A presentation on disruptive items in scholarly communications and how publishers are responding to this by developing an "upstreaming" strategy

1. Upstreaming: The Migration of
Economic Value in Scholarly
Publishing
A Presentation to the IEEE Library Advisory Board
October 18, 2018
Joseph J. Esposito
Senior Partner
Clarke & Esposito, LLC
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2. Meet the new boss / Same as the old boss —The Who
But when you talk about destruction / Don't you know that you can count me out (in) — The Beatles
I think the world is going to be saved by millions of small things — Pete Seeger
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Choose Your Epigraph
Clarke & Esposito, a presentation to IEEE

3. Topics
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What is the value chain?
How have publishers exploited the traditional
value chain?
Where do libraries fit into the value chain?
What disruptive technology disrupts
The lengthening (downstream) of the value chain
The loss of control (by publishers) of the
traditional value chain
The opportunities upstream
The impact on different players (e.g., libraries,
researchers)
Clarke & Esposito, a presentation to IEEE

4. Publishers traditionally made their money
by focusing on the end-product of a long
chain of events
By weakening the hold publishers had on
that product, the fixed text, digital
technology has disrupted publishers’
economic model.
All participants in that chain of events—
researchers, funding agencies, publishers,
libraries, archivists, data analysts—are
affected by this switch.
To counter this, publishers increasingly look
elsewhere in that chain of events, typically
at the steps that precede the final text. This
is upstreaming.
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Why Upstreaming?
Clarke & Esposito, a presentation to IEEE

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A value chain is a high-level model developed by
Michael Porter used to describe the process by which
businesses receive raw materials, add value to the raw
materials through various processes to create a finished
product, and then sell the finished product to customers
- Investopedia
What Is a Value Chain?
Clarke & Esposito, a presentation to IEEE

6. Clarke & Esposito, a presentation to IEEE 6
Q: What is the Publishing Value Chain?
A: The publishing value chain begins with
research and ends with the final publication

7. Research Authorship
Article /
Book
Submission
Editorial
Review
Publishing
Agreement
Production Marketing Sales Distribution
Clarke & Esposito, a presentation to IEEE
The Publishing Value Chain
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8. How Libraries Fit into the Publishing Value Chain
• Libraries are downstream, serving as publishers’ customers and the
curators of materials post-publication
• Libraries themselves have their own value chain
• Different from publishers’
• Intersects with publishers at the time of purchase
• Through support of Open Access, libraries create a new or modified
value chain
• Publishers as service providers
• Libraries often manage an institution’s OA fund
• Libraries index and enhance discovery of OA materials
Clarke & Esposito, a presentation to IEEE 8

9. • Contracts vary
• Publisher by publisher
• Project by project
• Format by format (e.g., books, journals)
• Author by author
• Regionally
• Contracts codify agreements for a
particular value chain
• Example: Gold Open Access differs from print book
contract
• Changes in the value chain puts stress on
contracts
• E.g., development of Creative Commons licenses
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Sidebar: Publishing Agreements
Clarke & Esposito, a presentation to IEEE

10. Working with the Traditional Publishing Value Chain - 1
Upstream, publishers keep an eye on authors
• Regularly encourage submissions
• Sometimes commission work
Submissions are evaluated; successful authors offered
contracts
Publishers get full or almost full economic rights
• Copyright monopoly
• Non-compete clause
Publishers add value in production
Clarke & Esposito, a presentation to IEEE 10

11. Working with the Traditional Publishing Value Chain - 2
Final form of publication is implemented (e.g., printed book
or journal)
Marketing department creates demand (advertising, PR,
etc.)
Sales department solicits customers
Final publication delivered to customers, often libraries
Clarke & Esposito, a presentation to IEEE 11

12. The Internet as global copy machine
• Undermines monopoly nature of copyright
• Undermines non-compete clauses
• Interferes with the business model at the tail end of the value chain
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How Does Disruptive Technology Disrupt?
Clarke & Esposito, a presentation to IEEE

13. Reduced cost of competing infrastructure
• Once had to own the press
• Today WordPress powers 30% of Web sites
Open Source
Free
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How Does Disruptive Technology Disrupt?
“Freedom of the press is guaranteed only to those who own one”
—A.J. Liebling
Clarke & Esposito, a presentation to IEEE

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Disruption as Aspect of Policy
• Research funders now stipulate
how research gets published
• Preference for Gold Open Access
• Downward pressure on article
processing charges (APCs)
• Declared aim by some to do away
with journals as “unnecessary
artifact of print”
Image Credit: Wizard of Id
The New Golden Rule
Clarke & Esposito, a presentation to IEEE

15. • File sharing creates a new step in the value chain after the final text
• Open Access reduces the incentive to invest in content
• E.g., eliminates reprint sales (in clinical medicine)
• Undermines advertising revenue
• Loss of monopoly status/control of fixed content
• Piracy, a function of digital media, undermines monopoly copyright
• In sum, the traditional value chain has been disrupted
Clarke & Esposito, a presentation to IEEE 15
The Plight of Publishers
(for those who care)

16. Sidebar: Sci-Hub and
Piracy
• The most conspicuous pirate site (of many)
• Collection rivals that of the largest university
libraries (books and journals)
• Many security issues
• Use of scholars’ credentials
• Questions about source of funding (and
motivation)
• A scholar who is willing to use Sci-Hub has no
need for authorized publications
Totally disruptive to traditional value chain
Why subscribe when you can steal?
Clarke & Esposito, a presentation to IEEE 16

