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A Matter of Perspective — Elsevier Acquires Mendeley . . . or, Mendeley Sells Itself to Elsevier

Mendeley

Mendeley (Photo credit: AJC1)

Confirming earlier speculation, Elsevier has acquired the reference management site Mendeley. Terms were not disclosed, but TechCrunch has estimated the deal to be worth between $69 million and $100 million in total. That’s approximately $30-45 per user. Given revenues that seem to be relatively slight at this point, Elsevier appears to have paid a significant multiple for Mendeley.

From Elsevier’s perspective, the deal is accurately described as, “Elsevier Acquires Mendeley.” However, because Mendeley has been a darling of open access (OA), which inevitably brings with it some anti-Elsevier sentiments, the deal may also be interpreted as, “Mendeley Sold Itself to Elsevier.”

David Crotty and I were allowed to interview Mendeley’s Victor Henning and Elsevier’s Olivier Dumon in anticipation of Elsevier’s announcement, which was embargoed until 9 a.m. GMT Tuesday, an embargo that was quickly undone by TechCrunch, then social media, and finally on Mendeley’s own blog Monday night. This post uses portions of that interview to inform the speculation and perspectives that follow. (I wrote most of the post, with David contributing edits throughout the evening.)

Anyone who has been through an acquisition knows that the acquirer ultimately holds the cards, no matter what assurances are made at the outset. To mitigate any perception that Elsevier doesn’t understand the Mendeley community, Elsevier has immediately expanded Mendeley’s services to users, doubling storage capacity and promising to continue the freemium business model Mendeley has been using.

Mendeley’s future at Elsevier seems to be a mix of “remain a standalone platform, building on what people know and like” and “integrated more deeply with Elsevier’s sales and technology strategies.” There seem to be some obvious paths for Mendeley at Elsevier, as a discovery tool for readers in Science Direct or as an almetrics tool built into Scopus. In a blog post published last night, Mendeley has this cryptic description of its role at Elsevier:

Mendeley will become Elsevier’s central workflow, collaboration, and networking platform, while we continue on our mission of making science more open and collaborative.

So perhaps Scopus and Science Direct are about to be subsumed by Mendeley. Whatever the internal changes at Elsevier, the market face of Mendeley is not about to go away. This was not an acquisition to take out a threat, but an acquisition to create a more vertically integrated tool. Mendeley staff also remains intact — Henning will continue on at Mendeley, and will have an additional role at Elsevier in their strategy group, while Jen Reichelt will run Mendeley’s day-to-day operations.

Digging a bit deeper, you begin to see some real business drivers behind the deal. One of these emerges when you consider the Mendeley Institutional Edition (MIE), which currently accounts for about 1/3 of Mendeley’s revenues (group and individual purchasers of premium services account for the other 2/3 of their revenues). In our interview, I asked if MIE will be rolled into Elsevier’s “Big Deal” licensing approaches. Their response was a little vague and more stumbling than the text below might indicate:

What we know for sure is that we can keep the Mendeley Institutional Edition as an ongoing product, so that we know for sure. It’s going to stay as a standalone product for now. Whether we’ll potentially integrate this new feature into other product offerings that we currently have, it is too early to say. I think we will decide that in the upcoming weeks or months. We don’t know for now.

It’s just a gut feeling, but I believe the short answer is, “Yes.” Time will tell, but Mendeley is a high-priced item already. A February 2013 Library Journal article goes into some details around the pricing at institutions:

Subscriptions for small academic institutions (with fewer than 500 FTE) start at $5,500. Very large institutions (more than 50,000 FTE) would pay $50,000 per year.

Currently, Swets is the only sales agent selling the MIE product for Mendeley, but this is a non-exclusive arrangement with some exclusions Swets carved out which prevent Elsevier from using a few specific agents. A blog post on the SwetsBlog notes that MIE sales have been made to at least six major institutions, plus many other smaller institutions. Assuming full-price, that would put Mendeley revenues via MIE at about US$400,000, possibly higher; if this is 1/3 of their revenues, then individuals and groups are chipping in another US$800,000, for total revenues of US$1.2 million in 2012. But this is just a “back of the envelope” guesstimate, and earlier estimates peg the revenues at “tens of thousands of dollars per month.” This makes the $69-100 million range quoted at TechCrunch for the acquisition startling.

