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From the landscape analysis report

The Academic Publishing Industry In 2018

Elsevier, Pearson, and Cengage in particular are transforming themselves into data analytics companies built atop their content, effectively adding ways to monetize it.

4 mins read

Twenty-plus years into online distribution, and thirty-plus years since the first digital products first became available commercially, the academic publishing industry is undergoing a massive adaptation process. At first glance, academic publishing should have shared the traits of most Business to Business (B2B) media businesses after the transition to digital products and services: concentrated supply (protected by scale economies in sales and distribution and high barriers to entry), strong pricing power (driven by oligopolistic supply and by inelastic demand), and rising profitability. While the industry has indeed experienced these trends, fault lines are appearing everywhere, forcing the publishers to pursue different strategies from the past, which have massive – and potentially negative – implications for the academic community.

These fault lines are driven by media usage behavior which is familiar to consumers. Very much like cable TV viewers “cutting the cord” on their subscriptions, college students are lowering their spending on textbooks by renting them or purchasing them from the second-hand market; librarians, for their part, are taking tougher stances when they negotiate the renewal of scholarly journal collections and are more willing to let subscriptions expire. At the same time, digital dissemination has enabled piracy to play an increasing role, in the form of gray market imports and counterfeit physical textbooks, as well as unlicensed downloads of digital copies.

The response of the publishing industry has been predictable. On one hand, it has put some effort into protecting its copyrights through legal action; on the other hand, it has quietly started to lower prices (or the rate of price increases) to reflect the changing elasticity of demand. Many publishers have started to also adapt to new business models, in the hope that the industry can settle into a new equilibrium by embracing the equivalent of cable TV’s “skinny bundles” or the music industry’s streaming subscriptions. As a result, hybrid scholarly journals, which maintain their subscription model but accept Open Access (OA) publication fees (APCs), have taken a substantial share of APC spending, and textbook publishers are pushing a model they call “inclusive access” in the hope of recapturing student spending lost to the secondary market. Some publishers, however, understand that all these are actions are – essentially – palliative remedies.

Elsevier, Pearson and Cengage in particular are transforming themselves into data analytics companies built atop their content, effectively adding ways to monetize it. None of these companies shows any inclination to abandon its traditional content business, and for sound reasons. These businesses are very large relative to the overall size of either company, and failure to sustain their profitability would have severe consequences for their respective valuations. In addition, without content these companies would have a much harder task building credible data offerings. As a result, the traditional journal business of Elsevier and the higher education textbooks of Pearson and Cengage are likely to stay for a long time in their respective portfolios. But the management teams of these companies clearly view the future as driven by adding the provision of data and data analytics services to their respective customers, rather than by growing only the traditional core business.

By leading the shift of the publishing industry into supplying data services, however, Elsevier, Pearson and Cengage (as well as other entrants, coming both from the publishing industry and from the information industry) are posing challenges for the academic community. Until now, these companies were – at worst – seen by institutions as an annoyance for selected communities within academia. Librarians complained about the cost of periodicals and talked about a “serials crisis”, but the impact on the overall budget of a university was well below half of a percentage point. Similarly, the high cost of textbooks was an issue for students, and in particular those coming from disadvantaged backgrounds, but scholarships and some forms of financial aid, as well as the used textbook market, tended to mitigate the problem.

The move by publishers into the core research and teaching missions of colleges and universities, with tools aimed at evaluating productivity and performance, means that the academic community could lose control over vast areas of its core activities. In addition, the collection of massive amounts of data about faculty and students poses a significant legal and reputational risk for institutions, along with potential privacy and security threats for individuals.

It is important to underscore upfront that we are not opposing the use of data and data analytics in academic institutions. This project is aimed at ensuring that academic institutions retain control over the use of data and data analytics, that the use of data and data analytic tools is consistent with the goals of the academic community and that academic institutions are properly equipped to deal with the risks and implications posed by the rising amount of data being collected, analyzed, and used.

About the authors

Portrait of Claudio Aspesi

Claudio Aspesi

A respected market analyst with over a decade of experience covering the academic publishing market, and leadership roles at Sanford C. Bernstein, and McKinsey.

Scholarly Publishing and Academic Resources Coalition

SPARC is a non-profit advocacy organization that supports systems for research and education that are open by default and equitable by design.