Is this Elsevier’s  “music industry” moment? As more news emerges of German academics denied continuing access to journals, while Projekt Deal talks in Germany appear becalmed, there will certainly be anti-commercial publishing opinion in academe that hopes so. The whole debate on German access to Elsevier looks more and more like Britain’s Brexit talks, with one party in each case stating its minimum terms and not seeing any reason to settle for less, while the other reiterates “final positions” without getting any closer to a deal. And Elsevier will be as keenly aware as the poor UK trade negotiators that a false move in the push for a deal with someone who does not need to compromise simply hardens resistance to compromise. Those of us who have relied on the “surely good sense will prevail amongst people of good will on both sides” argument begin to despair of both sets of negotiations. 

So what happens in a digitally networked world when parties fail to agree? Those with most skin in the game get hurt first. When the music industry faced the problems of download and disc burning it wasn’t strict enforcement of copyright that saved them from users who knew what they wanted and had the technology that could do it. Instead, music owners and distributors were faced to accept co-operation withe the technology plays as the price for continued participation in a, for them, smaller but still profitable market.  And with that came consolidation, a different sort of investment profile and and a new relationship with the only really powerful people in a networked world – the end users. 

And in Elsevier’s world those users have never been more powerful. As Joe Esposito rightly suggests in Holly Else’s Nature article (19 July), there is Sci-Hub for a start. But then there is more than that. Social networking has already been widely used to distribute articles. Many academics are acutely aware of who they most want their readers to be and regularly circulate to them. “Good enough” publishing on pre=print servers proliferates Institutional and individual reputation management raises its game. It is not that the whole and holy progress of traditional academic publishing comes to a halt – simply that water finds its way round a dam – and then gets used to and deepens the new water courses. Do we really needs articles? Can we just report the data? Can that and our discussions about it be cited? High level science research already carries huge cost and time pressures around research publication. Elsevier must be anxious in Germany about creating a breakpoint that drives publication in-house. 

At this point I always find it useful to ask a silly question. And a favourite is “What would Steve Jobs have done with this problem?” Irrational responses do sometimes win markets. And Jobs after all responded to the levelling off of consumer computer markets by inventing the computer as a hub, to run iPhone, iPad, iPod etc. So, Steve, what do you think?

STEVE JOBS: “Well, I would scrap this Projekt Deal for a start. Its going nowhere. Just walk away. Tell them you are not interested anymore…

Then I would go to the Federal government and say ‘Can you get the research institutes, the universities and everyone concerned with research funding round a table? We have a plan to increase German research funding by 5-7% per year for five years without it costing the German taxpayer a cent.’

Then I would say to my people at Elsevier: we are the technically best equipped company in the sector. For 25 years we have invested in Science Direct, Scirus, Scopus, SciVal and the rest. We know the future is not in journals or even in content but we find it hard to divorce from the past and embrace the future. So we need a learning experience, to teach us how our next market works. But it comes at a price. 

Then I would say to the German government: We want the contract for intelligent services and risk management in German research. We will put all our technologies into this deal. Its scope will be providing your research communities with ways of mapping prior and current work, in Germany and  elsewhere, evaluating success or failure in current work , providing intelligent tools to give every researcher full-beam headlights in their niche, showing German research where its major collaborative possibilities and competitive pressures where, giving government and institutions unique insight into where quality of outcomes lies – and where current funding is being wasted. We offer you a five yer deal to populate all your systems with our knowledge, and since we are learning, building alongside you, and developing some new things on which you can earn royalties in future, we also offer you a special price. Now can we start negotiating? 

Oh, yeah, I almost forgot. We also have a special workflow deal – help us make the smoothest, hassle free workload system of uploading QA articles and you will never pay more than $1000 per article in APCs. And, as I always said at the end of presentations, One More Thing… all access to ALL journals to all users is completely free to all Elsevier registered  German users for the life of this contract.”

There are of course no instant solutions and no predictability. But RELX investors, industry analysts and anyone trying to get an IPO off the ground will be hoping that someone somewhere will be able to find a breakpoint – here as well as with Brexit.

