May 31, 2021 • Issue #34 • The Missing Elephant
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The Missing Elephant
The biggest story in scientific and scholarly publishing over the last month was the announcement of the planned acquisition of ProQuest by Clarivate for $5.3 billion — a respectable sum for a company that began selling microfilm to libraries. Clarivate and ProQuest have made a good case for the strategic alignment between the two companies. They both sell software and databases to academic and corporate markets and so the acquisition opens opportunities for both cross-selling and cost-reduction, as Roger Schonfeld describes in an astute analysis. While the strategic rationale is convincing, we suspect that “money is cheap” may be the best explanation for the deal from Clarivate’s perspective. Given the heavy involvement of private equity in both companies, investment fund life cycles and other financial factors unrelated to the intrinsic business may have also played a role in the deal timing.
The most striking aspect of this deal, however, is the news that EBSCO was not the acquiring company. Jerre Stead, CEO of Clarivate, has said this was not a competitive auction. It is possible that this was a “bear hug” situation where Clarivate made an offer so compelling that ProQuest simply could not turn it down. It is also possible that while Clarivate and ProQuest were indeed in exclusive negotiations, such negotiations followed a discussion with others including EBSCO. Given the strategic fit between EBSCO and ProQuest, it would be remarkable for such a conversation not to have taken place. From the perspective of the equity shareholders of ProQuest, EBSCO had the strongest incentive to acquire the business and hence, in theory anyway, would be likely to pay the most for it.
We have no knowledge as to whether EBSCO was invited to tender an offer. But if they were, then one must conclude that they either passed or were unable to muster a sufficiently compelling bid. Either of these possibilities is also remarkable. If EBSCO passed on the deal, it raises the question as to whether they remain committed to the library market. Both EBSCO and ProQuest sell content aggregations and software to the library market. Bringing together these two content and software businesses would have given EBSCO an uncontestable position in the library market and additional pricing leverage. EBSCO could also have wrung considerable cost efficiencies out of the business by not only consolidating operations (sales, marketing, finance, HR, IT) but also platforms (something that Clarivate will not be able to do to the same degree).
If, on the other hand, EBSCO was not able to tender a sufficiently compelling bid, that leads to questions about their corporate structure and whether they will be able to compete in the long term as a privately held family company. Publicly traded companies, such as Clarivate, have the ability to raise capital from public markets. A privately held family company is not structured to sell equity to raise capital, which leaves debt financing as the sole option. An equity deal can pay for itself if the share price rises; debt financing, by contrast, requires actually repaying cash to lenders or bond holders. Valuations financed by debt tend to have different considerations. If EBSCO was not able to proffer a compelling offer, it calls into question its ability to remain competitive in a market shaped by publicly traded companies. Will the market ultimately force EBSCO to either transition to a publicly traded structure (perhaps in the mode of Wiley where the family remains involved)? Or will EBSCO determine that it is a market it wishes to exit, divesting its related assets?
We emphasize again that we have no knowledge about whether EBSCO entered into acquisition discussions with ProQuest prior to the deal with Clarivate. But either way — if they did or if they did not — EBSCO is the elephant missing from this room.
Source: Clarivate, The Scholarly Kitchen, Roger Schonfeld (@rschon) via Twitter
Professional and Academic Publishing
Another month, another PLOS business model (we note parenthetically that we are appreciative of PLOS’s business model fecundity — if they keep this up, we will have to create a dedicated “PLOS” section of The Brief). The latest model is called “Global Equity.” Another publisher would have called it something like “Tiered Pricing” or “International Pricing” or maybe, in a paroxysm of marketing exuberance, “Global Membership.” But much like “Community Action Publishing,” with Global Equity PLOS has elevated their business model to the sphere of social justice. Who among us could possibly be against global equity or community action?! We doubt that PLOS actively employs guilt as a sales strategy, but how is a librarian to feel about not signing up for Global Equity or Community Action?
But what exactly is Global Equity? It is basically an annual institutional publication fee (also known as a “subscription”) that entitles authors affiliated with a participating institution unlimited publication (with no APCs) in participating PLOS journals (pending editorial review and acceptance). It is not very different, in other words, from PLOS’s “Flat Fee” model (which we hope PLOS will rename to something more inspiring like “One World” or “Open Unlimited”) — except that the Flat Fee model is based on historical publication trends. As we noted last month in the The Brief (see Item 2), when PLOS announced five new journals, they were committing themselves to ginning up some kind of method for pricing journals with no historical trend data. The Global Equity model was designed for just this purpose. Rather than base the annual fee on historical output in PLOS journals, the Global Equity model bases it on historical publication output in other journals in relevant subject areas. The fee is then indexed to institution size and the economy of the country in which the institution is located (as measured by the World Bank lending tier).
We puzzled over the need for the Global Equity model. Couldn’t the Flat Fee model just do the same thing and PLOS could say “for new titles where there is no historical data we’ll use output in relevant third-party journals?” In a couple of years, it will make no sense to continue to base fees on publishing trends in other journals when there is data for actual PLOS journals. Perhaps the reason PLOS did not use this approach is that “Flat Fee” is not just a model — it is also a package. Institutions that subscribe to Flat Fee are purchasing publishing services related to five specific journals. So if PLOS added all the new journals to Flat Fee, they would have to either break apart the bundle, raise prices considerably (which is hard to do in any event but especially so when one is talking about new journals with no track record), or create an add-on bundle (“One World Premium”?). This is the exact same conundrum that traditional pay-for-access publishers face with subscription bundles and new titles — and there is no good solution, only less bad ones.