Nevertheless, it seems likely that other agents will soon be selling the MIE product for Elsevier, possibly integrated with current “Big Deals.”

Currently, Mendeley predicates its terms of use on the notion that the PDFs being shared are the “user’s Content.” Recent decisions like that around ReDigi suggest that copyright and licensing can undercut this assumption. Mendeley might have been previously protected from lawsuits because of its “I’ve got no money but am widely beloved” image. Now that Mendeley is owned by “I’ve got lots of money and am not widely beloved” Elsevier, I can almost hear the lawyers turning their attention as one to this acquisition.

When asked about this, the answer was underwhelming. First, a bit of perspective — Olivier Dumon, the person quoted in the Elsevier press release and who was also on the call, admits he’s new to scientific and scholarly publishing, having been at Elsevier for only 15 months (he was previously at eBay and AT&T Interactive).

The reaction was unsatisfactory for a few reasons — first, there was talk about trying to better establish what user’s “entitlements” were, but this avoids the question about whether users have the right to openly share copyrighted or licensed content via Mendeley even if they or their institution subscribe (or if there is a CC-BY-NC license associated with the work); second, there was acknowledgement that validating users has not been a priority for Mendeley, and that it’s something they will have to shore up, as inference has failed due to a predominance of Gmail accounts in their database; and finally, Dumon seemed to believe that Mendeley can ameliorate any concerns because it will “drive traffic to publisher’s Web sites.”

I almost fell over. How many times have we heard this refrain from people who want our content? This empty promise (which nobody will back up with an SLA or similar contractual guarantee) went beyond weak tea years ago in my book and actually has become a bit of a red flag. Perhaps this is a sign of Dumon’s novice status in the space, or simply that Elsevier has a lot of thinking to do yet around issues like this, but I see a potential problem — one that ties into the legal risks around this deal and the longevity of Mendeley’s central premise of PDF sharing now that it’s owned by Elsevier.

One thing that may reassure publishers would be for Elsevier and Mendeley to release some actual usage statistics. How many papers have been uploaded? How much are they shared? Is there really discussion going on around them or is the service just being used as a Napster for scholarly papers? Still, in the long run, it’s likely better for publishers to see this service under the roof of a company with incentive for respecting copyright, rather than an independent wildcard with no such ties.

I also asked about Mendeley’s reliance on the PDF as the container of choice, and here they’ve clearly thought more about the need to move beyond the PDF. However, the answer pointed to the HTML version as potentially exportable, while citing Elsevier’s “Article of the Future” work. This seems a double-edged sword — moving beyond the PDF to store and share the HTML in certain cases as well might be good for users, but probably won’t lessen the legal threats to the whole enchilada.

Another area we explored was whether Elsevier would put a thumb on the scale at Mendeley. We’ve already seen how non-financial motivations at PubMed Central can affect interface design. Dumon and Henning both said that Elsevier has proven it can be “publisher agnostic,” and that they intend to continue to be with Mendeley.*

But will publishers continue to be Elsevier-agnostic? Now that a major commercial publisher owns Mendeley — and, if the rumors are correct, a few major publishers were actively vying for Mendeley — will Elsevier treat its own content differently, or will battles around Mendeley become akin to proxy wars between large commercial publishers? It’s worth noting that publishers tend to take services at face value, as Connotea and CiteULike were used by many platforms across journals, despite being owned by Nature Publishing Group and supported by Springer, respectively.

With the OSTP policy memo now in play, perhaps Mendeley can become the ultimate dark archive for the literature, providing searching across all disciplines. After all, PMC is essentially a silo of biomedicine. With a strong headstart and Elsevier’s content and muscle, Mendeley could transform into a discipline-spanning scientific search engine to end all search engines. Search and aggregation are on Elsevier’s mind, as their new Clinical Key search engine shows.

