Tuesday, February 19, 2019

Pearson Sells K-12 Business for $250MM

Long on the list of 'discontinued operations' Pearson has finally completed a sale of their troubled K-12 education business.

From Reuters:
British education company Pearson said on Monday it had agreed to sell its U.S. K12 courseware business to Nexus Capital Management LP for $250 million as it shifts its focus from textbooks to digital.  Nexus will pay an initial $25 million and a further $225 million by way of a vendor note due in the next three to five years for the business, which provides textbooks and resources for students from kindergarten to 12th grade.
Following the repayment of the vendor note, Pearson said it would be entitled to 20 percent of cash flows to equity holders and 20 percent of proceeds in the event the business was sold.



Publishing Technology Report 2019 - available 2/25/2019

Tuesday, February 12, 2019

Annual Publishing Technology Report 2019: A Review of ERP & CMS Software Built for Publishers


This report will be published on February 25th and we are offering a pre-pub purchase discount price of $995.  This price will go up to the full price of $1500.00 after publication.  The 2019 report is more comprehensive than the 2018 report and offers more detailed insight into the companies and products reviewed.  Similar to the 2018 report, we cover software providers offering Enterprise Resource Planning (ERP) applications such as Product Data Management, Editorial and Production Planning, Order to Cash and Contracts Rights and Royalties and we cover Content Management Systems (CMS) provide content hosting, distribution, ecommerce and access and entitlement.  We also contribute some analysis on trends in the industry.  (NOTE: the market map above is only a partial view of the entire map).

Please use this link to purchase the report:  PURCHASE NOW 2019 Report

In total, we have identified over 100 software companies in our market map which cover segments including ERP, CMS, Title Management, Contract Rights and Royalties, Editorial Services, Membership Management, Digital Asset Management, Digital Asset Distribution, Intellectual Property Management and Content Analytics.

You should buy this report if you need insight in to the market and the primary competitors, you are an investor looking for new client relationships and MOST IMPORTANTLY if you are a publisher looking to invest in new and/or replacement solutions to support your business.

EACH REPORT PURCHASE WILL ALSO RECEIVE TWO HOURS OF CONSULTING TIME TO REVIEW THE REPORT AND ANSWER DETAILED QUESTIONS. 

In this report we also discuss the technology the vendors actually use and the investments they are making to improve their platforms - particularly in the area of SaaS and API development.  As a buyer of these solutions it is important that there is an awareness and appreciation of how 'future proof' are these applications.

We would like to thank the following companies for participating in our interview cycle:

ARPHA/Pensoft
Aries Systems
Advantage Computer Systems
Censhare
Consonance
CyberWolf/Accumen
FADEL
Filmtrack/Jaguar
Klopotek
Lumina
Iptor/Bookmaster
MetaComet
MultiPub
Media Services Group/Newscycle
PubFactory
Real (Alliant)
Schilling A/S
Silverchair
THINK/MPS
Typefi Systems
Tizra
Supadu
Virtusales


Related recent posts on this topic:
New Ticker for Publishing Technology Companies

Tracking the Technical Velocity of Publishing Software - Looking at how software companies are investing in new technology

Publishing Market Map 2019

Thursday, January 31, 2019

The Auto Textbook Algorithm



There are many dire predictions that have all human workers being replaced by machines in the not too distant future, so this article from MIT Technology Review is likely to make educational textbook staff nervous.  That said, the underlying content from Wikipedia wasn't created by a robot - at least as far as we know...

The article explores how a group of researchers were able to create viable textbooks by building an algorithm which sources Wikipedea content.
That raises an interesting question. Given the advances in artificial intelligence in recent years, is there a way to automatically edit Wikipedia content so as to create a coherent whole that is useful as a textbook?
Enter Shahar Admati and colleagues at the Ben-Gurion University of the Negev in Israel. These guys have developed a way to automatically generate Wikibooks using machine learning. They call their machine the Wikibook-bot. “The novelty of our technique is that it is aimed at generating an entire Wikibook, without human involvement,” they say
The approach is relatively straightforward. The researchers began by identifying a set of existing Wikibooks that can act as a training data set. They started with 6,700 Wikibooks included in a data set made available by Wikipedia for this kind of academic study.
MIT Technology Review Link

Thursday, January 24, 2019

Publishing Technology Report 2019 Update


Some recent news from some of the companies I am covering in my annual publishing technology report.