17. Sci-Hub’s Impact on other Parties
• Scholars get a “free” and near-comprehensive library
• Could undermine the economics of a scholar’s own professional society
• Security issues (e.g., stolen IDs) could be serious
• Paradoxical relationship with libraries
• Introduces security issues, draws away traffic, and undermines library funding
• On the other hand, allows for aggressive negotiations with publishers
“Give us a good deal, or we will turn our scholars over to Sci-Hub”
Clarke & Esposito, a presentation to IEEE 17

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What’s a Publisher To Do?
Traditional models challenged on all sides
Play Defense
• Litigation
• Political Lobbying
Use Scale to Fight Back
The Bulwark strategy
• Recruit societies to join
largest publishers’
offerings
May be useless against
disruptive policy
changes
Seek new Revenue Streams
• Upstream
• Downstream
Clarke & Esposito, a presentation to IEEE

19. Downstream Opportunities - 1
Archiving / life-cycle management
• Historically the role of librarians
• Portico and LOCKSS already in market
Scholarly Collaboration Networks (e.g., ResearchGate)
• Serious copyright questions
• Litigation already underway
TDM – Text and Data Mining
• What is the business model?
• Legal situation not entirely resolved
19Clarke & Esposito, a presentation to IEEE

20. Downstream Opportunities - 2
Research Management
• Opens up new categories of customers (e.g., administrators)
• Examples: SciVal (Elsevier), Symplectic (Digital Science)
Expanding access to published materials
• Gap in the market for a comprehensive database to solve this common problem
• Creation of the “supercontinent” of research material (R. Schonfeld)
• Growing interest among largest publishers to hoard materials for their own use
20Clarke & Esposito, a presentation to IEEE

21. Upstream Opportunities
Preprints
• Cannot charge for content
• Opportunities in hosting (BioRxiv), TDM, and data analytics
Workflow Tools
• Examples: Publons, Kopernio (both Clarivate Analytics)
• Open questions – who is the customer? How big is the market?
21Clarke & Esposito, a presentation to IEEE

22. Upstream Business Models
Sales of new services
• Example: Aries Editorial Manager (now Elsevier)
• Associated revenue is relatively small
Business intelligence to support content business
• Mendeley helps Elsevier get a view of entire market
• RedLink (independent) provides data analytics to help increase publishers’
sales and library collections strategy
Discovery services as portal
Linked tools could enforce lock-in to a single vendor
22Clarke & Esposito, a presentation to IEEE

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Issues for Libraries - 1
Budget problems are ongoing
Largest companies continue to increase
their clout
Will provosts continue to support libraries if
the core responsibility of collecting content
moves elsewhere(e.g., to OA hosting sites)?
OA, piracy, and SCNs represent rivals for
researcher attention
Clarke & Esposito, a presentation to IEEE

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Issues for Libraries - 2
Ability to adapt to changing priorities of
constituencies and evolving environment
Trans-institutional resources developed to
counter influence of largest publishers
On one hand, library skills (e.g., indexing)
decouple from traditional publications; on
the other, same skills applied to resources
beyond local collections
Broader mandate (e.g., textbook
affordability) as library responsibilities
migrate to new areas
Clarke & Esposito, a presentation to IEEE

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Issues for Publishers
Upstreaming requires scale – which may
hurt smaller professional societies
Swift M&A actions are necessary
Possibly there is more data than business
opportunities
Likely need to find new classes of customers
beyond library sales, such as administrators
or researchers themselves
Clarke & Esposito, a presentation to IEEE

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Issues for Researchers / Authors
Soaring number of publishing venues (and a
disconnect between disruptive forces and
career advancement strategy)
Complexity of literature search and
validating quality within a growing volume
of material
Managing unprecedented requirements
from funding agencies (mandated OA,
restrictions on fees, e.g., Plan S)
What about academic freedom???
Clarke & Esposito, a presentation to IEEE

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Issues for Funding Agencies
Funding disruptions upstream fly in the face
of the academic reputation system
Funding agency coverage not
comprehensive – not all research is
supported by funders (e.g., humanities)
Danger that devaluation of journal brands
will make funding decisions harder to assess
Creates a positive obligation to fund
publishing as well as research
Clarke & Esposito, a presentation to IEEE

28. Joe’s Crystal Ball
Clarke & Esposito, a presentation to IEEE 28
• Pluralistic environment
• Neither all OA nor all toll-access
• Libraries increasingly extend reach beyond
their own collections
• Shared services
• Curation of OA content
• Largest companies remain highly significant
• Workflow tools increasingly interwoven with
content
• New companies largely do R&D for industry
(then get acquired)

29. • Clarivate is the likeliest model for publishers
• Focus on metacontent and tools
• Large business outside the academy
• Elsevier moving aggressively in this direction
• Has need to protect content revenue
• Despite pressure on libraries, librarianship extends its reach into new
areas
• Concern that professional societies may be left behind
• Matter of scale/resources
• Membership not uniformly motivated by non-editorial activity
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What Does the Future Landscape Look Like?
Clarke & Esposito, a presentation to IEEE

30. Thank You!
Joseph J. Esposito
Senior Partner
Clarke & Esposito, LLC
jesposito@ce-strategy.com
@josephjesposito
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