“Are You Being Served?”

This month’s “Ask the Chef” question is fundamental, so the answers are generally both vexed and brief:

Are we a service industry or a product industry?

There is plenty of room for interpretation here — who are “we”? what is a service? what is a product?

Let the responses begin!

Joe Esposito: An economist would define a services industry as one that trades in intangible goods. Don’t take my word for it; you can look it up in the Wikipedia. Since the publishing industry trades in intangible goods, it is a services industry. That should be the end of the story, but the reason that this question of services vs. products keeps coming up is that people have multiple notions of what services are. Most commonly in publishing, a services company is distinguished from a content company.  AAS creates and markets content, but works with HighWire to host and deliver that content. In this scenario, HighWire is a services company. This is really a rhetorical debate about the meaning of “services.”

Rick Anderson: It seems to me that in the print realm, publishing is both a service and a product industry: it provides authors a service and provides readers a product. The more completely publishing moves online, though, the more it turns into a pure service industry. The service to authors remains roughly the same; for readers, the change is that they’re now buying the service of hosted access rather than a product that changes hands. The exception is when electronic files are actually transferred to the buyer and hosted locally rather than kept and served out by the publisher. In that case, the transaction is functionally the same as under the old print model — only the format has changed.

David Wojick: Product industries provide services and service industries provide products so the distinction is relatively relative. Even a steel mill has to meet specs and delivery schedules, which are not products. Engineers deliver drawings, which are not services. Publishing is really a third thing. Publishing has a product, but it also provides services, not to its customers, but rather to its suppliers, who give away their produce. But even the product, which is expressed thought, is more characteristic of a service. But it is not the publishers thought that is expressed. (No wonder we are all confused.)  In short neither the producer nor the service provider model works very well for scholarly publishing. I like the contest model myself. Is a contest a service? But then there is the communication aspect. And the payoff for winning comes from elsewhere. I give up.

Ann Michael: In my opinion, products tend to be discrete, often immutable, packages or bundles.  The creator of a product is defining, crafting and delivering those containers of content in a few standard variations with limited options for personalization or customization. Often a custom delivery means the customer choses Bundle B over Bundle A or perhaps selects an “add-on.” Services are fluid, variable, and customizable. There is still content being purchased, or partially provided for free, but the breadth, depth, and pieces within that transaction can vary.  Just like in any other service industry, there can be self-service as well. The customer can decide, at a more granular level, exactly what they want and how they want to use it. Which of these scenarios sounds more like your business? More important, which sounds more like what your customers are requesting, even expecting? While it can be argued that publishing is both a product and a service industry, I believe publishers will be far more successful with a service mentality.  A service mentality requires us to focus on the customer and their goals. It also requires us to take a holistic view of what value we provide specific user groups: researchers, authors, reviewers, practitioners, educators, etc.  The service is the entire experience through which the customer interacts with content and a publishing brand. As a result, the services that publishersprovide are becoming more inseparable from technology every day.  Does that mean that publishers need to be the source of all technology innovation? Not necessarily.  It does mean that, at minimum, they need to be expert at appropriately applying technology to content in a manner that produces compelling value for their target audiences. Publishing is now a content and technology services industry.

Kent Anderson: I think we’re a service industry that produces products, or a product industry that produces services — if that’s not too Zen for you. What you charge for (the services or the products) defines your business model. For instance, traditional publishers charge for products — discrete, time-bounded subscriptions; measurable distribution to a measurable audience for advertising; and so forth. Service is part of product support, but a background activity. If you flip the model, and charge for services and not the product, then you have things like blogging platforms, open access publishing, or a library. These provide services that can perceived as free because the product — a blog, an OA article, or utilization of library resources — is perceived as free, even though indirectly it’s paid for somehow. So just as traditional publishing is product-based with a service backdrop, OA publishing, for instance, is service-based with a product backdrop.

David Crotty: I’m going to take the cop out answer here and answer “Yes” to both. To quote Cameron Neylon from our recent interview, “We have traditionally bundled lots of functions together in the organizations we call ‘publishers’,” and that diverse bundle includes both products and services.

