[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]

Re: NYTimes: Reed Elsevier's Online Ads

This appears to be a shrewd move on Elsevier's part.

If the Times report is accurate, Elsevier will be cherry-picking the articles that go on the ad-supported site. This means that they forecast few subscription losses from libraries, as libraries will want the entire journals. If this is true, then all the revenue is additive--as one would expect, considering Elsevier's history and status as a publicly traded company. A boon for shareholders, but no relief for librarians.

Elsevier will supplement their journal content with summaries of the content from third-party journals. This means that part of the readership of those journals will find those articles through Elsevier's portal. A very good marketing position, as it permits Elsevier to sell ads against summaries of others' content (as search engines do). This will have the effect of weakening the economics of those third-party journals, who will lose some advertising to Elsevier. Here again Elsevier, which plays a bare-knuckles market-share game, has its own history to learn from.

The market (according to the article) are those clinicians not associated with an institution. This is, in other words, a new market, for which ad-supported media rather than subscriptions provide the best return. This is highly innovative.

Long term, this strategy will improve the editorial quality of Elsevier's journals (at least for articles on oncology) at the expense of competitors' journals. This is because authors will seek the best of both worlds: institutional representation through Elsevier's subscriptions, and Open Access through the ad-supported portal. Only Elsevier can provide this. Thus authors will migrate to Elsevier publications, enhancing the prestige of Elsevier's program, and enabling Elsevier to continue to raise prices on subscriptions year after year.

There are two negatives (for Elsevier) that I see:

First, the investment in this service is not trivial, especially because Elsevier is committing to create original material for the portal.

Second, just as Elsevier can migrate advertising from third-party journals to the new Elsevier portal, search engines, and Google in particular, can migrate advertising from journals and the Elsevier portal to the Google search-engine results page. On the other hand, if Elsevier did not do this, Google would erode Elsevier's in-journal advertising anyway. It probably is appropriate to think of this portal as a partial response to Google Scholar. One wonders if there is another shoe waiting to drop.

Having some appreciation of what it means to plan a project like this, I am a bit awestruck. The thinking that went into this, the level of investment, the shrewdness of the market assessment, the audacity of the risk-taking: I can't think of a recent parallel. Simply stunning.

Now they have the fun of making it work.

Joe Esposito

Ann Okerson <aokerson@gmail.com> wrote:

Of possible interest and a model to watch. What happens to
liblirary subscriptions? Will we need them? For whom, at what
price, etc? Ann Okerson

_______________________________

September 10, 2007
A Medical Publisher's Unusual Prescription: Online Ads
By MILT FREUDENHEIM

By some measures, the medical publishing world has met the advent
of the Internet with a shrug, sticking to its time-honored
revenue model of charging high subscription fees for specialized
journals that often attract few, if any, advertisements.

But now Reed Elsevier, which publishes more than 400 medical and
scientific journals, is trying an experiment that stands this
model on its head. Over the weekend it introduced a Web portal,
www.OncologySTAT.com, that gives doctors free access to the
latest articles from 100 of its own pricey medical journals and
that plans to sell advertisements against the content.

The new site asks oncologists to register their personal
information. In exchange, it gives them immediate access to the
latest cancer-related articles from Elsevier journals like The
Lancet and Surgical Oncology. Prices for journals can run from
hundreds to thousands of dollars a year.

Elsevier hopes to sign up 150,000 professional users within the
next 12 months and to attract advertising and sponsorships,
especially from pharmaceutical companies with cancer drugs to
sell. The publisher also hopes to cash in on the site's list of
registered professionals, which it can sell to advertisers.

Mainstream publishers have wrestled for years with the question
of how to charge for online content in a way that neither
alienates potential readers nor cannibalizes their print
properties. So far, few definitive answers have emerged. Reed
Elsevier, which is based in London, is taking a risk that its
readers will drop their paid subscriptions and switch allegiance
to the new Web site, which will offer searches and full texts of
the same content from the moment of publication.

"It's a calculated risk, a bold step into the unknown," said Dan
Penny, a senior analyst in London at Outsell, a market research
firm.

[SNIP]

Copyright 2007 The New York Times