This is an interesting acquisition, one that rewards an innovator and his team (Victor Henning et al), which is good; one that simplifies life for Mendeley by making it clearly a services company owned by a publisher, allowing it to focus; one that complicates the brand relationship between Mendeley and its users; one that courts some risk around copyright and licensing terms; and one that most likely raises the stakes around offering services in the publishing community.

* A quibble — please stop saying “agnostic” which means in this context “unwilling to commit to an opinion.” When someone at Elsevier says they are “publisher agnostic,” what does that mean? Just say “publisher neutral.” Please. It’s a simple word and a clear concept.
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About Kent Anderson

I am the CEO/Publisher of the STRIATUS/JBJS, Inc., the home of the Journal of Bone & Joint Surgery, JBJS Case Connector, JBJS Reviews, JBJS Essential Surgical Techniques, the JBJS Recertification Course, PRE-val, and SocialCite. Prior to this, I was an executive at the New England Journal of Medicine. I also was Director of Medical Journals at the American Academy of Pediatrics.

Discussion

33 thoughts on “A Matter of Perspective — Elsevier Acquires Mendeley . . . or, Mendeley Sells Itself to Elsevier

  1. I’m glad to finally see a public mention regarding the concerns surrounding how Mendeley seems to fly under the radar as far as unauthorized file sharing. If there’s been previous conversations on this subject I’d be curious if others can point them out to me. I’d tried contacting folks at Mendeley to get a response on their policies about users sharing copyrighted materials but never did get an answer. Maybe some light will be shed on this now. Having said this, I applaud Victor and the rest on the hard work they’ve put in to reach this point. Well done and congrats!

    Posted by Adam Etkin (@adametkin) | Apr 8, 2013, 10:22 pm
      • Key paragraph from that article here:

        Way back in the stone age of 2000, media giant Bertelsmann invested in the granddaddy of all fileswapping networks, Napster. The plan was to turn it into a legitimate subscription service that would allow users to continue swapping files, but to ensure compensation to copyright holders. But this act of lying down with infringers led to an expensive case of fleas for Bertelsmann. They ended up having to pay out massive settlements to copyright holders due to its financial support of an illegal network. Bertelsmann gave up on their plans for Napster at that point, and its assets were sold off at auction. Napster became a wholly different beast that merely sold files without any sharing, lost the bulk of its users to newer filesharing networks, and subsequently changed hands several times without any significant impact on the market. Bertelsmann’s legal troubles point out the danger in partnering with companies that are violating copyright law.

        But it’s also important to realize that the filesharing functionality is pretty peripheral to the value Mendeley offers Elsevier. The core values are in discovery for the reader (via integration with Science Direct) or better analytics (via Scopus). Filesharing could be dropped today and Mendeley would be no less valuable an acquisition.

        Posted by David Crotty | Apr 9, 2013, 7:35 am
        • David, while I agree with you 100% that Mendeley has much value even w/out the file sharing, the reaction from OA advocates to the sale make it pretty clear, to me at least, that there is a large percentage of users who view the file sharing as a prime benefit and a “wink wink” way to get around copyright and access restrictions.

          Posted by Adam Etkin (@adametkin) | Apr 9, 2013, 9:38 am
          • It’s hard to know as it’s such a closed system. For Bittorrent and the like, you can find who is offering files by searching. Here, they’re keeping the redistribution of papers behind closed doors to those outside of a particular sharing group. That’s why in the post above, we suggested that if use is really legit for discussion and annotation purposes, releasing data to back that up would be helpful.

            What’s interesting to me about the system though is that it would seem to already contain the tools needed to police things. Reference management tools are built to automatically identify papers from the PDF’s. Given that their system does make this automatic identification, 1) it would seem that they can’t claim the ignorance of the identity of the files needed for safe harbor protection and 2) they could readily build in a method for preventing illegal redistribution by blacklisting copyrighted papers (and instead driving the user to a link to the legitimate version).

