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UKSG Workshop 2007 - Financial Considerations (from a Publisher perspective)
- 1. Financial Considerations (from a Publisher Perspective) Paul Calow Journal Sales Manager, Europe
- 7. Editorial - New Journals surplus loss 0 7 years time
Editor's Notes
- Huge subject to cover in a single short session Deliberately not too specific in places as I have had to be careful not to include confidential information - the ways different publishers manage their finances can give significant competitive advantage Nervousness from colleagues I spoke with when preparing this presentation Where I refer to either Blackwell Publishing or Wiley-Blackwell please bear in mind that I’m actually referring to commercial and society publishing in general…
- Revenue Subscriptions (Institutional, Personal, Membership) Rights and permissions (not covering in this presentation specifically) handle royalties from translations, third party resellers, permissions, misuse of content (legal cases) Page charges (Small – excessive pages or author fees for submission) Costs - can be categorised as being fixed or variable: Fixed in that they remain the same regardless of circulation e.g. cost of editing, cost of review Variable in that they change depending on circulation e.g. cost of printing, cost of mailing paper journals Costs are also described as being either direct or indirect Direct as in costs directly identified with a publishing activity e.g. editing articles or printing issues Indirect as in costs necessary but not directly involved in specific publishing processes e.g. marketing activities Editorial expenses – growing significantly in recent years as institutions become more reluctant to subsidise cost of running an editorial office – publishers are having to bear the cost Royalties – Fees paid to societies that own titles or editors as part of their incentive plans (usually based on % of income or profit share)
- Financially, editorial departments are responsible for the overall cost of… Running the editorial process Paying editors Developing and running author services (inc. peer-review) Reviewing performance and identifying trends…that might help form future strategy
- Real data – changed the name to protect the innocent Obviously an HSS title – lower revenue, lower cost STM titles will have far higher revenues and costs – bigger journals, more pages, higher quality e.g. paper, more colour, high res images, sophisticated electronic version (linking, html and pdf, multimedia?) You can see here how all revenue and costs are in some way assigned on a title by title basis – exception is with Overheads (e.g. buildings, staff) where it is very difficult to apportion cost by title Terminology differences: Issues prepress = composition (copyediting, typesetting, artwork etc) Honoraria = Editorial Fees Sundry e.g.. Insurance
- Continuing with editiorial… IMPORTANT - Pricing decisions are driven primarily by forecasted cost, not by profit (surplus) expectations Most publishers now try to moderate price increases (and make them fair and justifiable) Ultimately we want to produce credible revenue projections and secure the very best cost base…because, if anything, accurate information helps us to win new publishing contracts through trust and transparency Need to get agreed prices out to agents and customers by June ideally – usually not until August (example of where our respective cycles don’t match)
- How do publishers identify new titles? 1) Commission report to identify new and developing areas of research – corroborate findings using ISI data – confirms emergence of new disciplines or subsets of existing disciplines 2) Spot an increase in number of submissions of articles within a certain discipline to an existing journal 3) Direct feedback from the scholarly community or editor/editorial board – corporate customers (pharmas) are good at identifying emerging opps… 4) Look to our competitors – do they have similar titles that are successful? Have they launched a title in a new discipline? New titles will already have content ready for publication from other titles and this helps to forecast the direct cost Also rely on existing relationships with authors who publish within other titles by same publisher to ensure contributions
- Launching new titles is challenging, expensive and risky… New titles don’t have an impact factor (due to a lack of citations), Prestige, Circulation, Usage or Readership that established titles have It takes a few years even for a title to become listed in A&I databases New titles usually have limited funds as they aren’t proven to be successful or worth the investment As the graph indicates…it usually takes around 7 years for a new title to become self sustaining and to make a surplus. During this time focus is as much on encouraging submissions and maximising circulation and readership as it is on revenue generation as this increases citations and hopefully earns the title an impact factor which in turn attracts more authors… These are also reasons why publishers might, when deciding how much to charge for the new title… Give free access in the first year (or longer) Or at least get commitments from customers if they exceed a certain level of usage after free period
- Moving on to production… WORTH MAKING A DISTINCTION BETWEEN PRINT AND ELECTRONIC JOURNAL PRODUCTION because the structure of the costs of production vary greatly between print and electronic Cost to create the first copy of the electronic version accounts for approx 80% of the total cost of an article The rest is associated mainly with the cost of technology development and ensuring long term availability of the electronic copy Print costs are more evenly distributed between the cost of production of the first copy, replication and then distribution IT’S NOT TRUE TO ASSUME THAT THE COST OF PRODUCING ELECTRONIC CONTENT IS LOWER THAN THE COST OF PRODUCING PRINT – THE COST IS STRUCTURED DIFFERENTLY - IT’S NOT NECESSARILY LOWER Printing, typesetting, web hosting and content management are all areas where costs can be controlled or even reduced via outsourcing to third parties Both publishers and libraries are currently running two systems to accommodate print and electronic…and the cost of production in particular suffers because of this!
- Marketing budgets are often the first to see cut backs if a title is struggling but it quickly becomes a chicken and egg situation Customers need to be made aware of titles in order to increase readership/usage/revenue/demand but the individual title cannot necessarily afford a big investment in marketing
- Obviously sales teams are the main generators of new revenue but they are also now responsible for the protection of existing revenues too. Cost of supporting sales: Back in 1999 libraries purchased most subscriptions via agents Model changed and librarians (and consortia) expect to see reps and negotiate face to face – this has an associated cost in terms of T&E Customer Services easily dealing with print and electronic subs business but negotiated deals are often non-standard and therefore need new systems, processes, detailed analysis At BPL we created and recruited a new data analysis team specifically to support offline deals
- Like I said at the start of my presentation… this is a huge subject to cover in such a short session This really provides a taster for a series of forthcoming new UKSG seminars covering more comprehensively financial imperatives for both publishers and librarians, agents and open access publishers Look out for more information on listservs or UKSG website