Mar
9
“RELX, not Relicts!”
Filed Under B2B, Big Data, Blog, healthcare, Industry Analysis, internet, Publishing, Reed Elsevier, STM, Thomson, Uncategorized | Leave a Comment
It was a simple enough mistake to make. As I read my screen and saw the announcement two weeks ago I passed on the news to an American friend on the other side of the room. The response prompted the correction from me at the top of this page: Reed Elsevier have renamed themselves after their new stock exchange identity, and are not actually inviting us to call them also-rans. Everyone will appreciate the logic of removing the dual identity and the double quote and the difficult accounting exercise to keep these two trading identities in the market together. But I am left wondering if there is not another, almost subliminal, market message being left here, one to which perhaps even the senior management of RELX are oblivious. Coming a month after the death of Ian Irvine, one of the architects of the deal that brought Reed and Elsevier together, it made me wonder whether the real meaning here is a totally different orientation for the new group, one which would have invited the snarling displeasure of Dr Pierre Vinken, at whose insistence the Dual Monarchy was originally created and launched in January 1993.
Whatever else it is, an “Elsevier” is a book, and indeed in the nineteenth century became the term of use for a pocket book, the contemporary version of a paperback. Reed was a nineteenth century paper company. In some ways therefore these resonances should definitely go, especially since underlying brands like LexisNexis or Elsevier Science remain in place. Perhaps then we are being told that RELX is a bundle of brands invested by a quoted umbrella organization. That would be consistent enough with practice in recent years, and one can imagine that the new structure, the single quote, and the name are designed purely as a play to investors, and have been sold to employees on that basis. After all, one of the lamentations of successive generations of Reed Elsevier management over the years since 1993 has been that the European markets have consistently under-rated the company. After a couple of years of share buy backs and consistent dividend policy, now is the time, one can almost hear them saying, to move away from Reed Elsevier as the sluggish market benchmark in Europe, and re-align RELX as a more dynamic growth vehicle with a much improved rating. And all those with bonus scheme equity holdings not yet vested should cheer that relaunch!
And yet… there are some real risks. The views of investors are always short term and their analysts are as often wrong as right. Does Claudio Aspesi* know more than the professional management of Elsevier Science about what happens next in Open Access? I doubt it, but his views, from his influential desk at Sanford Bernstein, have certainly driven the share price of old Reed Elsevier more than many management announcements in recent years. Further, if you are a bundle of brands represented by a stock market ticker symbol, it is open to everyone in the market to rate you on that brand composition for short term interests. Thus it is now possible to read RELX critics who find the stock “unbuyable” until Lexis Law is divested, or who think Elsevier Health Science is too small in market share terms and should be merged with WK Health and then “IPO-ed”. I wonder who would profit most immediately from that, if not the market-makers themselves? I am not here concerned with whether either of these moves is feasible or desirable: just with the idea that if your focus is unbalanced in the direction of the market, you tend to be driven to appease market sentiment. And market sentiment is a quicksand.
Will it matter to lawyers or scientists that they now buy, ultimately, from RELX? Probably not at all. So what then is the issue? Really one of short versus long term. RELX has a history in science and law and some key business sectors that gives them two advantages. They have experienced management who have shown themselves close enough to ultimate users of information to allow them to judge likely outcomes. Timing is everything. When to press the button is just as important as all the other decisions in new product development. And new product development is going faster in these sectors than ever before. Is that a good time to swap areas of expertise within the portfolio, bringing in areas to which senior management have not been previously exposed and forsaking areas of traditional strength? Or is it a time for long term investment, active acquisition and development programmes, such as the ones that built Elsevier Science, which reposition the brand in the forefront of the marketplace but which take correspondingly long periods to pay back? Whatever choices are made, they surely begin in the market place and end by being packaged for potential investors. It is hard to believe that successful schemes can be created that begin with assessing what investors will swallow, and end with creating market interventions that fit that paradigm.
Fortunately I can end with a suggestion which will please all parties. In 1997-8 RELX attempted to merge with Wolters Kluwer. Why not bring it on again? WK is said to be selling its transport B2B division at the moment, just another of the long list of market exits since the European Commission made its competition opposition clear in 1998. There are now no education or STM assets at WK to get in the way. In the US there would be Health sector competition issues (though there are now other very large content players), but with Bloomberg BNA swarming into the tax market alongside Thomson, combining WK and Lexis on the tax side would make sense. In Europe, Lexis-WK would be powerful in France, though Lexis left Germany to WK, so no competition issues there. Long term bets on the Eurozone would not make the analysts happy, but lawyers in France and Germany are likely to be busy whichever direction the currency takes. And above all, for all of those investors who have boosted the WK share price for 17 years in the hopes of just such a denouement – a payoff!
RELX is not the only player to feel these tensions. Every quoted company is subject to them in one way or another. It is what management do to make these tensions creative and not negative that makes the difference. RELX? RELaX, not RELICTS!