            Posted by David Crotty | Apr 9, 2013, 9:53 am
          • I know several lab groups using Mendeley, which share PDFs. In that case, almost all the PDFs are likely already licensed by the large research university libraries, but having them instantly available on the desktop for new students etc, is very much faster than having to log in through a VPN and manually download the different articles through a bunch of different interfaces etc.

            Posted by Stian Håklev | Apr 9, 2013, 4:50 pm
            • Which makes for an interesting legal question. You and the members of your research group, as subscribers may have a legal right to access the journal article, but does Mendeley have a legal right to provide that access, and is this complicated by them charging for that service?

              If each member of my book group buys a Kindle copy of a novel, does a literary discussion website unaffiliated with Amazon or the publisher have a right to make a full text online version of the novel available to my group for a fee without securing permission or rights from the publisher and Amazon?

              Posted by David Crotty | Apr 9, 2013, 5:11 pm
      • Ah! David, you nailed it back then. Thanks for pointing this out for me.

        Posted by Adam Etkin (@adametkin) | Apr 9, 2013, 9:41 am
    • Personally, I’d like to see our community stop using the word “sharing” when what we actually mean is “copying.” The word “sharing” invokes a halo effect (just as the word “piracy” does the opposite), whereas “copying” has the twin virtues of accuracy and political neutrality. It seems to me that the more we call this behavior what it is, the more likely it is that we’ll be able to have rational conversations about it.

      Posted by Rick Anderson | Apr 9, 2013, 9:55 am
      • I agree, as the semantics of the situation often distract from having a substantive discussion of the issues. If one refers to it as “stealing” or “theft”, then you end up in a lengthy argument about the terms, rather than the principles. Maybe, “Redistribution”? “Infringement”?

        Posted by David Crotty | Apr 9, 2013, 10:29 am
        • Rick/David – Good point regarding the semantics. “Infringement” seems the most apt to me.

          Posted by Adam Etkin (@adametkin) | Apr 9, 2013, 5:03 pm
          • The problem with “infringement” is that it represents a prejudgement of the copying. Not all copying of copyrighted material represents infringement. Why not just call it “copying” unless we know for sure that it infringes?

            Posted by Rick Anderson | Apr 10, 2013, 9:50 am
            • Making a copy isn’t necessarily a problem though. It’s redistributing that copy without the right to do so.

              Posted by David Crotty | Apr 10, 2013, 9:55 am
              • I agree with David. I personally am not referring to “sharing” or even “copying.” I’m concerned with “infringement” which, as David points out, is distributing w/out the right to do so.

                Posted by Adam Etkin (@adametkin) | Apr 10, 2013, 5:38 pm
  2. Kent, thank you for a very timely, informative and authoritative review of the Elsevier acquisition of Mendeley. It will be interesting to see what will become of the BiomedExperts.com professional network as Mendeley has surpassed it in regards to relevance and number of registered users. Elsevier has been very busy this year with the acquisition of Knovel and now Mendeley, how the products and services of these companies will be truly integrated remains to be seen but most important how will these services improve the critical path of the author/researcher? The research community will vote with their eyeballs.

    Posted by darrellwgunter | Apr 8, 2013, 10:39 pm
  3. Props to the SK team for calling this move so far in advance (and for digging into the details of what it all may mean for the future). However, I would like to push back just a little against the following:

    However, because Mendeley has been a darling of open access (OA), which inevitably brings with it some anti-Elsevier sentiments, the deal may also be interpreted as, “Mendeley Sold Itself to Elsevier.”

    Is it really true that the OA community held up Mendeley as some sort of beacon? I certainly understand that Mendeley has attempted to wrap itself in the flag of OA in the past, but that’s more a marketing tactic than anything else I would think. Indeed, it will be interesting to see if the company’s public stance towards OA will change going forward…

    Posted by Ed Sperr | Apr 9, 2013, 9:25 am
  4. Guess it’s time for me to start looking for alternatives. Anyone have any good suggestions? Colwiz looks good but I’m hoping to get some opinion on this by people who might have used it more. Looks great on first glance though.

    Posted by Joseph Staten | Apr 9, 2013, 9:38 am

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