stores for researchers on the other. In order to play here the publishers will need a data platform which allows the cross-filing and searching of content-as-data, and ways of developing search in this context on both structured and unstructured files. They will be pushing the envelope on metadata development, imposing text enrichment disciplines to increase the value of their content, building extensive triples stores, and using their expertise as a draw for researchers to deposit experimental/evidential data with them, as well as publishing their articles. And, having decided their niches, they will be collaborating with other publisher data-holders, sourcing Open Data deposits and turning themselves into a part of the research value chain itself. When peer review gives way to PPPR (post-publication peer review) their grip on the “barrier to publication” cycle, in which the publisher-managed peer review is necessary for the researcher to enter the market, will be broken anyway.

So what will these new products and services look like? Well, both of these players already know something about that. Springer has successfully re-platformed on the widely-used MarkLogic system, which creates a completely different data-handling opportunity and is widely used in the sector. And Springer has form in the researcher workflow market through its recent purchase of Papers, the Dutch article production software (Mekentosj BV). Likewise, Wiley have made real strides in developing knowledge stores in support of their chemistry browser project and in response to the strength of their chemistry list (as noted here already). But these instances are swallows, not summer. There has to consistent and sustained development to create batteries of data services in chosen sectors, and the data enrichment must be widespread, not experimental. The workflow tools will include some acquisitions, but will reflect a great deal of home grown learning as many publishers discover, for the first time, what the eventual user (not the library intermediary) does for a living – and how he can be helped and supported by data-charged service modules which will become as essential to his view of research as, well, journals once were. The real issue, then, is not technology: it is the mindset to forge a new business out of the old, with end-users, not buyers, and with data, not pre-formatted reporting, at its core. It sounds like a choice, but it isn’t really. Growth in real terms is the key to survival. It is time to start thinking again about how we satisfy markets, and investors.

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