Editor’s note: Today’s post is by Jon Treadway and Sarah Greaves. Jon Treadway is the Director of Great North Wood Consulting, working with organizations across the research sector and creative industries. He has worked previously as Chief Operating Officer for Digital Science, as a Senior Analyst at Holtzbrinck Publishing Group, and ran the UK’s largest funding program for the cultural sector at Arts Council England. Dr. Sarah Greaves is an independent consultant working across STEM publishing. Sarah has over 20 years of experience in the industry. She was originally an academic researcher before joining the editorial team at Nature Cell Biology after which she became the Publisher for Nature. She launched Nature Communications and Scientific Reports and was recently the Chief Publishing Officer at Hindawi.
The story of mergers and acquisitions in scholarly communications is one dominated in the last 10 to 15 years by a series of eye-catching vertical acquisitions by publishers, content aggregators, and database providers which have expanded their services. These mergers have blurred traditional roles and reflect a strategy of traditional players moving to become broader providers of analytics and workflow.
The successful integration of early stage companies and managed transition by established commercial entities is one of the major reasons scholarly communications has not seen the level of disruption anticipated and desired by many who seek to change the status quo.
The most significant acquisitions by publishers over the last 18 months are interesting when viewed through this lens. On the surface, the Wiley acquisition of Hindawi and Taylor & Francis’s purchase of F1000Research look like horizontal integrations — the acquisition of content providers by content providers, albeit driven by the success of the younger entities’ open access (OA) offerings. Both purchasers were able to rapidly increase their OA output more than would have been possible through organic growth in the same timeframe, closing the gap with the largest OA publishers in the market, Elsevier and Springer Nature.
But these are also acquisitions in line with the broader trends of the last 15 years — Hindawi and F1000Research offer platforms and tools that reduce the dependence of their acquirers on larger data and workflow providers. Whether these integrations are fully leveraged within Wiley or Taylor & Francis or continue to be used by external societies, publishers, and funders remains to be seen. The perception of such partners may change the narrative on how they ultimately build value for both Wiley and Taylor & Francis.
Either way, we continue to see pressure for horizontal acquisitions as most if not all key market trends push in that direction:
- Most of the obvious, attractive targets offering vertical integration have already been acquired.
- There is heavier competition, at higher valuations, for early stage vertical investments than there was a decade ago. Many more stakeholders are seeking opportunities to invest and VC interest in the space has grown (as recent Moressier & Code Ocean deals indicate).
- Plan S favors scale. Larger entities are better placed to handle the regulation and administrative compliance required, and library consortia seek to reduce complexity in negotiations.
- Clarivate / ProQuest is another example of a horizontal merger, and will also have implications for content providers that favor scale and mergers.
We expect to see further acquisition of mid-sized commercial publishers by the very largest players in the market; it could also be likely that the Big 4 publishers will become the Big 3 or the Big 2 in the mid-term. Consolidation beyond this point remains unlikely because of the regulatory pressures from competition authorities in various jurisdictions. Yet this pressure could have major implications for long-standing academic publishers such as De Gruyter, Karger, OUP, and CUP. None offer the scale wanted by the Big 4, nor do they offer new tools and services which might make them attractive targets.
Greater horizontal integration could have complex implications and the distinctions between ‘Exit, Voice & Loyalty’ developed by AO Hirschmann in his influential book and subsequent work may be of use.
Hirschmann formalizes conditions under which agents have more impact by expressing their dissatisfaction while continuing to remain with or make purchases from an organization — the ‘Voice’ of the title. This contrasts with the withdrawal of services, or ‘Exit’, anticipated by traditional analysis of market power and consumer behavior. The loyalty agents sometimes feel, and the existence of powerful ‘Voice’ options in quasi-monopoly circumstances, can lead to counter-intuitive and more subtle results than anticipated.
The distinction has been further developed in the context of scholarly publishing and open access by Joshua Gans and Lagoze, et al. Their work offers suggestions as to how the market may develop further.
Access to bigger archives will become a key determinant in preserving subscription pricing models as the volume of new publications available via open access increases. As such, we can expect this to drive further mergers and monetization of valuable backlists.
Publishing open access now offers a less plausible ‘Exit’ strategy for researchers wishing to express dissatisfaction with the market status quo. It is harder to move away from larger, commercial publishers when they are also the largest open access publishers.
This suggests that ‘Voice’ options are more likely to gain greater traction with greater numbers of researchers. This might be in the form of boycotts, withheld editorial and peer review labor, and more successful pushes for reform of pricing, access, and greater share of rewards.
Alternatively, researchers may look for alternative ways to ‘Exit’ the current market dynamic. Publishing with non-commercial entities may become a more significant action in line with the prioritization of not-for-profit (NFP) models by various funders and advocates. Although Boards of NFP entities often jealously guard their independence, we might reasonably expect greater collaboration and potentially mergers between NFP publishers to arise in response to this.
However, after speaking to a number of learned societies, we have heard no evidence that this is happening yet. And in fact, initiatives like Plan S are having the reverse effect, magnifying the importance of the scale and expertise offered by large commercial publishers. For smaller publishers, they provide reassurance, scale, and tools to comply with Plan S and other funding initiatives that they alone will find hard to implement after years of reducing internal editorial and publishing offices.
Authors may also seek to publish in journals, or disruptors, that are yet to appear on the market. With the rapid expansion of journals published from within China on the horizon, if these offer the best author service and fulfill the needs of academics, it could be that many academics switch from their traditional journal home to new publishing venues created by the upcoming Chinese publishing review.
Most radically, perhaps, we could expect disruption to come from above. It would be relatively simple for Google (and others) to severely disrupt the whole scholarly communications industry through greater investment and integration in some of their core products. Stitching together existing offerings and facilitating self-publishing by researchers would be a viable, ‘good enough’ option on a scale unavailable through other routes. This would represent an ‘Exit’ route at scale for researchers who wanted to escape from a dominant competitive landscape and who found their ‘Voice’ options too limited. Yet the often conservative nature of academics and their sometimes slow adoption of new publishing venues might mean this high-level disruption, even if it arrived, would not be rapidly adopted en masse.
Overall, the industry remains very much in a growth phase with high potential for further acquisitions and mergers, played out against a backdrop of Plan S and COVID-19 with an ongoing battle for researchers’ loyalty. There is a widespread belief that eventually researchers’ desire for robust, fast, rigorous publishing with rapid dissemination and access for all will become more important than prestige of the publishing vehicle. When and if this happens, it remains to be seen whether this race will be won by organic growth, mergers, acquisitions or large scale disruption from outside the industry.