Scholarly book publishers are, without a doubt, based around creating products. The genesis for most books starts with an acquisition editor, who starts with a raw idea and turns it into a final physical (and digital) product. Some percentage of scholarly books do come in “over the transom,” but the majority, in my experience in the life sciences, are plotted out from scratch. The editor carefully plans and commissions content, content which wouldn’t exist without the book. The endpoint is a collection of material sold as a product.

Scholarly journal publishers are perhaps more of a service industry. As many are quick to point out, technology has reached a point where researchers can do for themselves much of what a publisher offers. The question is why they would want to spend their valuable time doing such mundane work. Researchers, scientists in particular, do an enormous amount of outsourcing. Their job is discovery, doing experiments, learning new things. As such, they pay someone to wash the test tubes in the lab rather than doing it themselves, because that’s time and effort taken away from experimentation.

Many labs buy pre-mixed solutions that they could spend the time to make from scratch themselves at a lower cost, and much of biology is dominated by kits, prefabricated sets of reagents for performing a particular assay, again, faster, but much more expensive than making everything yourself. Labs farm out common activities like sequencing DNA, making constructs, breeding flies, or making transgenic mice. This is all done so researcher time can be concentrated on the cutting edge of garnering new knowledge.

And that’s where journal publishers come in. We provide a set of necessary services for the communication of results. These are often tedious and time-consuming services, and like the dishwasher, the sequencing center, or even the campus plumber, we are paid to do the necessary things in order to free up a researcher’s time to do research.

One can certainly argue over which of the services provided are necessary or worth outsourcing, and we’re currently going through an era where technology is both opening up new types of services and making older ones obsolete.

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Kent Anderson

Kent Anderson

Kent Anderson is the CEO of RedLink and RedLink Network, a past-President of SSP, and the founder of the Scholarly Kitchen. He has worked as Publisher at AAAS/Science, CEO/Publisher of JBJS, Inc., a publishing executive at the Massachusetts Medical Society, Publishing Director of the New England Journal of Medicine, and Director of Medical Journals at the American Academy of Pediatrics. Opinions on social media or blogs are his own.

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Discussion

16 Thoughts on "Ask the Chefs: "Are We a Service Industry Or a Product Industry?""

And…what is the purpose of this ‘fundamental’ question? In what way would it make a difference?

If you think of yourself or your company as primarily one or the other, what you think your customers or the market values changes. If you get it wrong, you could fail. It seems pretty self-evident to me.

Right. I see. So the fact that the ‘chefs’ can’t really decide whether the publishing industry is a service or product industry means what, exactly, for the way the industry thinks, or should think, about its customers and market values?

You’ll have to draw your own conclusions. Some of us are clearer about it than others. Some draw distinctions between parts of the industry (books vs. journals, for instance). But I think it means that we’re in a time of transition — from print to online, which is a proxy for “from product to service,” you could argue.

How fundamentally could this shift? I’d like to see whether financial statements at some companies shift from “product lines” to “service lines.” Maybe some already have.

Newspapers used to think they had products (newspapers), when in fact they had services (journalism and delivery). The Internet took over the delivery service, and in reaction, they gutted their journalism service to mistakenly preserve the product nobody really needed. Pro Publica and Huffington Post caught onto this, and are doing better.

IMHO, I think journals also provide services to funding bodies and tenure committees as well, in the evaluation of research, which each committee would have to do for itself without the journals having already done it.

Also, to researchers-as-readers, in helping sort out and through the rapidly growing mass of non-book published work. Some suggest that automated tools could replace >that< function, but I actually think that, for the foreseeable future, human judgment would tend to out-compete the algorithms; but we will have to see how that actually shakes out in the market.

(My opinions are my own, I work at Springer.)

Indeed Scott, your evaluation point is why I suggested the contest model. The fact that the journal system sorts, selects and ranks research results may be far more important than the communication aspect. But it is the journal system, not individual journals, that perform this emergent function. Yet this core value is poorly understood and it seems to me little discussed, because it is poorly understood.

