Springer Science+Business Merges with Holtzbrinck’s Macmillan Science Group

One could get dizzy trying to trace the M&A history of Springer Science+Business. I recall analyzing their likely future back when they were owned by two private equity companies, Cinven and Candover in the mid-2000s. Cinven & Candover had formed Springer Science + Business by merging Kluwer Academic Publishing with Springer in 2004. In late 2009, Cinven & Candover  sold Springer Science + Business to EQT, a Swedish private equity firm, for 2.3 B EUR (note, Springer held 2.2 B EUR of debt at the time).

In 2013, EQT sold Springer to BC Partners for 3.3 B EUR.

Today, it was announced that BC Partners will merge Springer with Holtzbrinck Publishing Group’s Macmillan Science Group (well, almost all of MSG). Holtzbrinck becomes majority investor with a 53% stake; BCP retains minority ownership. Derk Haank, the CEO of Springer, will become CEO of the combined company. Annette Thomas, current CEO of Macmillan, will serve as Chief Scientific Officer.

The combined entity will have 13,000 employees and annual sales of 1.5 B EUR ($1.7 B US).

The rationale for the merger centered on the need for market share in the scholarly publishing segment. Derk Haank is quoted as saying, “Together, we will be able to offer authors and contributors more publishing opportunities and institutional libraries and individual buyers will have more choice. The expected economies of scale will allow for additional investments in new product development.” 

Scale and market share are becoming increasingly important as large publishers, including Elsevier, Wolters Kluwer, and Wiley, along with Springer, are competing to acquire titles from scholarly societies and other small publishers. Having control over the high quality scientific and medical journal content allows the big publishers to reinforce the value of bundled access to their collective publications (as well as subsets of their publications). But, perhaps more important, by accumulating rights to a significant share of the journals that serve as the arbiters of quality research— and by association, quality scientific and medical evidence—these leading scientific, technical and medical (STM) publishers will remain essential to any analytics engine that aims to mine the universe of important research results.

In brief, scale affords digital information businesses far more options in their choice of business models than would be available to a small publisher. Springer Science + Business now has Nature and its portfolio of journals in its camp. Together, they should be able to better compete in a segment that will continue to consolidate.

Secondary Data Usage in Healthcare

I was guest speaker at the March 22, 2012 “Let’s Talk HIT” series hosted by Scratch Marketing & Media in Cambridge, MA. The topic I chose was Secondary Data Publishing in Health. Health Content Advisor’s parent company, InfoCommerce Group, has a long history of guiding business media companies in constructing data products, but increasingly we are finding interesting examples of secondary data products that develop as a by-product of technology companies. Electronic Health Records (EHRs) represents one of the more compelling examples of information technology that has the potential to spawn a new generation of data products.

Scratch Marketing has posted the video of the talk, which was structured as an interactive group discussion, in 8 parts. See their YouTube page for the list of segments: http://bit.ly/H9Wjk9.

See the event recap by Lizzie McQuillan at Scratch Marketing here:

http://scratchmm.com/2012/03/event-recap-let%E2%80%99s-talk-hit-with-janice-mccallum/

Also, for a provocative view, read Marya Zilberberg, MD, MPH’s takeaway from the evening’s discussion:

http://evimedgroup.blogspot.com/2012/03/how-our-healthcare-spending-is-like.html

Thanks again to Scratch and the many Boston-area (stretching all the way out to the Berkshires!) health IT, public health, healthcare publishing, entrepreneurs, and marketing experts who attended and participated in the discussion. Scratch Marketing added Twitter handles to the video, which helps tremendously in identifying each speaker.

Google Health Post-Mortem

Last Friday, June 24, Google announced that it will shut down Google Health, which had become a much-hyped platform within the health IT community for storing one’s personal health and wellness data. Outside of the health IT community, Google Health made little impact.  I have read at least a dozen other articles that dissect the technical reasons and health IT insider viewpoints on why Google Health failed.  I’d like to discuss the reasons why Google Health never gained traction within Google.

I’ve followed Google from the very early days when they burst on the scene as a new search engine when nobody thought we needed a new search engine.  Google transformed search by using an algorithmic approach to identify the most relevant results.  Among the three key factors that differentiated Google from the pack were 1) algorithms that ranked pages based on popularity (Page Rank) and 2) scale: the larger the collection of sites that were crawled, the better the results (at the time circa 2000).  Since its introduction, Google’s algorithms have changed many times, but the fundamental fact that Google prefers to depend on programmable solutions that don’t require human intervention remains constant.  And, Google continues to chase large-scale opportunities where it can become an essential layer of the infrastructure.

