Society publishers participate in the marketplace for scholarly communications in many ways. Because of the relatively small size of many of these publishers (this is definitely not true of the larger societies), the options available may not be readily apparent. It is not unusual to have a conversation with a society publisher who exclaims: “You mean I can do that???” Yes, you can. What you need to do is get an overview of your options and to map them to the particular circumstances of your own society. It can’t be said often or loudly enough that there is no such thing as a “strategy for publishers”; there can only be a very specific strategy, tailored for the particular circumstances of an individual society at one point in time.

handshake

This is particularly true for societies seeking a partnership of one kind or other. What kind of partnership should be forged? Who does these kinds of deals — and will they want to work with me? What do I have to give away in a partnership? When is a vendor a vendor, and when is a vendor a partner? There may be a “higher order” question as well, as in the case of the society that seeks to find a software development company to build a new publishing platform, when perhaps the better arrangement is not to build anything at all but to sign up any of a number of service providers whose offerings may even be more robust and less expensive than a society can build by itself. In the end success — and failure — is a matter of management: good managers make good decisions in the context of their own organization’s particular circumstances.

When it comes to partnerships, potential arrangements fall into four broad options:

The “no-partners” strategy. This option is listed here simply to set a baseline. An organization that seeks to do everything itself is said to be vertically integrated. A “vertical stack” company is quite the fashion in Silicon Valley these days, as they are not beholden to any other organization for its success. From time to time one encounters functions that a society has chosen to perform itself even when any number of superior options are available from reputable vendors. Need I mention the professional society that still has printing presses on its premises? Or the trade association that literally does all its own software development? Who cares what we can get from Oracle? Let’s do it ourselves!

This is not to suggest that knowing when to seek an outside service is always self-evident. This can in fact be one of the hardest decisions a management team will ever make. But all publishers, from the smallest to the largest, outsource something. It may be software development or copy-editing; surely everyone should outsource payroll management (and let’s take a real close look at those printing presses!). I’m inclined to think, though, that some companies outsource too little and some too much. Every instance of outsourcing removes one “touch” a publisher has with its operations and sometimes even of its users and authors. To take one particularly dramatic example, when publishers capitulated to libraries’ demands for end-user privacy,  they effectively outsourced to libraries the authentication of users. The result was Sci-Hub.

The “fee-for-services” model. Every publisher uses this model to a greater or lesser extent; it is the preferred option for the independent publisher.  In the fee-for-services model, a vendor is a vendor. A publisher can pay someone to manage any number of tasks, from hosting content to copy-editing; some publishers pay service bureaus to handle sales, especially sales in territories that may be hard for a small publisher to reach. The ability of societies to select and manage vendors varies widely, however. Some issue complex RFPs for small projects, others don’t shop around at all. While this point may seem obvious, a defining aspect of fee-for-services is that the society is paying for something, so the fulfillment of the service represents a cost. This is not true in the licensing or outright sale models defined below.

Licensing. In the age of the Big Deal, licensing plays a large role. In a licensing arrangement a society publisher makes an arrangement with a larger publisher, which then provides an entire suite of publishing services. These are likely to include making available a manuscript submission system, providing a hosting platform, handling all aspects of sales and marketing, and in many cases most or all aspects of production. In such a situation the key thing that the society retains is full editorial control of the contents of the publications. It appears that a society signs a licensing agreement with a large publisher every week. (Disclosure: my colleagues and I are active in this area.) In a licensing arrangement, the society outsources an almost comprehensive set of services, but unlike the fee-for-services model, the services are paid for by sharing revenues, which the larger publisher collects and then redistributes to the society.

It should be clear why so many societies choose this option. Licensing moves a great deal of costs away from the society: instead of paying someone for services, the society sits back and collects royalties. The key issue is whether the society earns more through royalties than it was from managing its own operations.

The outright sale. The outright sale of publishing assets for societies is not very common, though it may be more common for books than journals. The reason outright sales are infrequent is that societies are reluctant to lose control over the publications, and also because a licensing arrangement provides many of the benefits of an outright sale without a loss of control. In an outright sale the buyer takes over the entire publishing operation. This almost always leads to staff reductions as the new owner installs its own management. The hard part to negotiate for an outright sale is the use of the society’s trademark: Can the buyer use the trademark? For how long? Under what circumstances? How does the use of the trademark affect the price of the deal?

So which of these options represents a partnership? Only #3, licensing. In #1, there are no partners because the society tries to handle all functions itself. In #2, fee for services, the so-called partner is really a vendor. And in #4, the outright sale, there is no partner, because the sale is indeed outright. This is a roundabout way of getting to a critical point: not all partners are partners and before a society publisher should seek a partnership, it should go through the strategic exercise (which is long, intense, and expensive) of determining just what kind of publisher it wants to be in the first place.

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.

Discussion

10 Thoughts on "How Societies Structure Deals with Their Partners"

The distinctions you draw are compelling, but I’m left wondering why a society (or even a journal seeking to publish) should be conscious of these definitions. Could you explain the potentially negative consequences of mistaking a vendor relationship as a partnership, for example? Thanks in advance for your elaboration (and the post)!

These distinctions are fundamental to operating a business. In the first two categories, for example, the publisher uses its own capital; in the last two, the capital is provided by other parties. In the fourth category the publisher gives up all control of intellectual property, including trademarks. Think of the implications were Duke U. Press to sell its journals division to Elsevier and allow Elsevier to use the Duke name in perpetuity!

Also, a partner has an incentive for your business to do better because they share in the upside. A vendor gets paid regardless of the results. It is all about risk-sharing: the more risk a vendor/partner takes on the more you pay if things go well. If you are confident in the results then you may just want/need a vendor; if you are unsure of the results you may be willing to take less of the upside in exchange for limiting your downside.

Thanks, Joe and Dave. This is exactly what I needed to know. I was immersed for a few years in a business culture that tried to embrace the concept of treating everyone you work with regardless of relationship as a “customer” or “partner,” which I understand from a customer-relations point of view but which is obfuscating from the bottom-line point of view. I definitely agree that it’s important to be alert to the boundaries of these definitions. Given how decentralized publishing is today, it’s good to know the terms of the landscape.

Thanks for your article; we suggest to introduce a new option, we called it as “global resourcing” and it is a mix of what you describe in your #2-#3. In this scenario the publisher signs a global agreement with a technical partner (not a publisher); it is more than outsourcing, since both uses the same platform (to manage all the workflows and processes); the publisher retains the control of scientific quality and it is responsible to publish or not; the partner is involved in processes more deeper than a simple outsourcer. Here in Italy some University Presses are using this option (disclosure: we are involved in these agreements).

This fits squarely into category #2. Please don’t try to fool publishers. You are a vendor.

Joe, I read Giovanni’s comment as perhaps a joint venture (with shared risk) rather than a straightforward vendor / publisher relationship? Whether that’s what Giovanni intended, that could indeed be a separate category?

An interesting version of #3 involved the journal Book History, which comes from the Society for the History of Authorship, Reading, and Publishing (SHARP). At Penn State Press we arranged to be the publisher for this journal under a licensing agreement, but our Press could not afford to do electronic journal publishing and so licensed Project Muse to handle the e-publication for all of our dozen journals including this one (which was our only society-owned journal). But after a decade John Hopkins Press (which runs Project Muse) took over publication of the journal entirely, which of course made a lot of sense. We had benefited from publishing the journal because we also had a monograph series in book history edited by James West, a former president of SHARP, and many of our authors were SHARP members.

I’m happy to learn that Sci-Hub is the librarians’ fault.

This is very funny, but of course you realize I said no such thing.

Comments are closed.