Judging by my email in-box, the excitement of the moment seems entirely to concern the success or failure of the Springer Nature IPO. Not Stormy Daniels and the traumas that even money cannot take away. Not whether Theresa May can find the  Alice in Wonderland magic mushroom and thus become small enough to squeeze through the crack between the floorboards called “Brexit escape route”. And least of all, will two parts of the globe ignite in local thermonuclear disaster, allowing the White House Press Secretary to claim that these problems have now been chalked up as Presidential successes, on the grounds that they no longer exist?

But for many in this industry, the Springer Nature IPO has been such a long running saga. Any company that moves out of Bertelsmann into three stages of PE ownership is going to feel some friction around re-entry into the earth’s atmosphere. All the PE company investors did well out of Springer over the years, leaving  it now loaded with $3 billion in debt, some of which at least now needs to be cleared down. There has been constant date setting and cancelling since the last years of Emperor Franz Joseph (well, certainly since those of Dirk Haank). Now it just happened all over again. So what’s new?

Really very little. The IPO market in Germany is described as “soft” at the moment, though in recent months Spotify got away in Europe at $30 bn, and the markets seem to be enthused by iZettle, the point of purchase payment system. So maybe it is the story that is wrong, and which led to a $7 bn IPO to drop to a $3.2 bn  part IPO, and then disappear altogether. Like the smile on the Cheshire Cat, we know it will be back, but in the meanwhile, while I am keyboard in hand, indulge me while I offer a little advice to the IM writers employed by the great firm.

“Dear Morgan Stanley and JP Morgan,  I really do hesitate to speak up – your all-knowingness being celebrated in all quarters – but I really did want to ask whether you thought publishing was, well, “sexy”. You see Siemens got their medical technology division away in a good IPO in Frankfurt a week or so ago and that was thought to be pretty exciting, and, as you are Global Co-Ordinators to the Deal at Springer Nature I worry that this grand company may be seen by investors not as the sexy change agent who will set the huge and valuable global research market alight, but as the No 2 player in a very solid market of have-to-have information with a long run of good Ebitda performance (admittedly down from the palmy days of the Big Deal), coping with a few hiccups in recent performance (well, you have to recognize that OA dilutes Ebitda a bit ) and a long way in to the great story of digital transformation. Yes, I do know that investors have been spooked a bit by Elseviers little local difficulties in Germany. And the Digital Transformation is a bit of a puzzle  when you are writing an IM – since no one who has been transformed has grown revenues over print, investors do need to be persuaded that “smaller and more profitable” is the right direction.

So all this stuff about all the journals you have and how loved they are and how once the Elsevier  big deal goes through the library yours is normally next….. well, that may not be where the fire is now. When you come back with the 2019 IPO, try to find a bit of real allure. Try to see if the owners can find a bit of magic dust to sprinkle – any start-up with a web address ending .ai will do. Even better, say you are starting an incubator to develop the solutions to stream scholarly articles and data directly into the workflow of scientists, and using a revolutionary twist of Blockchain to do it. Make provision for future losses – they loved Spotify. Forget about content – its getting commoditized and anyway you can get it free in Kazakhstan and your investors know it. Talk about transforming the lives of end customers. And forget all this rubbish about library requirements. In fact, forget about libraries altogether. Talk about a company that is “in the forefront of revolutionising the workflow of the bench scientist “and” materially increasing the return on the global R&D budget.

I will not write more since I think you have my drift, and as you know this keyboard is always for hire and as a good advisor I do not wish to give away too much before I see the sums in your contract. Reflect that  I may be expensive, but I am a lot cheaper than pulling IPOs!  Ever your humble, etc.  David Worlock”

So you see, dear readers, this IPO thing is not for serious people like us. We are engaged in change, not in marketing If you have reached this point you may be asking why Springer Nature did not acquire Digital Science right back at the point of merger. But I only answer trivial questions about how you address investors!

 

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