STM Publishers Embrace E-media’s Phase II
When your stock-in-trade is information that drives innovation, people expect you to be on the leading edge. And so it is with the scientific, medical and technical (STM) publishing sector. While the STM market faces similar challenges to the rest of the publishing industry, its willingness to embrace electronic platforms and develop innovative revenue streams has positioned it well in the face of new competition brought about by the expansion of digital media.
“The biggest challenge has been mastered, and that is the transition from paper to electronic for STM content,” notes Derk Haank, CEO of Springer Science + Business Media, the world’s second-largest publisher of STM journals and the largest provider of STM books, with sales of more than
$1 billion in 2006. “Everything we do is Internet-driven, and we use or will use whatever our customers need.
“The STM sector is far ahead of other publishing sectors [in utilizing technology], and has been since the middle of the 1990s,” he says. “Our end-users were early adopters of electronic information, and we began providing libraries with e-journals in the mid-1990s.”
Haank believes Springer has paved the way for a wider acceptance of e-books and journals among STM publishers and other segments in publishing.
“Although we were not the first STM publisher to bring e-books to the market, we were the first publisher to do so on a meaningful scale and with a very progressive, customer-friendly business model,” he says. “In June 2006, when we launched the Springer eBook Collection, we had 10,000 books. Now, we have almost 20,000.”
Along with moving more written content online, many STM publishers have invested heavily in webcasting, blogging, e-newsletters, streaming video and podcasting.
“We are investing in all of the above for many diverse reasons,” says Tim Hamer, senior vice president of global marketing services at Thomson Scientific, which saw revenues grow 6 percent to $162 million in 2006. “Just to give a few examples, webinars and webcasts are good for helping customers and users to get the most out of their products, as well as building up networks that help information users to help themselves. Video and podcasts are good for marketing and promoting new products and services as well as disseminating white papers together with hosting industry discussion forums,” he says.
Hamer agrees that STM publishers were at the forefront of embracing these new technologies, recognizing them as means to add value to information in a way that enables customers to “make better decisions faster.”
The expansion of materials available online has, in turn, led to a major shift away from printed reference books and toward tutorial or conceptual books as best-sellers and category leaders, according to Tim O’Reilly, founder and CEO of Silicon Valley-based O’Reilly Media. “Pure reference books may sell a fraction of what they sold in their heyday,” he says.
However, he says that some of those reference books remain among the most popular in online reference services like the company’s Safari Books Online, a book subscription service for which customers pay a monthly fee to be able to search across a library of books.
“Revenue from Safari is up 1,200 percent for us in the past five years, while print revenue is down modestly,” he says, “although that is also influenced by a decline in the number of [print] titles we’ve published.”
“Revenue from print-only journals is falling,” agrees Dan Strempel, senior analyst at Simba Information—a media industry analysis and market intelligence firm based in Stamford, Conn.— “but it’s being replaced at a faster rate by print and electronic combinations, or just electronic subscriptions and site licenses.”
Strempel says e-only subscriptions are approaching 40 percent of all subscriptions, while e-revenues (from any revenue source with an electronic component) account for about 75 percent.
“We expect the rapid growth since 1999 to reach these levels of penetration [and] slow in the coming years, and with it, revenues,” he continues. “Consortia sales will continue to grow, but the pricing models will continue to evolve, more and more based on usage. …”
Next Up: Multisource
Having embraced electronic media faster than many other sectors of the publishing industry, Strempel says STM publishers are moving into a “second phase” concerned with “developing tools that help researchers and clinicians use the content found in STM books and journals.”
“This is where you see things like condensed, evidence-based medical information delivered to a physician at the point of care,” he says.
Hamer refers to this emerging model as “useful information in context,” meaning the ability to find and bring together relevant information from many sources in order to best serve a particular need. He cites as an example powerful online tools that allow users to analyze information and spot trends themselves, creating charts and documents that “enable them to use what they’ve discovered in their own workflow.”
“STM information is an ideal sector in which publishers who add significant value to comprehensive, timely and trusted information … can thrive,” Hamer adds.
Overall industry numbers indicate that STM publishers are succeeding in capitalizing on the new opportunities afforded by electronic formats. According to Strempel, the combined global STM market grew 4.4 percent to $14.1 billion in 2006 and is expected to grow at that pace in 2007.
A strategic market report released by Simba in June found that the medical publishing industry hit a new revenue high last year, growing 4.5 percent to $6.4 billion. The report also found the online segment growing the fastest among all content delivery segments last year—increasing 7.7 percent to $2.9 billion in the STM market.