Recent News:

Advantage CS  
  • When Advantage moved to .NET in 2012, it paved the way for Unicode. Unicode is a computer industry standard that enables the use of other characters in addition to Latin, such as Cyrillic, Hindi, Japanese or Chinese. In its recent upgrade to 2016.0, Bayard took "Advantage" of these new capabilities to address the needs of its Hong Kong Subsidiary, Bayard Asia. For the first time, thanks to Bayard, Chinese characters are displayed on Advantage user screens. (link)
  • Forty people from 12 different clients gathered in Ann Arbor last week for the first Advantage Academy. The academy was a 3-day workshop centered around Advantage, with the goal of providing practical, hands-on experience that attendees take away with them to implement in their own organizations (link)
  • R & D activity in 2018 has been lively, to say the least. Here is an update. Integration with Salesforce and Dynamics: We recently tightened the integration between Advantage and these applications. Many of our prospects and clients use one of these CRM applications to manage sales leads and want a seamless integration between said package and Advantage (link)
  • We are delighted to welcome The Journal of Bone and Joint Surgery to the community of Advantage users. The Journal of Bone & Joint Surgery (JBJS) has been the most valued source of information for orthopaedic surgeons and researchers for over 125 years and is the gold standard in peer-reviewed scientific information in the field (link)
Aries Systems  
  • Elsevier, the global information analytics business specializing in science and health, today announced it has signed a definitive agreement to acquire Aries Systems, a leader in scientific publication workflow solutions headquartered outside Boston, MA. Aries’ offerings are used by journals, books and other publications for manuscript submission, peer review, production tracking and eCommerce. (link)
  • Aries Systems is pleased to announce the adoption of its web-based manuscript tracking and peer review system, Editorial Manager, by SAE International. The SAE International portfolio consists of 10 peer-reviewed journals, as well as several forthcoming journals to be announced later this year, all of which will launch on Editorial Manager in 2017. The journals previously managed editorial workflow using an in-house system. (link)
  • StatReviewer a decision support tool adopted by Aries Systems and integrated into Editorial Manager (link)
Atypon  
  • Atypon Doubles in Size in Two Years to Support Rapidly Growing Client Base and Product Innovation (link)
  • Atypon is now offering customers on its Literatum platform full integration with theIPregistry.orgto solve the problems caused by inefficiencies and inaccuracies within the process of managing, updating and communicating IP address changes. (link)
  • Taylor & Francis has extended its existing contract and will continue to host, deliver, and market all of its research journals on Literatum, Atypon’s online publishing and website development platform.(link)
Bibliocloud (Consonance)  
  • Rebranded as “Consonance” (link)
  • Awarded a ~£20k Innovation Support for Business government grant. (link)
Censhare  
  • Replaces leadership team. The Supervisory Board of censhare AG has announced that Jürg Weber has been appointed interim CEO and CFO with immediate effect, replacing CEO Dieter Reichert and CFO Stephan Wehselau. (link)
  • One of the biggest IT consultancy firms in the Nordics, Tieto, with over 14,000 consultants and technologists across 20 countries, has teamed up with censhare to offer innovative content driven, customer experience solutions, based on the censhare Universal, Smart Content Management platform that is already in use by global brands such as Jaguar Land Rover, Kohl’s and international publishers like Bauer Media Group and Hearst Magazines UK. (link)
Clarivate (Scholar1)  
  • Clarivate Analytics and UNSILO partner to power ScholarOne with AI (Link)
  • Clarivate Analytics Expands Transparent Peer Review Pilot with Wiley to New Titles (link)
FADEL  
  • FADEL today announced that it has made Rights Cloud available for integration and resale by OpenTextTM, the global leader in Enterprise Information Management (EIM). This integration enables users to check and clear digital assets against contract rights terms directly from OpenText Media Management. The integrated solution enables OpenText users with a single “rights” source across agreements, talent and assets. (link)
  • FADEL completes Series B Financing to Fuel Continued Growth (Link)
Filmtrack/Jaguar  
  • FilmTrack, the leading end-to-end rights management solution that helps media and entertainment companies manage and monetize their intellectual property, unveiled all-new platform features at NAB Show in Las Vegas last week. This announcement comes on the heels of $5.5 million Series C funding that the company announced last August (link)