Each journal decides individually what is right and best for their readers. The collective effect is the evaluation of all research, which no individual journal does. So if you just look at what a journal does you cannot see the value. Systems are like that. If you just look at the parts of a car, scattered about, you will never guess where they will take you when they work as a system.

Scott, your point about research evaluation is why I suggested the contest model for journal publishing. The journal system collectively sorts, selects and ranks all research results. This is an emergent property that no individual journal performs. So if you just look at what a journal does you cannot see its core value. This core function is poorly understood and it seems to me too little discussed.

I worked for the last university press in the U.S. that actually operated its own printing plant, Princeton University Press, up until the early 1990s. (A few other presses elsewhere, like Toronto and Cambridge, still have printing divisions.) If you define “product” narrowly as the physical entity that is sold, very few publishers actually are product creators themselves; they contract out the printing (and binding) to other businesses.

From the perspective of a trademark attorney, the distinction between goods and services, while not immediately ascertainable in this industry, is nevertheless significant since it affects trademark/service mark availability search and application strategies. A publisher might elect to protect its marks with respect to goods or services or both, not only in the U.S. but abroad.

I disagree that publishing companies are a products industry as what the consumer uses (i.e. the research paper) is not made by them but by the academic. They provide a service by facilitating its review and formatting. In the same way that the waiter is not a products industry just because he brings the food, the chef makes the food.

By that measure, is a commercial publisher like Scribner also a services company if Stephen King writes the book (even though Scribner creates and prints the physical object)? Is Apple a services company if Foxconn do the actual manufacturing of the computers, and all Apple does is supply the design and then sell them?

I think breaking apart the supply chain like this evades the core question — at any point in your analogy, there are products and services both. The real question in your analogy is, “Is a restaurant a product or a service business?” That’s a holistic question. Ultimately, patrons pay mostly for the product of the restaurant — the meal and its trappings. Think about it this way: Would you go to a restaurant just to sit at a table, have someone come and go from the table, and then be willing to pay for that experience? It’s clear it’s a product business. That’s what they’re selling. The services are a backdrop, necessary but not sufficient.

Traditional publishers sell products, even if those products have aspects that reflect services. For subscription publishers, each annual renewal is a product, one that creates a clear liability on its books that can only be earned out by fulfilling the product obligation. OA publishers seem to be selling a service.

It’s interesting to contemplate the long-term difference here. By selling content (each article a unique product, with a unique citation or SKU), the traditional publisher has a relatively large and unique inventory. By selling a service, the OA publisher has only one thing to sell — a service that is fairly easy to replicate. And so we get PeerJ.

But Kent, I would disagree: restaurants aren’t really in the business of satisfying the Maslovian requirements for nutrition. Food is the mis en scene , almost the excuse for their existence. Their product is providing a mix of entertainment, conviviality, convenience and a transaction friendly location (ie – for a date or a deal). That's why we pay 3-5 times the price for a bottle of wine and $30 bucks for someone's ephemeral molecular cuisine appetiser! It's why eating out alone is so unsatisfying, even if the food is outstanding.

I'm puzzled by the very question however: product or service. I would have thought the concept of a service as product (and vice versa) would be universally accepted. But maybe that's because I'm a marketer and not an editor!

It’s a question that comes up, and it’s hard to answer. It may be a red herring. I’m not sure. But because we’re hybrid organizations — some services leading to products, some products leading to services — it’s a mix. As in the restaurant analogy, though, I think without the product, all the services would seem irrelevant, lose their moorings, just as wine, waiters, and valets would seem weird without something to eat.

Interesting question – that was especially germane this week as we discussed strategy and value proposition in the face of technology and marketplace change – especially the tension between shrinking library funds and expanding scientific output.

I kept coming back to the old “railways forgot they were in the transportation business” saw. “Inside the building” we see ourselves as advancing science, essentially being in the discovery business. And our customers still think of us as content-based product – the journal. But give the tonnage of STM content published, cited once or twice then shelved…I wonder if that’s our real marketplace function? Could we really be in the “career advancement and reputation development” business, (which I guess would make us a service?), and that if we explored that more liberally, we could break out of the funding bounded box the industry seems stuck in?

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