Cover of "The Godfather (Widescreen Editi...
Cover of The Godfather (Widescreen Edition)

At the beginning of Jared Diamond’s magisterial  “Guns, Germs, and Steel,” the author recounts a conversation he had with a native of New Guinea. Why, the New Guinean asks, do the people of the West have so much more “cargo”? “Cargo” is his term for material wealth. Diamond’s answer is that Europe had the three elements of his book’s title on its side. With such advantages, the accumulation of “cargo” was almost inevitable.

I have often reflected on this passage when the question of the relative success of for-profit and not-for-profit (NFP) publishing enterprises comes up. Although there are some conspicuous exceptions, most of the big dogs in scholarly communications are commercial enterprises.  What is it about the for-profit world of publishing that has enabled it to become dominant over its well-intended, hard-working fellows in the NFP camp?

On the face of it, you would have to say that the dominance (measured in market share and expressed in dollars) of the commercial firms is highly improbable. Publishing is not like most other industries; the NFP sector is large and often attached to other institutions (universities, government) that sit outside the roilings of the profit motive. NEJM, AAAS, ACS, OUP, and so on — try to find the equivalent of such NFPs in the auto or consumer electronics industries.  One would think that with such a strong group of NFP organizations, there would be stronger challengers to the for-profit leaders of Elsevier, Springer, Taylor & Francis, John Wiley, and their kin. The fact is, though, that for all the prestige of some of the NFPs, this is an industry dominated by commercial entities. The presence of NFP institutions and publishers serves as an offset to the influence of the for-profit firms, but there is no question who is the biggest kid on the block.

There are various explanations offered for this, the most common of which is that the NFPs cannot compete with the commercial firms because the commercial firms simply have more money. This is not true, and it is important to understand why.

Let’s take a small university press as an example. For such a press, the prospect of competing with the likes of Springer, Random House, and Pearson is daunting. Few university presses even try, which is why there is no NFP book list in STM to compare to Springer’s, no NFP upscale trade list (political affairs, biographies of statesmen) to compare with that of Random House, no college textbook publishing that stands a chance against Pearson.  Size matters. The huge scale–the money–of the for-profits would appear to be overwhelming.

But this is the wrong way to look at the situation. Springer did not start out as a billion-dollar company, nor did Random House begin atop Wall Street. (See Bennett Cerf’s entertaining memoir “At Random” for the story of the company’s founding.)  Commercial publishers, however big they may be today, started out as the historical equivalent of two kids in a garage in Silicon Valley. There was no money; there was only drive and an editorial idea.

It is much, much easier for a NFP to get money for a start-up than it is for a commercial entity.  I invite anyone who has ever received a grant from a philanthropy or governmental agency to try his or her hand at writing a business plan and making the rounds on Sand Hill Road to raise capital. The bar is much higher in the commercial world; start-up money is hard to come by; some good ideas are not funded because of the lack of a strong management team, some good management teams are not funded because of the lack of a good idea.Stating the goals of a new company are not enough unless the goals are paired with a persuasive argument about the ability to execute brilliantly. And it is not enough to have a good idea; you have to have an idea that promises a better return on investment than any other competing proposal.  It is actually easier to get start-up money in the NFP sector than in the commercial world.

A lack of money is not what prevents a NFP from becoming the next Wolters Kluwer. Something happens, or doesn’t happen, after the seed capital is put in, and that’s why the big guys got so big.  Whether an organization is for-profit or a NFP, when it moves into the world of scholarly communications, it moves into the marketplace, where growth and success have much to do with the practical economics known as business.

Another explanation for the strong position of the for-profit sector is that the NFP world is mission-driven (which it is) and thus makes sacrifices in economic terms in order to fulfill the reason the organization was founded in the first place. This is also incorrect; it confuses mission with strategy. An organization may have a mission to save the world (actually, only a commercial firm would have such a stupid mission statement), but the issue for pursuing that mission is a matter of strategy. Strategy answers the question of “how do I get there from here?” A strategy has to be anchored in the realities of the overall business environment; if the environment grants special privileges to organizations of greater scale, then even NFP mission-driven organizations have to find a way to achieve that scale.

