Jul
26
The Media Investment Game
Filed Under B2B, Big Data, Blog, data analytics, healthcare, Industry Analysis, internet, online advertising, Pearson, Publishing, Reed Elsevier, STM, Thomson, Uncategorized, Workflow | Leave a Comment
The past week demonstrates triumphantly that human ingenuity knows no bounds in finding fresh ways to invest in content and software marketplaces, with appetites apparently undaunted by the many examples available which show how hard it is to get growth in traditional media and how hard it is to get margins in the newer variety. Pearson’s results, despite positive underlying trends and signs of more normal market conditions in the US, failed to set investors alight. The mean machine at Amazon, trying to cope with the margin constriction of online retail while desperately seeking other sources of value add profits in logistics and AWS got a chilly response from markets. And yet, during the week, a number of unrelated deals demonstrated a continuing hunger for media and information marketplace assets that belies the difficulties and provides new exemplars of market reconstruction and consolidation at work.
We are all used of course to the cellular division process employed by McGraw Hill and News Corp to create a Good Bank/Bad Bank division of assets that enables the bit with prospects to be revalued and become a new growth point. This week we could call this the Murdoch Gambit, as Twentieth Century Fox, aka Good Assets, went after Time Warneur while the latter was in process of casting its Bad element, aka Time Inc, overboard. The acres of screenspace devoted to discussing this rather obscured remarkable goings-on in the wholly less glamourous but once far more profitable field of building and construction industry information. A few weeks ago McGraw announced that it was selling its properties in this area, clearly not relishing the build to a workflow-based BIM marketplace, with market players only slowly migrating to towards a new world of data handling. Last week Reed Elsevier went one further, by selling its RS Means building costs division to Warburg Pincus (who own the competitor, Gordian Group) and including 49% of Reed Construction in the deal. This demonstrates two interesting possibilities: Reed really are a portfolio player now, with a clear strategy on the rules of investment engagement and a determination to let others share the risk when retooling and re-investment becomes necessary; and private equity is becoming recognised again as a good place to go for those re-investment activities. Warburg Pincus in particular can point to their years of patient market and service development work at GlobalSpec, now a key element in the IHS positioning at the front of the Engineering information market.
And this was not the only interesting news from Reed Elsevier. For a start, it’s revenues are now 82% “digital”, a figure that only financial analysts seem to care about, long after the rest of us had assumed the figure was 100%! And for a moment midweek we could have been forgiven for thinking we were returning to the “Happy Families” consolidations of the 1990s as Reed (Lexis) sold its Polish law assets to Wolters Kluwer, who with equal solemnity sold their Canadian assets to Lexis. It all made perfect sense. Neither Thomson Reuters or Lexis ever made Germany work, yet WK did. Poland was the same, only smaller. Canada was much more comfortable for Lexis, which had considerable assets there already. One can only wonder why rationalisation sometimes takes so long. Whatever the answer, looking at the assets as a portfolio investment manager and not as a committed investor in certain markets and geographies certainly aids the thought process and clarifies the rules. One of Reed’s mantras in recent years has been reducing reliance on unstable advertising marketplaces. This week’s results indicated that advertising is now down to 2% of gross revenues. Mission accomplished then, since Reed are clearly not interested in the marketing services environments which will succeed old-style advertising, and which created what for me was Deal of the Week: the sale of Bizo to LinkedIn. When we look back for benchmarks of the recognition of marketing services online as a wholly new service concept, then Russell Glass’s company, itself a breakout from ZoomInfo, will be the measure.
So should we expect more weeks like this as the industry vertically restructures and consolidates? Will Wolters Kluwer seek a revaluation of its wonderful health portfolio by floating it separately from the less vibrant business, law and tax divisions. Informa, who recently announced a very logical and much more service-centric structure, could take a similar view, since the relationships between, for example, their academic research and their trade exhibitions businesses are pretty tenuous. My guess however is that the real control here will not be the investment savvy of the suits at head office, but market tolerance and utility. In markets where data availability inside workflow driven models becomes the expectation, and each offering must be content complete in order to compete, there will seldom be more than two competitors. The portfolio investor decision is the oldest on record: stick, or …twist.
