A value chain begins at the beginning and ends at the end, except when it doesn’t. The scholarly publishing value chain begins with research, moves to the act of writing, proceeds through manuscript submission, and then, if the publisher decides to take the project on, goes through a series of steps — production, marketing, sales, distribution — until the customer’s money is collected and is used to start the process all over again. That pretty much describes how it worked for the print world, and it held true for journals as well as books. When digital media came along, publishers attempted to re-create that value chain simply by inserting one format (digital) in favor of another (print). That worked to a considerable degree (what is often called the “crisis in scholarly communications” is in reality a cornucopia of intellectual riches), but it is now showing signs of breaking down. Where exactly is the end of the value chain, when published materials can have a life, or several, after the purchase? That purchase, in the traditional model, was supposed to be the end of the chain, when the last drop of economic value was wrung from the line of economic stages. But who extracts value when articles appear on ResearchGate, in institutional repositories, or Sci-Hub? Those are all downstream additions to the value chain, and they have come into existence because of the disruptive nature of digital media.
Perceptive readers will see the hand of Michael Porter in the background. That’s all well and good, but let’s keep it in the background, as the Porter opus is far more rigorous (and quantitative) than the high-level view I am summarizing here. What interests me about the value chain is the possibility that each step potentially presents different economic opportunities. Publishers historically have concentrated on what was (then) believed to be the last step, the purchase of the final document. But now, as many copies and versions of that document fly around the Web with impunity, and often earlier versions as well, the ability to monetize that presumed last step is being undercut. So publishers look elsewhere, and more and more they are heading upstream.
I began to think about this in preparation for delivering a presentation to the IEEE Library Advisory Board. I am inserting the slides for that presentation below. What became apparent to me was that publishers are hell-bent, or will be, on finding new ways to extract economic value even when the traditional method dissolves before their eyes. This in turn would require other elements of the publishing ecosystem (libraries, for example) to adapt as well. When publishers move upstream, where do libraries go to continue to create value for their constituencies?
Where can publishers make money upstream, and how? That is a challenging question because as you move further and further upstream, you move away from what publishers know how to do. Publishers are very good at making editorial judgments and at taking intellectual property and refining it for distribution, but those are, relatively speaking, downstream activities. On the other hand, all the way upstream you may have a scientist in a lab (or a historian crawling through an archive). How does a publisher monetize that? The scientist needs lab equipment — which publishers don’t sell; the historian may need knee pads and a face mask. Yes, I am being flippant here, but the point remains that the know-how of publishers derives from the place in the value chain that they have historically occupied.
This is part of the reason that we have seen so many upstream acquisitions over the past couple years. That scientist in her lab needs a way to collaborate with her colleagues, and she reaches to common collaboration tools like Facebook (yes, Facebook) and Slack, but she is also likely to be using Mendeley, now part of Elsevier. A thorough literature review is important as well, and she turns, perhaps, to Digital Science’s Dimensions. Or one step downstream she may draft an article and submit it to a publisher — which likely involves ScholarOne, now a unit of Clarivate, or Editorial Manager, recently acquired by Elsevier. Did that scientist draft that article in Microsoft Word, which until recently was the workflow tool as hard to get around as the Wall in Game of Thrones? Or perhaps she worked with Authorea, recently acquired by Wiley? Everywhere you turn you see workflow tools being gobbled up by major publishers. Only time will tell if this is an expression of fear, anxiety, compulsion, or strategy.
The reason to go upstream for a publisher is that it is like fleeing a burning house, as the monopoly nature of copyright downstream, where the chain historically was monetized, is undermined at every step. The problem, on the other hand, of going upstream is that it is not as easy to monetize those earlier links in the chain. (For smaller publishers the problem is simply that they cannot afford to.) Once upon a time, libraries would pay a sizable sum downstream for access to packages of content, but will they pay for a data analytics tool that examines submissions and rejections? If they won’t, who will? If the prospective customer is another publisher, is there not something awkward in Publisher A attempting to sell a tool to its rival, Publisher B? And how much is Publisher B willing to pay for such a tool? How will Publisher B in turn make money on that investment? Will B perhaps use the tool as a means to extract larger payments for enhanced content sold to libraries? But, wait! Libraries no longer need to purchase or lease content when it can be found lying around everywhere, from the hallowed halls of Ivy League repositories to the Russian steppe.
The promise, or prayer, of upstream activities falls into different categories:
- These various tools can be monetized in and of themselves. But the problem here is that at this time, the revenue from such workflow items appears to be modest.
- But cannot these tools generate new products, perhaps databases of information of interest to new classes of customers, now that academic librarians, in their furtive embrace of Alexandra Elbakyan*, have little or no need to pay for content? Surely if 23andMe can charge pharmaceutical companies millions for access to its database, Elsevier, Springer Nature, Wiley, et al., will find a way to create products that will command similar sums. Or maybe not.
- Or if all else fails, there is still the sale of content, but it is weaponized content now, reinforced by analytic and workflow tools that, like Shelob, ensnare the customer in a Web from which there is no escape.
In the perfect world dreamed of by publishers, all three of these revenue streams would become robust: sales for tools, sales for new databases derived from text and data mining (TDM) and usage analyses, and sales from content that is wrapped inside a comprehensive suite of tools and is thus uncancellable. The third strategy (lock-in of content by tools) is a defensive one and has the structural limitation that only organizations that already have very large content offerings can play this game meaningfully. The first strategy (new tools) will mostly be the province of start-ups, of which there is no small number; their likely path is to be acquired and folded into strategies two and three. It appears that many publishers are placing bets on strategy two, the generation of new products and services that are, as it were, metaservices that sit atop the traditional publishing paradigm. We are watching the beginnings of an emerging battle where the larger publishers will seek to look more and more like Clarivate, which already extracts great value without primary content offerings; and at the same time, Clarivate is likely to seek ways to undermine the content offerings of the largest publishers in order to diminish the effectiveness of their defensive lock-in strategy. It is noteworthy that all these scenarios tilt the playing field toward the very largest firms.
Sit back and have a beer. It will be a great game.
*It is a sign of the times that it no longer is necessary to provide a link to aid the reader in learning who Ms. Elbakyan is.