04/26/2018

Why Don’t Societies Simply Sell off Their Publishing Assets?

So much money gets left on the table

The question in the title of this blog post was put to me by a senior executive of one of the largest publishing companies. Her company, like the other large commercial ones, has been bulking up over the years by licensing the rights to journals and, occasionally, other forms of publications from professional societies. Those publications are then integrated into the licensing company’s operations for everything from the management of submissions system to production and sales and marketing, everything but the defining editorial work. For these licenses, her company pays large royalties and usually significant annual guarantees. But her point was well taken: her company would pay so much more than the licensing fee for outright ownership. Why do societies insist on leaving so much money on the table?

This question gets at the heart of what professional societies are and how they think of their publications. Let’s put the question this way: Are the publications of a professional society an asset or an expression of the society? An asset can be bought and sold — think of a desk or a house — but an expression of something is harder to get one’s arms around. If publications are central to the way a society thinks of itself, how do you sell them off? This begs other questions: What constitutes centrality for a society, and why do some societies view publications as central while others do not?

A bit of background. Many publishers, and all of the largest ones, have a mix of publications that they own outright and publications that are owned by a third party, most often by a professional society. For that latter category the larger publisher is a service provider to the society publisher. The large publishers create these service arrangements for a number of reasons. For one, and this is perhaps the reason that this kind of business got started in the first place many years ago, the larger publishers may have excess capacity. Thus, bringing on a client for services allows the larger publisher to make some money on infrastructure that would otherwise lie dormant. Another reason is strategic development and relationship-building. So, for example, a large publisher with no publications in the area of clinical medicine may sign up a society publisher in that area (and pay a premium) as a way to begin to build a presence in the hospital sales channel. Or a large publisher may sign up a client for services as the first step to an eventual outright acquisition (this happens more commonly with books than journals). But over the past decade or two, the primary reason the larger publishers have set out to provide services to smaller ones is that this brings scale to the larger publisher’s operations. With scale come many benefits: stronger pricing power (and don’t libraries know it), leverage with vendors, and a great deal of operating data that can be mined for patterns in sales, marketing, and even editorial. In journals publishing, big is better.

Please select this link to read the complete article from The Scholarly Kitchen.