In my experience, too often NFPs use an appeal to their mission as an excuse for not having a more effective strategy. The real management challenge for a NFP is not the pursuit of its mission but to conduct that pursuit in such a way as to allow it to thrive in a competitive environment. To put this another way, there really is no point in whining about how big and unfair the big guys are if you resist the opportunity to compete with them.

Who really runs a NFP?  In my experience in shuttling from NFPs to for-profit firms and back, one of the distinctions to be drawn between the two classes of organizations is that commercial companies are mostly run by the CEO and (in some cases) the executive team, whereas NFPs have their center of power in their governing boards. I am making a broad generalization here, but before everyone jumps up and shouts out examples that contradict this statement, think long and hard about the various organizations with which you are familiar and ask who crafts the strategy, who makes the big decisions.  I don’t know if there is a right way or a wrong way to put together a governing board for any organization, but some boards have a different notion of their prerogatives from others.

It is not unusual for the Board of a NFP publisher to consist entirely of people doing research in the field.  This is especially true of many society publishers, where the Board is made up of members of the professional society. Occasionally someone from publishing fills one Board seat, but is outnumbered by a wide margin. The principle here is that research publishing is by and for researchers, and researchers know what is good for them. This confuses research (where only fellow researchers can make valid judgments) and publishing, which is a distinct art (publishing is not content; it is about content, a meta-service). Does a plant biologist with a toothache go to see another plant biologist?  Does a population researcher turn to another population researcher to fix the water pump on her car? It is difficult to have a reasonable discussion with people who feel this way, though perhaps thinking about what it actually means to run a publishing operation, for-profit or NFP, would help to open up the conversation.

The big mistake for most NFPs is what I call the “editorial fallacy”, the view that a publishing operation is entirely editorial in nature and that selecting the finest content will naturally lead to success.  The second big mistake is the idea that superior intelligence can solve any problem. Or maybe that’s the biggest mistake. Thus, the distinguished life scientist pronounces on how publishing operations should be run without reflecting that perhaps there is more to the game than being smart. A geneticist is not likely to lecture sociologists on their methodology, nor is a professor of comparative literature likely to offer a critique to the chemistry department, but publishing is one of those fields where everyone is an expert. There are other fields like this as well — politics, certainly: everyone thinks he or she could do a better job than the bozos in office; or the management of a sports team, a task that may very well be as complex as working in some academic disciplines.  But publishing is different in that a professor of cognitive science would most likely stop short if asked to manage the New York Yankees, but as for publishing — well, what’s so hard about that?

It is not only the day-to-day tasks that make publishing different from the research that generates its content.  No one really expects an anthropologist to know how to negotiate with a subscription agent (“I don’t want to pay 3%!”) or to install project-management software to track manuscripts through production. And when you get to digital solutions, the obvious gap between the researcher and the publisher is even greater. How to create an end-to-end XML workflow? Should we develop our own software platform in house or work with one of the growing number of vendors? But even here the questions respond well to careful data-gathering and analysis, all things that academic professionals are extremely good at.

The real problems arise when it comes to making money. Are we better off splitting this journal into two or keeping it as one? What will happen to our advertising revenue when we begin to phase out our print edition? Do we cut a deal with ProQuest or EBSCO?  What are the long-term implications of working with Google Scholar? Is Amazon our friend? Here few NFP governing boards are likely to have much experience, nor are they necessarily equipped to deal with the pace at which decisions must be made, not to mention the norm for the operating executive:  having to make a decision in the absence of complete information.

