Clubs, jokers and the ace of spades: consortia and business models beyond the Big Deal

1. Clubs, jokers and the ace of spades: consortia and business models beyond the Big Deal Hugh Look Senior Consultant, Rightscom Ltd

2. Of course I'm an optimist "If we maintain our faith in God, our love of freedom, and superior global air power, I think we can look to the future with confidence." General Curtis LeMay, mid-1960s

3. Torquay, trains and terrorism A short diversion into family history

4. “Oligarchies are seldom destroyed. They more frequently commit suicide” • Lord Reay, at the time of Lloyd George’s Finance Bill

5. “System cruel”

6. Today’s pressures: libraries • Already well described by Jill; more to come from Katherine • Exchange rates • Inflexible big deal subscription models • Tension with academics • Increasing “libraries don’t matter any more” thinking • Collection development still essential • Increasing gold OA costs • Holding consortia together under pressure

7. Today’s pressures: publishers • Problems sustaining margins • Increasing pressure from customers for more flexible model • Less capital available/harder to get investment agreed • Impact of public policy developments • The share price/value to society • The other parts of the business

8. But what of tomorrow’s pressures?

9. But what of tomorrow’s pressures? • Continuing economic uncertainty: a shared problem • How much will we have to spend? • How can we sustain our markets? • Could the sky fall in? • Changes in research & education • Boundaries between institutions becoming more flexible • Funders looking for different value • A drive to economic impact?

10. But what of tomorrow’s pressures? • The impact of developments already underway • Publication charges • Repositories • Free access • More demanding students • What pattern emerges? • Problems for the subscription model • This does not mean it’s fatal! • (But it might be)

11. Economic context

12. Economic context • Double-digit declines in funding for content • Exchange rates • Impact of recession on other divisions of publishers • Impact on other functions of institutions • Continuing growth in new markets • High potential, but must offer very high value to secure business • Impact on planning • Short-range visibility only

13. Two models pulling in different directions? • Consortium deals • Size gets better deals • Cost and T&Cs • Scale allows for acquisition of “surplus” resources at marginal cost • Higher perceived value • Change can be slow • The cost of doing politics • Big deals • Limit to what can be achieved – customer size • “Surplus” resources have actual cost (tradeoffs) • Change easier to implement in theory – 1 to 1 • In practice, bargaining power limits flexibility

14. Responding to threats

15. Responding to threats • Fight • Try to stop it happening • Flight • Give in, exit the sector • Face-off • Stare down the other side, ignore problems, pretend it’s not happening (or at least, not to you) • Fix • Make it more attractive for people to stick with the existing model • Follow • Stay in, accept alternatives are needed • Faff • Dither, tinker, hope it will get better

16. How has the sector responded? • …and I’m including publishers and libraries here: interdependent components • Combination of Fight, Fix and Face-off • With quite a lot of added Faff • And a small amount of Follow • Fight and Face-off can involve politics • Fix is mainly tactical solutioneering • Faff is…well, faff • Faffing can look like fixing • Confusing the two is very tempting… and very dangerous

17. A guide to the options

18. A guide to the options

19. Viable options • Follow • Fix • Or some combination of the two? • Are they compatible?

20. Any option only viable if…

21. Fix • Make it more attractive for people to stick with the existing model • Often comes about as a response to Face-off • The internal combustion engine as we know it • “Superconsortia” • The same but bigger • Up to national level? • Cost/time involved in setting up • Increased flexibility in big deal • Rule-driven models lead to binary decisions • Create efficiencies that allow reduced prices without lower margins • Sounds a bit like Faff?

22. Follow • Stay in, accept alternatives are needed • Change pricing model (again) • Redistribute functions and costs • i.e. change where value is added and paid for • Examples: Gold OA, overlay journals • Let the academy do more • Allows overhead reduction for publishers • Lower prices, but maintain margin

23. Redistributing roles: where do you find value in a networked world? • At the periphery - closest to the user, where specialist expertise is needed and relationships developed • Control of the user interface • Individualised experiences • At the core - where the shared infrastructure and expertise is • Generic • Benefit from scale • Not in the middle, with the process and pipeline operators

24. Alternative models • Advertising, sponsorship • But not a good climate at the moment • Usage pricing • We all know it creates barriers • Cheap subscriptions with usage caps • Mobile phones • How much feedback do users need? • No publishing company has a back office that could sustain this level of transaction • Volume • Complexity

25. What really matters? • Transition, transition, transition • Many of these models could work • The problem is the cost and disruption involved (for everyone) in getting there • Can only be managed system-wide

26. Is this a solvable problem? • And if not, what do we do about it? • If it works for libraries, it won’t work for publishers? • Is it cyclic? • Probably, but impossible to predict the length of this phase • Managing polarities is a key skill • We all have to live with high levels of uncertainty • There is a lot more Face-off and Fix to come

27. It’s never too late

28. Or is it?

29. „Gegen die Dummheit, kampfen die Gotter selbst umsonst“ Schiller

30. Thank you Hugh Look Rightscom Ltd www.rightscom.com