PLOS’s solution is to price (most of) the new journals separately, outside of the Flat Fee package. Three thematically related titles (PLOS Climate, PLOS Water, and PLOS Global Public Health) are available on an à la carte basis under the Global Equity model. One new title (PLOS Sustainability and Transformation) has been added to the CAP model, also on an à la carte basis. And the last of the new titles (PLOS Digital Health) has been added to the Flat Fee package. This may result in undervaluing the new title in the short term (because of the inability to raise the Flat Fee pricing sufficiently to cover the costs of a new title). In the long run this addition will help enhance the value of the package and may, over time, provide some pricing leverage (as the Flat Fee model is based on publication history, the new journal will presumably increase the total output across the package) — and at any rate the journal will produce revenues via APCs in the meantime.
The Global Equity model is another shrewd business model innovation from PLOS. It adapts the established Flat Fee model for institutions while providing a mechanism to price the journals (including for different countries) while they establish a publication history. Global Equity also provides a way for PLOS to add additional titles on a flat fee basis without overloading the Flat Fee package. The only drawback to the approach is that by leaving the journals outside of the Flat Fee package, there is no compelling reason for a university to subscribe immediately. The advantage of packages is that, assuming one has sufficient pricing elasticity, new titles do not have to make their own way in a crowded market. In the case of the new Global Equity titles, many librarians will likely take a “wait and see” approach. Will affiliated researchers publish in the new journal in sufficient quantity to justify a subscription? And even if they do, what kind of grant funding might researchers have to pay towards APCs? In this regard, PLOS has an extra hurdle to get over compared to pay-for-access titles. Not only must PLOS establish the new title editorially but it also must convince libraries to pay from the library budget (as opposed to letting researchers and their funders pick up the tab). To find paying Global Equity customers in the near term, PLOS will need to find institutions that are either especially supportive of PLOS’s mission (or at least its naming conventions) or that believe there will be sufficient output to justify the new expenditure.
Source: PLOS Blog, Alison Mudditt (@alison_mudditt) via Twitter
Metrics were on our minds this month, as Clarivate announced the release of a new measurement into the wild. While at first the Journal Citation Indicator looked exciting, with a promise that it could be used to compare performance of different journals in different disciplines, Phil Davis’s analysis suggests this is easier said than done. Similar to Scopus’s SNIP, the Journal Citation Indicator appears to be a metric that offers a combination of insight and flaws.
Speaking of flawed metrics, the Center for Science and Technology Studies at Leiden University this month offered a superb visual explainer of why the h-index is so problematic. We’ve been seeing the h-index become increasingly prominent over recent years despite its fairly obvious flaws (it favors older researchers over younger researchers and h-index scores cannot be compared across disciplines). As David wrote back in a 2017 article in the European Heart Journal, “A researcher who has published five articles, each with 500 citations will have an h-index of 5, while a researcher who has published 20 articles, each with only 20 citations will have an h-index of 20. I know which one I’d rather hire.”
As the Leiden group suggests, research evaluation should rely on a broader view, particularly one that embraces qualitative assessments of work rather than trying to bring everything down to numerical measures. Quantitative measurements can enhance and support that analysis, but in the end, there will always be disconnects created when translating subjective questions (is this work good or important?) into quantitative numbers.
Source: Clarivate, The Scholarly Kitchen, Scopus, Leiden Madtrics, European Heart Journal
From the ongoing “unintended consequences of Creative Commons licenses” department comes a new preprint analyzing how copyright trolls are using CC licenses to file large numbers of lawsuits against those who have made mistakes in the complicated attribution schemes necessary to reuse the works. Daxton Stewart from Texas Christian University writes about photographers who post CC BY licensed pictures, then scour the web searching for reuses that don’t exactly follow their stated attribution requirements. They then contact the reuser requesting a settlement or they file a lawsuit demanding significant damages. The reuser likely settles for the smaller sum, given court costs, time commitments, and the difficulty of proving a fair use case.
This sort of copyright trolling takes advantage of early versions of CC licenses. Pre-2013, CC licenses were considered void and full copyright restored if the attribution terms weren’t strictly followed. CC BY 4.0 corrected this oversight, adding in a grace period where corrections could be made and the license terms restored. The trolls here are careful to license their creations under the earlier versions, which enables their lawsuits. Stewart’s preprint looks at how courts have ruled in these cases and how fair use arguments have applied.
The whole point of the CC BY license is to remove uncertainty around reuse, but they have unwittingly become litigation tools for those looking to abuse the system. We advise taking care when reusing CC-licensed materials. Be sure to accurately follow all required attribution details, particularly when using a license prior to CC 4.0.
The National Academy of Sciences is launching PNAS Nexus, a highly selective, multidisciplinary, open access science journal. PNAS Nexus will be developed via a publishing services agreement with Oxford University Press. (PNAS itself is not part of this agreement and remains independently published by NAS.) The new journal, led by Editor in Chief Karen Nelson (president of the J. Craig Venter Institute), plans to publish its first papers in early 2022. C&E is honored to have represented NAS in brokering this notable deal with OUP.
Morressier raises $18 million in Series A funding round led by Owl Ventures.
RBmedia announced the acquisition of McGraw Hill Professional’s audiobook publishing business. RBmedia will also become the exclusive audio publisher for McGraw Hill Professional’s new titles.
Darla Henderson is the new Director of Publications at the Federation of American Societies for Experimental Biology (FASEB).
Robert Kiley, Head of Open Research at Wellcome, has been seconded to cOAlition S as Head of Strategy.
Eric Lander is sworn in as Director of the White House Office of Science and Technology Policy. While vaccine infrastructure and climate change are at the top of the list of Lander’s priorities, open access policy is under review at OSTP, according to Science.
Joseph Serene, former Publisher and Treasurer of the American Institute of Physics, has passed away. Our heartfelt condolences go out to his family and former colleagues.
If we were all on trial for our thoughts, we would all be hanged. ―Margaret Atwood