Sep
7
Milking the Disintermediators
Filed Under B2B, Big Data, Blog, data analytics, Financial services, healthcare, Industry Analysis, internet, mobile content, Publishing, Reed Elsevier, semantic web, STM, Thomson, Uncategorized, Workflow | Leave a Comment
Remember those days when intermediary businesses in information markets were going to be taken out of the loop by savvy operators who could increase margins by collapsing processes in the service cycle? In the far-off nineties, before bookshops had disappeared and while libraries were still functioning as they had for the previous century, this disintermediation stuff was really hot. We spoke of “disintermediating the disintermediators”, and even “re-intermediation” – well, I did at least, and I rather hoped that you might have nodded off through some of this, since it is all changing again now, and in ways that demonstrate that we were not always entirely right in our prognostications. No, let me rephrase that – I was more often wrong about this than I am now comfortable about admitting.
There are many reasons for this but the most obvious is the most painful – pure failure of imagination. I convict myself of the crime for which I have so often harangued others. A simple failure to remember that when one relationship in a chain changes, it changes everything else in the chain. A month of illness and recuperation and holidays has given time to catch up on a backlog of reading – and thinking. And reminded me to remember my roots. As a farmer’s son in the Cotswolds, the bane of our lives on small farms was the regimented slavery of milking cows at 6am and 4pm. Now that slavery is abolished, as avid followers of the UK radio soap The Archers will be aware (North Americans can start here: http://www.cbc.ca/news/canada/new-brunswick/robot-milkers-gaining-in-popularity-at-dairy-farms-in-n-b-1.2756987). Think through these changes in terms of the chain relationship idea, and we end up in a discussion about the future of farmers and the way we organize access to and curation of the land in our society.
So what we have to discuss is whether, in information, and often entertainment, markets our intermediate role is worth saving. Whether we call ourselves publishers, or information service solution vendors, matters not a whit. Do we do enough to stay in the loop as other relationships change in our client base, and other players threaten to subvert our value by combining it with theirs? When as a law publisher online I crowed that I had “captured” the user desktop all I was actually saying was that I had beaten the law firm’s library budget to a pulp. Very many law firms don’t have librarians any more, but, in recession, many have found that more and more legal process can be outsourced in commercial law. And, as I have noted here before, as outsourcers like Obelisk (www.obelisksupport.com/) band together the unemployed lawyers to provide a service base to re-align where the work is actually done, and outsourcers to corporate counsel like Axiom (www.axiomlaw.com) replace much of the service value that private law firms once offered to corporate customers, the tectonic plates are moving in that most conservative world of law, just as re-regulation after recession is creating a new marketplace around risk management and compliance. So, take the most conservative of professions, with highly protective union rules around membership and practice, which you would think would entomb change through mummified procedure – and even here we can see real evidence that within comparatively short periods of time, far-reaching change is massively afoot.
Then look at the organization of medicine, and medical advice. Or PR, and the ability of marketing department analytics to subvert much of the value of the PR businesses. Or insurance. Or construction and BIM, and planning processes. Or engineering design. Or property transactions. Or almost any field in the world of work or transactions that you can imagine. From the taxi drivers who resent Uber to the private drivers who park with RingGo, these changes in relationships are live on the streets of London today, yet we still take each change as a piecemeal development and not as a link in a fundamental shift. And we are very good at describing over-arching movement, but not at all good on detecting what those movements may mean on the ground. If you are still reading in the next few months I shall want to write about the Internet of Things, about M2M, about “Big” metadata, about ubiquitous computing, about semantic analysis, about additive manufacturing, about open and linked data etc etc. But I am now more determined than ever to describe those things in the clothing of work and business as it is now.
So what is the Future of Law Publishers , in the sense that I have used them as an example in this piece? Well, I think that the logic of what I have been looking at this month implies that they themselves will be dis-intermediated. Clearly the small players will successfully cope with the diminishing ranks or practitioners who want texts in some form or other, until that small market becomes a self-publishing function. I can imagine that the large players, like Thomson-Reuters, Lexis or Bloomberg BNA, will be able to migrate through acquisition into the workflow outsourcing business. Their data is becoming highly commoditized, and they have too little expertise to allow them to customize. So I see them as becoming service bureau, providing cloud-based services either to their former clients, or to their client’s clients. The decisions they make for their clients will be insurable and a good number of their employees will be legally qualified. Gradually, in some service areas, it will be hard to tell them apart from law firms. And that is a prevalent conclusion from research in these areas – only our physical, non-networked world could have sustained these separate service functions in the value chain. Put them all in the same virtual network, and inexorably they mutate into one solution. Before the summer break, I wrote about this here under the title “If its a Service, Outsource it…“. Reviewing that piece I now realize that we are seeing the first stages of a much more fundamental re-alignment. And it cannot be postponed or delayed because media and information corporations so wish it.
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