Factor 3) is the business model. Remember the early 2000s when we all wondered how Google would make money?  After Yahoo acquired Overture in 2003, the revenue model was decided.  Keyword-driven advertising became the preferred method to monetize traffic on the popular search engine sites and scale matters in this model.    

With these three key factors in mind: algorithms not people, scale, and an advertising-driven revenue model, let’s consider why Google Health was destined for failure.

Google has done an excellent job of staying ahead in the “scale” category.  Google loves large repositories of data that it can monetize via advertising.  Google Books is an example. Once the legal hurdles have been worked out, Google Books will run without much human intervention –and has the bonus of providing an e-commerce revenue stream along with an advertising revenue stream.

Where Google got into some early trouble with Google Books was they wanted to side-step the hard work involved in working out agreements with publishers, so they did a deal with AAP and the Writers Guild that required authors and publishers to opt-out and take action if they wanted to set their own pricing terms.  When it came to orphan works, Google would be the presumptive copyright owner if the rightful owner couldn’t be located. So far, Google Books fits with the scale and business model elements. But, Google Books required a heavy initial investment in scanning books.  That certainly requires significant human effort, but Google was able to hire inexpensive labor and only older books needed to be scanned.  Newer books are available in electronic form, so once the initial investment is completed, the humans that place the books on the scanners will no longer be necessary. 

With Google Health I have to agree with Kent Bottles who wrote that Google found the degree of complexity in healthcare too great because it required too much specialized conversion programming and relationship-building with multiple stakeholders.  This variability that cannot be easily managed algorithmically is beyond Google’s chosen core competencies.

With respect to revenue models, Google said they would never put ads around PHR data in Google Health.  I think I still have a copy of the initial terms and conditions that stated that Google planned to monetize Google Health through data-mining aggregated patient data and then presumably selling the results to interested parties, with Pharma undoubtedly at the top of the list. In order for the mined data to be useful, scale and consistency of content types and formats would be necessary.  The revenue models could include keyword and display ads or content sales.

So, in effect, Google Health fell short on all three factors: scale, ability to use an algorithmic approach to content management and search, and revenue model.  Yes, health represents over 17% of our economy, so scale was still a possibility, but rate of adoption was slow—and was named as the primary reason for discontinuing the service.  Google will continue to reap benefits of health care searches via its advertising programs on its existing online and mobile search engines, but a Google Health product that was defined as a personal health data repository just doesn’t represent a big enough opportunity for Google. 

Like most of the healthcare publishing and health IT community, I was excited when I first heard that Google was establishing a health group.  Note, I first wrote about Google Health in 2006 when Google Health was envisioned as part of the Google Co-op program that had a crowdsourced model that encouraged publishers and subject matter experts to tag healthcare information.  Google Health took several turns during its short lifetime and who knows, it could come back in five or ten years once the healthcare industry grows up to resemble the financial services industry where the majority of customers log on to their computers to manage their accounts.  But, even then, its business model will have to measure up to Google’s broad business objectives for it to have any chance of succeeding.

Amplifying Your Content via Twitter

If I offered you a highly targeted opt-in list of potential customers and key opinion leaders who would promote the content in your publications, what would you be willing to pay per name in the list?  What if I told you there was no cost and furthermore, I’ll include metrics on who promoted your content along with a profile of that individual?  Sounds pretty interesting, right?  

This is one of the benefits of Twitter, as well as other social networks.  But, wait a minute, didn’t a report commissioned by Yahoo! just find that Twitter is a media platform and not a social network?  Well, some of the headlines I read made it sound that way, but the actual report, Who Says What to Whom on Twitter, confirms earlier research that found that “Twitter more closely resembled an information sharing network than a social network”.  That’s not the same as saying it’s not a social network.

Twitter is of course a social network: the platform is interactive and users decide whom to follow.  That’s enough to make it a social network.  Granted, Twitter differs from FaceBook in that following does not have to be reciprocal.  So, I may choose to follow the feed of a publication that interests me, say for example, @TheEconomist, but the Economist may not find value in following me.  In this respect, Twitter resembles a media platform, since a large part of the population uses Twitter to receive information, not publish information. 

