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.”
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.