Apr
2
Righting Copyright’s Wrongs?
Filed Under B2B, Blog, eBook, Education, eLearning, Industry Analysis, internet, mobile content, Publishing, Uncategorized | Leave a Comment
They are at it again, you know. I have warned about this before. It seems that you cannot stop legislators making laws. They seem to think it is what they are for, while we older people know that the only way to preserve a reputation as a wise law-giver is to give nothing away. Nobody is happy with a patched road or a mended fence. Most Western legal systems are full of patched legal garments, most legislators are patching the patches, many of us know that only revolutions will allow a complete remake. The Sumerian agricultural revolution and the laws of Hammurabi. The Byzantine revolution and the laws of Justinian. The French Revolution and the Napoleonic code. The Digital Revolution and the redefinition of networked trading and ownership rights…?
Well, you certainly need a broad historical canvas if you are going to start a conversation in this area at all. One man of vision over many years in this field is the British media lawyer, Laurie Kaye, whose latest blog (http://laurencekaye.typepad.com/laurence_kayes_blog/) on 29 March sets out the battleground for the digital media marketplace arguments for 2015. And I share his respect for the enthusiasm of Commissioner Oettinger of the European Union, while adding a touch of personal despair at how long we Europeans have been about this Single Market business. Who amongst us is not frustrated by the limitations of the world we have now moved into? The librarians and researchers launched their London Manifesto yesterday to try to encourage the Commissioner in the right direction. (http://www.cilip.org.uk/sites/default/files/documents/The_London_Manifesto.pdf). Well they would do that, wouldn’t they? Yet more and more their impatience is just an echo of common place resistance and outright defiance in the market place.
And its not just copyright as ownership, its the whole content trading system of which copyright is the centre piece. As a good Brit I pay my BBC annual licence fee, but the rule of territoriality in a global networked society means I cannot view the videos I can see in London while I am in New York. Each of the media has a different rulebook, yet we live in a world of multiple and multi media developments. Above all, the interests of the players in the cycle of content creation and distribution are beginning to diverge, and great gaps, more significant than ever before, appear between what authors want and need, and the way in which publishers, ever protective of their business model, require for survival. The increasing dissonance that I hear as I listen to the strident voices protecting the copyright regime of the last century (representing a business model where publishers held the whip hand), and the equally strident voices demanding the freedom in the network to control for themselves the way authorial output is distributed is becoming distressing. Please, Officer Oettinger, what is a man to do?
In some ways this started in the academic world. When we write the history, Open Access will be seen not just as a way of allowing all citizens to discover the content of state-funded research. It will also be seen as authors wanting to use the network, with its ability to create huge access and impact for global populations, as a way of building reputation in the communities they target. The communities where they earn their bread and seek preferment. And is this so very different from the science fiction author who spoke to me recently about his publishing as a way to create an income stream – in his case from lecturing fees, public appearances, film scripts derived from the content, and commissioned writing for on and offline magazines. The book made the reputation, just as the scholarly research article does, and the key issue is not its royalty yield, but the breadth of readership and brand recognition that it creates. All too often the defence of copyright is the defence of the publishing business model, without a realisation alongside it that the role and value of the intermediary which is in question here. Networks, we always used to say, disintermediate intermediaries. In a world where it is so relatively easy to create your online eBook, and publishers are deserting the scrutiny of unsolicited manuscripts in favour of bringing successful self -publishers into contract as authors, publishers must – and can – demonstrate the value of their editorial preparation (something few now indulge in for cost reasons), their ability to discover talent and their excellence as reputation formers and mass marketeers. These are not all areas of strength for everyone, but they are becoming survival skills. Recall for a moment how proactive agents have been diminishing the rights granted to publishers in order to increase the flexibility of their clients. Recall for a moment how often now (Quebec City this week, Montreal airport last year and the Italian railways just before that) you can download an eBook from a library in order to read while travelling.
So when we want to debate the small print of copyright licensing rules we have to bear in mind that the revolution coming will have such violence that it will completely transform the way that longform text is created, marketed and distributed. No industry can be kept on life-support by virtue of making a concession on library lending while winning a point on fair dealing. We now need to resolve, as a matter of prime concern, whether territoriality in terms of making agreements about content is of any continuing use. We need to address issues that affect market receptivity, like net neutrality. We have made huge strides, thanks to the efforts of Lawrence Lessing, in writing into licensing a real recognition of origin and authorship while freeing up a good deal of re-use, and we need to look at ways in which the Creative Commons movement give pointers to future treatment in a licenced – and implied licence – network world. But above all we must urgently clear our minds and begin to redefine “ownership” of intangible intellectual property. For anyone under 17 this is a meaningless blog , and no one could explain it to them. Living in a world where the network sorts out licences and rewards on an M2M basis – machine to machine – this will never be an issue. Until then, different rules will govern downloading from those that govern streaming, and the lawyerly debate on whether that was a product or this was a service will create fresh intellectual property from the argument itself.