The Biggest Challenges
“I think the No. 1 challenge STM publishers face is preparing for life after the transition from print products to electronic products is complete,” says Strempel, who notes that publishers who have benefited the most during this transitional period have been those with a large print business undergirding a portfolio of fast-growing electronic products.
“Eventually print will whittle down to a nice niche business in the areas where print still makes sense, and what you’ll be left with is stiff competition for growth in the electronic realm,” Strempel adds. “So what you have now is a lot of publishing executives who were brought up in a traditional print environment, trying to figure out what business models and strategies will work in an electronic marketplace that hasn’t fully developed yet.”
The most important of these models and strategies, according to Haank, concern payment for content (should the user or the author/institution pay?) and whether to adopt a business model based on subscription to individual journals or database pricing.
When it comes to new business models, perhaps no STM publisher has gone farther than Hindawi Publishing Corp., a New York- and Cairo-based publisher of more than 80 journals in fields including engineering, life sciences and mathematics. As of last February, Hindawi has adopted a full “open access” business model—that is, free and unrestricted online access to all materials—based on author-side publication charges.
“Since authors have a strong incentive to have their work read––and hopefully cited––by other researchers, open access publishers can cover their costs with publication charges rather than subscription fees,” notes Paul Peters, head of business development for Hindawi.
“While the ability of authors to pay publication charges varies a fair bit based on location and research area, there are a substantial number of authors who are able and willing to pay the publication costs of their work,” he adds.
Peters cites as a measure of success the number of submitted manuscripts received by the company each month, which jumped from 272 submissions in January to 540 submissions in August. He calls this growth of nearly 100 percent “the clearest sign of the success we have had after converting to open access.”
Print subscriptions dropped for most of Hindawi’s journals after the conversion to open access, according to Peters, who says the decrease was expected.
“Our business model does not depend on selling print subscriptions, so this is not something we are particularly concerned about.”
While not switching entirely to the open access format, other STM publishers have proven ready to integrate the model into their operations.
“We no longer experiment with open access; we provide it,” Haank says. “Since 2004, our Open Choice option allows authors to choose to publish using the open access model.”
O’Reilly agrees that STM publishers must embrace open access in order to better circulate their content.
“There’s way too much focus on DRM [digital rights management] and protecting content,” he says. “In today’s era of information abundance, finding and promoting content is far more important than protecting it from unauthorized use.”
In the next five years in the STM segment, Haank believes, “the changes and new developments will continue to be
in electronic publishing. Unlike journal publishing, where
the electronic journal is increasingly replacing the print
journal, we believe that e-books will not replace printed books, but will rather have a positive effect on the sale of backlist titles.”
O’Reilly forecasts a more drastic change for some STM publishers. He expects to see something of a shakeout
among mid-size STM publishers due to consolidation in retail channels.
“Very small and very focused publishers who can survive on direct sales or sales through online resellers like Amazon will have a significant advantage over those who’ve depended on retail distribution,” he says. “There was a period in which retailers were embracing books that were more professional, but as the Internet becomes an increasingly useful part of the professional information landscape, retailers are backing away.”
According to Peters, the open access movement may ultimately benefit smaller STM publishers.
“The need for a new business model is particularly strong within the scholarly publishing industry, since smaller publishers have found it increasingly difficult to compete within the subscription model,” he says.
Then there is the controversial Google Book Search platform, which O’Reilly and Haank believe has real potential to expand the market, especially if Google launches programs for paid access to online books.
“At first we were a bit concerned about putting excerpts of our books on Google Book Search,” Haank says. “We thought people might ‘read and run,’ but quite the contrary happened. Google has proven to be a powerful marketing tool.”
Strempel points to Springer as an example of a company that has benefited from Google’s service, noting the company has 29,000 titles displayed through the program, and has seen an increase in sales in both backlist and current titles. He notes, however, that most publishers are not as sanguine.
“Publishers are taking a hard-line stance on copyright because they are afraid of how the laws might evolve in the digital age,” he says. “They also feel Google is using their content to sell advertising, and the publishers get nothing in return.”
Another concern with platforms like Google Book Search is that it will further the sort of information overload that makes it difficult for consumers to distinguish, in Hamer’s words, “good information that you can trust from bad.”
In a world of rapidly expanding media options, it may be that STM publishers’ ability to provide quality content applied judiciously will ultimately prove to be the segment’s ticket to continued growth and success. BB
James Sturdivant is an award-winning freelance writer based in Philadelphia. James Calder contributed to this article.