It may be governance that helps to answer the question that has troubled me for many years: Why is it that the single biggest innovation in scholarly communications in the past 20 years, the creation of arXiv, should not have resulted in an organization operating at the scale of John Wiley or Springer? This question is my personal equivalent of the New Guinean’s query to Diamond about cargo. There is little doubt that arXiv is here to stay, but it remains a niche service. If Apple could turn a small technological advance (the use of the newly developed micro hard drive as the basis for the first iPod) into a technology and media empire that now bestrides the world, why is arXiv still passing the hat? One wonders what would have happened had arXiv had a broader vision of the strategic environment it operates in. Would arXiv be bigger than Elsevier by now?  Is PLOS heading in that direction, having had the example of arXiv to learn from?

This is not to suggest for one minute that the Boards of NFP publishing entities should consist entirely of publishers. Publishers are an insular lot and, like everybody else, can make boneheaded decisions based on extrapolations from their own area of expertise. It is simply mind-boggling to think that a half-dozen commercial firms did not beat PLoS to the punch with an author-pays open access service; they even had the model of BioMed Central to learn from. When publishers go to the tenure committee in the sky, they will have to answer for having let the author-pays model get away from them.

The important thing about building a Board is to have expertise from various areas represented: information technology, research, publishing, library services, finance, marketing, etc. It is also important that the Board understands that they are there to work in the publisher’s interest.  A librarian on a Board does not represent a library’s interests; the librarian represents the publisher’s interests in the world of libraries. For a Board to be effective — to help a NFP publisher compete in the marketplace — the Board has to defend the publisher’s business interests.

What we should be asking the Boards of NFP publishers is that they be held accountable for the financial success of their publishing entities. “Success” can be defined in different ways; I would include an acceptable level of subsidy in my definition, provided that the size of that subsidy and the means to pay for it are established in advance. There should be a little bit of perspiration when someone enters the Board room, as the responsibilities are not trivial. We should ask a Board to populate itself with people who can help make important business decisions and who understand how to work with the Executive Director and the management team. Most of all, we should understand that NFPs do in fact compete with for-profits, like it or not, and the terms of that competition are the laws of the marketplace. A fuller embrace of the market orientation of the world in which NFPs and for-profits operate is the first step toward having the NFPs take on more cargo.

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Joseph Esposito

Joseph Esposito

Joe Esposito is a management consultant for the publishing and digital services industries. Joe focuses on organizational strategy and new business development. He is active in both the for-profit and not-for-profit areas.


17 Thoughts on "Governance and the Not-for-profit Publisher"

This article is spot-on and the issues mentioned are exactly what the NFP society publisher I work for has struggled with. Now we have taken on Editorial and Production publishing professionals the journal is going from strength to strength. We are definitely aiming to compete with the For-profits and we’re not ashamed of that!

Very thoughtful, Joe. I am a little concerned that your Board sounds a lot like a management team, which could lead to conflict with the actual management team. Micro-management by Directors is a common problem. Do the Boards of the giant publishers look like this?

One obstacle I see is that NFP society publishers are limited by the scope of their society. The giant commercial houses publish for huge swaths of the science and technology market. If my market is limited to my society’s specialty there is not that much room to grow. The same may be true for university presses, but more for internal political grounds. It is hard to imagine a U-press being allowed to outgrow the university. Has that ever happened? This may be true for society publishers as well.

But the idea of having a Board that is independent of the society (or the university?) is very intriguing.

One factor that may hinder established non-profits is the inability to ‘speculate to accumulate’. This may in part be because the sort of governing board you describe is not composed of ‘pros’ and therefore tends to be risk averse (though not always). But equally importantly the organization may not have the R&D funds needed for such ventures or an established mechanism for getting them from outside. The latter is one reason why many non-profit publishers didn’t leap into author-pays publishing or Web 2.0. Big commercial publishers simply have more money (in absolute if not relative terms) to ‘play’ with.

As for not beating PLoS to the author-pays service, this is less surprising. PLoSOne rather than BioMedCentral (or the other PLoS journals) represents the major success story here (which is presumably why BioMedCentral’s owners have just launched Springer Plus), and as I have said before, I think it took a non-profit publisher to legitimize this sort of low-bar, high-volume publishing.

Very interesting, and very true. I own a small publishing company and journal in Chile, for profit, and no subsidy nor angel investor has ever been around to help me jump start my OA biomedical journal. But we shall overcome.