It should be noted that a key finding of the Who Says What report is that infomediaries play an important role on Twitter. [The authors use the terms ‘intermediaries’ and ‘opinion leaders’, but I prefer infomediary.]  For example, I may chose not to follow @NYTimes because I know my friend @KentBottles will provide tweets that cover stories of interest to me from the Times.  Kent becomes the infomediary –or curator—for content from The New York Times for me. 

Okay, we’ve established that Twitter is a social networking and media platform.  Now consider that it is particularly well-suited for mobile and local applications. Let’s see, if I spell out the benefits and features I’ve mentioned above, we can say that Twitter is:

“a social local mobile real-time amplifier and audience building curation tool that offers detailed usage metrics and is available at no cost”.

So why have publishers been so slow to apply Twitter? The problem is that Twitter is many things to many people, which makes it very difficult to classify.  Trying to classify it as either a social network or media platform doesn’t make sense.  It’s both and more.  My advice to publishers is to focus on its amplification capabilities for existing content.  I recommend this podcast with David Meerman Scott, Ian Condry, Michael Bird and Gary Halliwell to get some other expert opinions on this topic.  And note that I commented on the podcast page, which NetProspex’s marketing team then posted as a separate blog and tweeted it.   Amplification, indeed!

Most of the Twitter presentations I see are targeted to marketers and advertisers, not publishers, and I’m considering preparing a seminar on the value of Twitter to healthcare and B2B publishers from my perspective as a consultant who focuses on effective business models for data producers/publishers. Please contact me to let me know if you would be interested.  If there’s enough interest, I’ll develop a seminar that can be presented onsite or offsite.

Free is Not a Business Model

“Free” is an attention grabber, not a business model.   Chris Anderson, author of the recently introduced book, Free! The Future of a Radical Price , understands the power of the word “free” on many levels (including using it as a catchy title).  But even he can’t justify giving away intellectual property as a business model.  Rather, he frequently recommends a “freemium” model, where some content is widely available for free with revenue coming from upselling leads.

I wrote my last article on the commoditization of health content, before the release of  Anderson’s book.  While I agree with most of his points—especially the fact that digitized content is subject to commoditization because of low marginal costs – it’s important to keep in mind that Anderson and others are only talking about a part of the picture.  Digital content and digital distribution may drive down prices over time, but they also increase the options available for packaging content for different audiences and applications.  So, while the basic bits may be commoditized, helping customers apply those bits to solve problems, close sales, or become more efficient remains a very valuable service. 

There is a range of options available to publishers to differentiate their content in the marketplace to retain value.  The best mix of free content, premium content, tools, subsidies, and value-added services will differ depending on the nature of the content and the size of the potential audience.  Very specialized content with a limited audience may do better with a premium subscription model; news content with mass appeal may be better suited to an ad-supported free-to-the-reader model.  In both cases, some content may be used for marketing purposes to attract and retain users.

To thrive in the digital economy, publishers need to rethink how their users value the information they provide.  What do these users do with the content?  What can you do to help these users become more productive or work more efficiently?  This is the essence of infocommerce, and many publishers still have not harnessed its full potential. Some are still stuck in the old mindset that they produce “textbooks” or “newspapers” or “journals”. Instead, they should be thinking about how their content can be integrated with software to offer decision-support systems, or how their content could be used by an online marketer to shorten the sales cycle.  

In the past week, infocommerce has been the subject on Andrew Savikas’s blog at TOC at O’Reilly Publishing - Content as a Service and  Matt Dickman, a digital marketer at Fleishman-Hillard  -  Content as  Commerce  . Both  stretch their ideas a bit too far in order to make their point, but they represent creative thinking about how to readjust the way we view the value of content.

Another phrase should be added to the discussion:  “Content as Advertising”.  Publishers need to gain a renewed understanding of their advertisers’ needs and consider how content can be used as a vehicle to engage prospects.  Using free content to attract leads and build brand equity isn’t all that radical if one looks at how this “content as advertising” is supporting (and in some cases supplanting) traditional branding and lead-generation methods.  We predict that as “content as advertising” and “content as commerce” continue to evolve,  the lines between publishers and marketers will blur as marketers learn new methods for using content online to attract new customers. 

[Note, although not specifically focused on health content, this article is particularly relevant to pharmaceutical marketers and OTC health and beauty marketers.]