Jan
15
The Ultimate Question is Scale
Filed Under Big Data, Blog, Education, eLearning, Industry Analysis, internet, Publishing, Reed Elsevier, STM, Workflow | 2 Comments
How big do you need to be to succeed? In this age of internet service and content consolidation the urge to be large seems almost irresistible. You have to be big enough to be a one stop shop, or big percentage thereof. You have to be big enough to enable the technology spend, and get its paybacks. As content gets increasingly commoditized, you have to be big enough to move up the value chain with your users, and to buy into innovative smaller players at the right time. Above all, if consolidation is, as I have long maintained leading to information market sectors with two, or three big players and a host of smaller ones, you need to be in the First Division if you aim to influence market behaviour, pricing, access and discoverability rather than be driven by them These thoughts come immediately to mind while thinking about today’s news of the “merger” between Springer and Macmillan.
I have put “merger” in inverted commas because you could also describe this as a German dynastic marriage, or indeed you could describe it as an acquisition, since the architect of the deal, Stefan von Holtzbrinck, ends up holding 53% of the equity. Holtzbrinck, of course, remains a family company and started as a major player in German national and regional newspapers. Like another family company, DMGT, this generation has seen the instability of basing the family wealth solely in newsprint. DMGT, through diversification supported and encouraged by Vere and then Jonathan Harmsworth, is now a B2B company with a minority proportion of its activity in newspapers. The Von Holtzbrinck route was different, but ends in the same place: the minority of its interests are now in scientific information, academic publishing and education. The critical threat that the demise of newspapers would sink the family ship is now over.
And over in a very clever way. Keep “merger” in quotes. While Macmillan always had to get bigger to become a rival to Wiley in a market dominated by Elsevier, Springer always had to sell. It has had so many suitors over the years that it qualified for a place on Parship, the Holtzbrinck dating site. The current relationship with BC Partners is a tertiary private equity deal, something unheard of before this century. But the result of Cinven and Candover buying the decaying hulk of Springer from Bertelsmann was a clean-up, followed by a sale to EQT and GIC. Which was followed by more streamlining and margin improvement and a sale to BC Partners for 3.3 billion euros. There could have been little improvement to be made this time round. Springer had recreated its Springerlink online platform and the company is undoubtedly back amongst the market leaders in terms of profitability, so the only way to go was a trade sale. The solution in this deal is just that, staged to the benefit of both parties. BC get to exit their 47%, possibly via an IPO, in the next three years, at an enhanced valuation secured through the Macmillan assets, and especially Nature Publishing. Holtzbrinck get a satisfying revaluation of their Macmillan purchase when the IPO goes through, and probably an opportunity to grow their stake. So both can go happily hand in hand to the German regulator, and get a big tick for accomplishing one of the prized national objectives – keeping Springer, the historical home of German chemistry as it reshaped late nineteenth century science, as a German company. Finally, as you look at this deal, do the maths. Holtzbrinck have merged into this deal their assets at Macmillan to form a company worth 5 billion euros. Their partner put in a company worth 3.3 billion euros two years ago. Holtzbrinck get 53%, depending on how much debt is left in 2-4 years time , and how much of this the partners decide to turn into equity. Sounds good to me!
It could have been so much worse for Springer, though. The perpetual arranged marriage for Springer was always going to be Informa’s Taylor and Francis. It almost came off twice. but the in-laws came to blows at the altar rail. Then people like me bet on Springer, always underexposed in the US, being merged with Thomson-Reuters Healthcare (now in PE hands as Trueven) or Thomson-Reuters Science (still oddly outside of the parent’s finance-law corporate vertical). Wiley was even mentioned as a possible deal, though this always seemed unlikely. But the new marriage, with a market cap, remember, of around 5 billion euros, has desirable scale, and both players together make a powerful force in Open Access and can use their joint capacity to operate effectively as data publishers as science wants more and more experimental evidence linked to articles and made available on time and alongside.
And of course there is more than science in this deal. The Education interests of Macmillan, with some exceptions, are in the mix, as are the now much diminished B2B interests of Springer. Rather more interesting is what is left out on the Macmillan side. No private equity player looking at a forthcoming marriage of convenience would want to see assets included that were under a cloud or had yet to yield a margin. And Springer’s margins , which the current management have recovered from their previous deeply unimpressive levels , are now above the industry average and almost certainly better than Macmillan. The whole US Higher Education market is fairly cloudy, which may explain the exclusion of Bedford from the deal. Macmillan consumer publishing is just irrelevant to all this. And the seed investment areas are just too far from profitability, so they stay with Holtzbrinck, giving that company another bonus. There are some great growth points in these seed beds. Just imagine, looking at the ReadCube venture in Macmillan Digital Science, the effect of using that platform, already in Wiley and Nature, in Springer. That is the good thing about scale – you can build quickly.
The final question we need to ask is how all this can be managed. Annette Thomas goes onto the Springer board as Chief Science Officer, joining Derk Haank, CEO, Martin Mos (COO) and the Springer CFO. As indicated in the last blog here, Annette’s style has been innovation and adventure. Her Dutch and German colleagues on this board have built through more conservative policies. A big priority has been securing the management team pay-outs that three rewarding deals in 15 years can secure. By some estimates those rewards would now buy a small European country, let alone a farm at Groningen! Such things are not secured by high risk investment. As a team these people are the most experienced STM players anywhere: what we now need to see is how well they perform as a management team. This is not the least interesting part of this deal.
« go back — keep looking »