Really good post Joe. I can vouch for the complexity of the publishing business, as an ex-scientist who has spent the last decade or so trying to get an understanding of it. The culture of science is described by Carl Cohen (in his superb book Lab Dynamics) as being a culture of “machismo” and dueling egos. Many successful researchers have reached that success by being certain that they are the smartest person in the room, the person with the best answers. It’s difficult for many to accept that their formidable brain power doesn’t immediately translate to fields outside of science.

I think Richard Sever in his comment above answers your question about the PLoS ONE model nicely, and we discussed it further in another Scholarly Kitchen post. Had anyone other than PLoS pioneered the business model, particularly a big commercial publisher, it would have been seen in a much different light and been much less successful.

Thank you for this interesting article. As the Journal Manager of a small non-profit journal (The Canadian Field-Naturalist), this certainly hits home. While I agree with the main point of the article (non-profit publishers need to consider the business side more seriously), I suggest there are additional reasons why for-profit publishers are more successful than non-profits. One reason is staring me in the face in another tab of my browser: issues of scale.

I’m sending subscription renewal notices to our journal’s subscribers (bear with me for a few sentences – the relevance of this will become apparant soon). I’m using Microsoft Word’s “mail merge” function to insert subscribers’ names and addresses at the top of their letter. Some addresses have an “address3” field (e.g., fourth floor) and many do not. It is a real pain in the butt to convince Word to not insert a blank line in the address for those subscribers without any address3 data. I’ve found a solution (in another tab of my browser), but it has taken quite a bit of my time and patience (coding if-then statements in Word is very frustrating). So, what does this have to do with non-profits vs for-profits? There are many little things just like my address example that require an initial expenditure of time or money, but thereafter are relatively easy to just copy and paste to additional journals. The big for-profits publish a large number of journals (Morris 2007). Non-profits often publish just one or a few journals. Thus non-profits are investing resources disproportionately into the initial setup costs of running a journal (the y-intercept for those who think graphically, if number of journals published is on the x and resources required is on the y axis) without enjoying the relatively cheap costs of running their second, third, and more journals. i.e., the per-journal cost of publishing is higher for publishers with a small number of journals, which tends to be non-profit publishers. I’ve learned how to mail merge like a pro (something my insect training did not prepare me for at all), but I’ll only get to apply my lessons learned to our single journal. The next one would be a breeze.

Morris, S. (2007) Mapping the journal publishing landscape: how much do we know? Learned Publishing, 20, 299-310.

The point about boards applies to society publishers mainly, i would argue. University presses operate generally either with boards that have representation of publishers on them (as Princeton U.P. does, having had its board chaired over the years by the CEOs of such companies as McGraw-Hill and Wiley) or with no boards at all (as was the case for me at Penn State U.P.). In either case, the presses were being run by professional publishers, not academics trying to pose as publishers.

As for money, yes, many commercial STM publishers started small, but they did not have to deal with university bureaucracies and could raise money quickly, if needed, through bank loans, which university presses, at least, are not permitted to do. Some of the larger presses are required to turn back a portion of their surpluses to their parent universities, rather than being allowed to invest in their own future technological and editorial development. That is a constraint that their commercial counterparts do not suffer from–again, a consequence of being embedded in a larger institution that operates in many ways differently from traditional businesses. So i would argue, to the contrary, that money has made a big difference.

Regarding mission, there are clearly ways in which NFPs have chosen to prioritize mission over maximization of profit. E.g., university press book prices are generally well below the average of what commercial academic publishers charge, as studies have shown. Instead of following the model of European commercial publishers and putting out books only as very expensive hardbacks sop as to recoup all costs from library sales alone, U.S. presses have preferred to maximize distribution over profits by issuing many books in cheaper paperback form. Presses following these strategies realize what they are doing, and so long as they do not in the process increase the need for much greater subsidies, what is wrong with that kind of strategy? Presses are not JUST businesses.

