AAUP 2011: New Business Models (J. Esposito)

Joseph J. Esposito [email_address] AAUP 2011 Baltimore, MD

Business models/revenue models
The four categories of revenue streams
Hybrid models
Special cases
Analyzing new ventures

Traditional model (“user pays”) Inverted open access model (“author pays”) Marketing services Institutional sponsorship

Traditional and most common form of publishing
Sometimes a user is represented by a proxy (e.g., a library, a K-12 school district)
Market-based—this is both good and bad
Competition makes for better offerings
Ineffective when the market is small or nonexistent

Not all users can pay—the access problem
Pressure on library budgets aggravates access problems
Dominant players shape marketplace to their own advantage
Monopoly nature of copyright potentially interferes with some noncommercial use
DRM inconveniences users

Established by BioMed Central; copied by PLOS, Wiley, Sage Open, etc.
Not to be confused with vanity publishing
Unproven (even untested) for long-form works
Probably best for works of limited circulation (not many readers to share costs)
Open access aspect removes reader access issues; opens up extensive Web interactions

Advertising is best-known of these
Other services include lead generation, promotional use of content (sampling), data collection for direct marketing
Requires extensive technical infrastructure
Tremendous competition for online ads
Requires an audience of meaningful size
Better for some categories than others

Funding from universities, philanthropies, governmental agencies
Primary funding mechanism for higher education
Primary source for libraries
Presses may struggle to get this support
Funders can be fickle

The “freemium” model
Licensing

“Free” + “premium”
Free content used to attract audience
Special content or services are offered for a fee
Really a hybrid:
Free content = marketing service
Premium content = user-pays model

Not to be confused with client licensing for digital products
Subsidiary rights
Strictly a B2B affair
Typically a user-pays situation at one remove
Originating publisher licenses material to another publisher (e.g., translation rights)
Second publisher establishes traditional model in its own market

#1:
Publish a book (user pays)
Receive subvention for plant cost (institutional support)
In later years, put book online as open access (institutional support)
Sell POD for online book (marketing service plus user pays)

Write and publish an article
Research for article supported by grant (institutional support)
Submit article to open access service (author pays)
Service derives some income from advertising (marketing service)
Article aggregated with others; sold in print coursepack (user pays)

Marketing services limited for scholarly works
Audiences mostly too small for advertising
Deceptively painless because no direct cost
Open access plus POD: not sustainable in itself
Online forms weaker than print for ads

Institutional support must be a component
Some products literally have no market
Absence of institutional support turns entire field over to commercial ventures; aligns publishing solely with profit
But institutional support is weakening at this time

Author-pays model has limitations
New model; not fully tested
Requires significant technical infrastructure
Already “staked out” by commercial companies
Limited author budgets; problems for long-form works
Least valuable for publications with wide audience

Strains in traditional model (user pays)
Library budgets under pressure
Physical bookstores pulling back
Enormous dependence on one channel (Amazon)
Little D2C infrastructure in place
Publishing electronically does not alter the key issues fundamentally
But globalization may open new markets

Seek hybrid models
Seek institutional support only as last resort and temporarily
Be wary of marketing services as magic bullet
Seek new customers through traditional model and author-pays (author as customer)
Align program with evolving demand, especially in global markets

AAUP 2011: New Business Models (J. Esposito)

by Association of American University Presses

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