Outside observers tend to fall into a sort of stunned disbelief when describing this setup.
It is as if the New Yorker or the Economist demanded that journalists write and edit each other’s work for free, and asked the government to foot the bill. The publishers then sell the product back to government-funded institutional and university libraries, to be read by scientists – who, in a collective sense, created the product in the first place. Scientists create work under their own direction – funded largely by governments – and give it to publishers for free the publisher pays scientific editors who judge whether the work is worth publishing and check its grammar, but the bulk of the editorial burden – checking the scientific validity and evaluating the experiments, a process known as peer review – is done by working scientists on a volunteer basis. The way to make money from a scientific article looks very similar, except that scientific publishers manage to duck most of the actual costs. All of this is expensive, and successful magazines typically make profits of around 12-15%. In order to make money, a traditional publisher – say, a magazine – first has to cover a multitude of costs: it pays writers for the articles it employs editors to commission, shape and check the articles and it pays to distribute the finished product to subscribers and retailers. It was a 36% margin – higher than Apple, Google, or Amazon posted that year.īut Elsevier’s business model seemed a truly puzzling thing. In 2010, Elsevier’s scientific publishing arm reported profits of £724m on just over £2bn in revenue. With total global revenues of more than £19bn, it weighs in somewhere between the recording and the film industries in size, but it is far more profitable. Despite the narrow audience, scientific publishing is a remarkably big business. The core of Elsevier’s operation is in scientific journals, the weekly or monthly publications in which scientists share their results. Aspesi, though, had reason to believe that that prediction – along with those of every other major financial analyst – was wrong. It was one of the few publishers that had successfully managed the transition to the internet, and a recent company report was predicting yet another year of growth. Reed-Elsevier, a multinational publishing giant with annual revenues exceeding £6bn, was an investor’s darling. I n 2011, Claudio Aspesi, a senior investment analyst at Bernstein Research in London, made a bet that the dominant firm in one of the most lucrative industries in the world was headed for a crash.
0 kommentar(er)
