KUHN CAPITAL Tuesday, March 20, 2018
Dispatches from the front

Scientific Journals: More Internet Roadkill?

While traveling the byways of the information industry, we sometimes slow to view roadside wrecks. We got an eyeful when ogling encyclopedia publishing back in 1995, declining as it was at 20% per year. The industry finally stabilized at a fraction of its former size as its market shifted to the Third World.

Then in 2003 we looked at the printing industry, now going through its own meltdown with the number of operators declining at the rate of about 10% per year. More recently we examined broadcast television, especially the news segment, which lost 26% of its viewership in 2001 alone.

All those woes have one antagonist in common: computer/internet technology. PC’s killed the encyclopedia (PC’s became the new home status symbol, edging out the bookshelf of richly bound encyclopedias); cheap, high-quality graphics software, printers and digital communications are turning print customers into their own printers; and broadcast TV is facing the demise of mass market channels in favor of endlessly-niched cable and internet media.

So what’s ailing scientific journal publishing? The field is still large with about $1 billion in revenue and fat 32% operating margins. But it’s staid and has been for some time an uncomfortable pairing of strange bedfellows – scientists and other academics yoked to giant for-profit journal publishers like Elsevier who assert copyright claims on their contributors’ articles. This tension makes the traditional print model vulnerable: libraries and individual subscribers chaff at the high prices of journal subscriptions, many academics believe that “information wants to be free,” and the internet speeds up distribution hugely compared to the snail-mail peer-review process print publishers use to select articles. These peer-review delays can run from months to years, starving scientists of news in fast-moving fields. And some studies suggest that internet distribution is not only faster and cheaper, but reaches a broader audience, especially of laypeople like patients seeking the latest information on their maladies.

Not all print journals are in denial: a number have supplemented their product with electronic versions or even moved entirely to bits and bytes. But the pricing pressure remains even in these hybrid publications: somehow, when a product becomes less tangible, consumers feel they‘re getting less value. Add to this the fact that last year the British House of Commons and the US Congress released recommendations to set up free repositories of scientific research articles as alternatives. The Brits have gone even further: they’re making grants to sponsor “open access” models where authors pay a one-time fee and the article is distributed at no charge to all comers.

In response, the print publishers argue that somebody has to pay for the peer-review process, even if printing costs drop in the face of electronic alternatives. Without rigorous peer vetting, they say, article quality will fall.

We agree that peer reviews will still cost money to administer: but it is the intelligent consumer (or in this case, scientist) who determines what that market price should be, not a publisher with a cash cow death grip on the field’s information.

While the scientific journal publishers are still a long way from losing money, to us the forces mobilized against them appear inexorable and the writing’s on the wall: it’s another round of Schumpeter’s “creative destruction” courtesy of the free market combined with the internet.

Ryan Kuhn

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