Jun
25
Every Man His Own Platform
Filed Under B2B, Big Data, Blog, data analytics, eBook, healthcare, Industry Analysis, internet, Publishing, Reed Elsevier, Search, semantic web, STM, Uncategorized, Workflow | 1 Comment
I have enjoyed reading an Outsell Market Update today entitled “STM Platform Providers”. It reminds me of the speed of change in a very forceful way, and Deni Auclair’s expert analysis brings out the differences between the various publishing and distribution offerings in the market place. But it also reminds me that the words we use to describe things are more rapidly eroded than we imagine, and that this can lead to imprecision if we are not careful. Thus in recent years I have begun to reserve “platform” for infrastructure. So I would reserve the word in this context for something like MarkLogic, a way of organizing and searching your total content, applying analytics to it (semantic in this instance) and developing new products through adding value to existing content or recombining it with third party content. By comparison, I would see Highwire as essentially a delivery system, Semantico as a systems integrator now developing its own tools, and IXXUS as a brilliant systems integrator using mostly MarkLogic and Alfresco to build platforms upon which publishing and distribution tools can sit.
This search for distinctions may just be pedantry, so please feel free to ignore it. Or it could be that there is something stirring out there which relates to wider changes. The worrying part, to me, of the work of the Atypons or the Publishing Technologys analysed here is that they tend to reflect the publisher’s need/desire to control and distribute content in its existing packages. Yet, as Deni wisely points out, eBook publishers commonly sell “by the drink” – typically in chapter-sized portions though if their metadata were better they could go smaller. This points me to the thought that these publishing and distribution technologies are often a barrier to change, locking publishers into format driven responses to markets that now want something different. New product development that starts with end-user requirements must begin on format neutral platforms, where content-as-data has to be the rule, where third party data can be absorbed and integrated with existing data and where analytics are semantic from the very start, and not added later.
So I am going to continue for a bit to define “platform” my way, and whenever I meet a publisher who says he is “re-platforming” I will ask the same question: “do you have your customer data and your sales data on the same platform as your content?” If they say “No” then I know they are buying bandages, not addressing the problems of rapid, iterative new product development, where those data sets are vital to the process. But then again, we may all be wrong.We may all be dancing in an emptying ballroom. For this was the week when writeLaTex partnered with Rubriq (www.rubriq.com). Or let me put it another way: this was the week when a prominent (and free) self-publishing service for scholarly research authors joined up with a developing service for pre-submission peer review (standard cost $600, well below any publisher). Or think of it this way: they do not need us for authoring and they do not need us for peer review, so how do you re-insert the value in the publishing sandwich?
And this was a week when the great things STM publishers do just got greater. I was delighted to see that IOPP had decided to make a further 5 physics journals wholly digital and I expect that in the next three years print will yield entirely in this marketplace. I was even happier to see that the brilliant men and women who built Elsevier’s Scopus have just launched the first Chinese language search interface to the service. I think this is a first anywhere and much to be welcomed: what an anomaly if the world’s largest science research source nation continued to function only in English. And then, yesterday, IMS Health (www.imshealth.com) announced that they had bought a group of data-intensive businesses from Cegedim. Bringing these data sets onto the IMS Health platform is clearly seen as a huge boost to the latter’s ability to derive new products and services. The revenue earned by this data at Cegedim last year was approx. $573m with Ebitda of $86m. IMS Health paid $520m in cash. As a result they add to their platform, amongst other things, a database of analytical comparisons covering 13.7 million healthcare professionals around the world and a range of information solutions that use primary research data. This deal may not be widely reported, but in the sense that building data into platforms for new product development purposes is important, this could be very significant.
This is the age of self-publishing. We know that the consumer fiction genre market now sells a greater volume of self-published digital fiction than all of the traditional publishers put together. We shall soon see similarly large proportions of STM markets devoted to self publishing. When that happens, the battle will not be around how effectively we deliver traditional products in familiar formats. The winners will be between those who can leverage their own, and third party/Open Web content, to produce the tools, the viewers, the analytics needed to support end-user researchers in their workflow-related tasks. Our data revolution has scarcely even started!
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