And as for PLoS One has a model of success, there are some of us who do not believe that low-bar, high-volume publishing is necessarily a boon for scholarly communication. It contributes to massive oversupply of less than truly original and worthwhile scholarship. We need more and better filtering, not less!

One nit to pick–
The iPod was merely one of many mp3 players using micro hard drives at the time of its launch. That wasn’t the real innovation that led to success:
“The iPod wasn’t actually that different of a concept than existing hard drive-based MP3 players — it just had a novel and simple user interface (the wheel), better software, a neat name, and Apple’s intangible cool-factor.”

That’s my point. It’s not the technological breakthroughs in themselves that lead to market-dominant positions but the business strategy and implementation afterward that make all the difference.

Thanks, Joe. Excellent article. My personal experience is largely limited to university presses, but In my view the most serious financial constraint on NFP publishers is a conceptual one: basically, the idea that responsible publishers should operate on a break-even basis. Everyone acknowledges that losses should be avoided if at all possible, but so should profits–or, if you prefer, operating surpluses.

This–let’s give it a polite name–ethos is pervasive; I’ve seen in in operation at virtually every level of press operations, from editorial board discussions of manuscript quality to press staff discussions about how to price a particular book or journal. So pervasive that it has led some to the strange conclusion that Oxford and Cambridge University Presses, because they each return a healthy operating surplus to their parent universities, aren’t “real” university presses.

Given that culture, it’s completely unsurprising that university presses, with some happy exceptions, do not generate the revenue to grow and compete from their own operations.

I think Joe is spot on in this excellent piece. Having worked in both sides of STM publishing (FP and NFP), and having been the only publisher on the board of a society owned journal programme, it all rings very true. Publishing is a professon with real skills that help make it work; researchers may publish but that doesn’t make them knowledgable about publishing. I think the discipline of having to satisfy share-holder expectations provides a pressure to increase revenues AND cut costs that has contributed to the success of the FPs. After all, one of the ways to cut costs is to merge with other companies (or acquire them) and save expenses via sharing back office services. Much of the growth in the larger companies has come from this..

A spot-on article. As someone who has worked in profit and non-profit publishing and also been CEO of a non-profit society, I can confirm that this dilemma exists across the full spectrum of society activities, not just publishing. The balance of power is intrinsically different from in the commercial world. In the UK, no staff member will be a trustee/board member of a charitable non-profit as (with a few exceptions) trustees are unpaid posts. Thus, in most societies, the board of the overall organisation is comprised entirely of academics/medics or whatever is appropriate subject-wise. This has its strengths, but it also means that the CEO and senior management team can be overruled by a group who have no expertise in the subject at hand (whether journal publishing, event management or whatever). This can be frustrating for a dynamic CEO and senior team and I believe leads to some really talented people either deciding not to move into staff roles in this sector, or moving on after a period.

As mentioned in the comments above, societies are generally limited to operating in their own subject area so, unless they collaborate, they are unlikely to obtain a critical mass. There seems to be a lot of scope in theory for groups of societies in an area (eg biosciences) to have a combined publishing operation, but I believe a mixture of board caution and territoriality (possibly even lack of imagination!) has typically kept this off the agenda. Thus, the easy options are either to continue publishing a small basket of journals, or outsource to a commercial publisher, the latter especially in the light of the sales activities required currently to maximise revenue.

Of course, societies could outsourse their journals operations to university presses, if their aims were not just to maximize revenues, and indeed some have done so. But as we saw with the American Anthropological Association leaving the UC Press to join Wiley-Blackwell, the temptation to maximize income, even when this might mean sharply increased subscription rates and less access to end users, seems just too much for some societies to resist.

It’s a tricky one, isn’t it? It’s very difficult for a society to turn down an offer which gives a better financial return in the short term, which they can spend in these difficult times supporting research and education in their subject area. This is sometimes further reinforced if the commercial contract publisher has an especially good online platform, There are arguments for this being a short-sighted solution, but let’s face it, societies have been benefiting financially from this for years and the benefits show no signs of disappearing in most cases.

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