Highwire  
  • Digital publishing technology provider HighWire has partnered with Springer Publishing to offer digital access to its extensive collection of nursing, behavioral and health sciences, and medical content, including textbooks, professional reference and clinical books, and journals. (link)
  • HighWire Appoints New VP of Global Sales as Demand for Digital Services Grows (link)
  • Highwire updates to the Scolaris platform will mean that it will now be much easier for you to host multiple types of content in the same site and manage it all through a single, simple CMS. In addition to delivering significant internal efficiencies for publishers, powerful search functionality will make it much easier for your users to find the content they need and seamlessly move between content types. (link)
  • HighWire and Cenveo Publisher Services Join Forces in End-to-End Publishing Partnership (Link)
Iptor/Bookmaster  
  • Iptor Supply Chain Systems, a leader in supply chain management, planning and logistics solutions and services, today announce the release of Version 8 IP1 Publishing ERP solution. IP1 Version 8 contains many enhancements ranging across all business processes, including financial management, Unicode, Rights Management, Global Taxation management, and PCI Compliance. (link)
Ixxus/CCC  
  • Ixxus/CCC announced the launch of task workflow tool, Content Kanban. Used in tandem with the Ixxus Publishing Platform (IPP), or as a standalone tool, Content Kanban provides intuitive content task tracking and management capabilities that streamline development, foster collaboration, and keep projects on schedule. (link)
Klopotek 
  • Klopotek is pleased to announce that Peter Karwowski has been appointed Deputy CEO for the Klopotek Group, effective from 1 August 2018. In addition to his new role, he will continue his responsibilities as Chief Technology Officer (CTO) of the Group. (link)
  • Klopotek, provider of solutions to the publishing industry, has created a technology that is state-of-the-art in usability and handling, leaving the limitations of Client-Server technology behind: the cloud-based platform STREAM (link)
Media Services Group/ Newscycle  
  • NEWSCYCLE Solutions (“Newscycle“),the largest software supplier serving the global media industry, today announced the acquisition of Infomaker, a Swedish software company that provides open, cloud-based publishing platforms for content creation, editing, asset management, and omni-channel delivery and presentation. (link)
  • After an extensive review process, longtime Cat's Pajamas client Books International recently agreed to upgrade their Cat's software to Media Services Group's Élan Platform (link)
PubFactory  
  • PubFactory hosts Sciendo, De Gruyter’s new publishing services business. De Gruyter’s new Sciendo platform showcases the breadth of its services and solutions offering along with presenting 600 Open Access journals and 100+ Open Access books. (link)
  • Manchester University Press to Migrate All Books and Journals to Sheridan’s PubFactory in Spring 2018. Manchester University Press’ launch of their books and journals on PubFactory will bring an enhanced reading experience for users, and seamless access to all of their content. (link)
RoyaltyShare  
  • RoyaltyShare, Inc., today launched an extension to its industry leading royalty accounting platform that allows clients to easily and securely deliver royalty statements to artists, producers and other partners. The new feature, available immediately as part of the RoyaltyShare application, simplifies the tedious process of distributing royalty statements.(link)
RSG Media  
  • RSG Media was awarded an Excellence in the Use of Predictive Analytics on 2018 Global BIGGIES Awards. This award was presented by Big Data & AI for Media Association at Columbia University on March 22, 2018. This competition drew participation from the most innovative media companies that implementing data and artificial intelligence initiatives, and has produced 39 winners from 14 countries and 21 companies.(link)
Schilling A/S  
  • Sanoma Learning chooses Schilling to streamline their royalty processes in the Netherlands, Belgium, Sweden and Finland. (link)
Silverbear  
  • ClearCourse Partnership LLP, a partnership with a mission to acquire innovative technology companies providing membership software and services to groups, organisations and businesses, today announced its acquisition of Silverbear, a leading membership and customer relationship management (CRM) solutions provider for professional organisations, trade associations and the wider Not-for-Profit sector. Link
Silverchair  
  • Silverchair announced today the addition of Code Ocean to the Silverchair Universe, a framework for rapidly integrating complementary products and services with the Silverchair Platform.(link)
  • Silverchair announced today a partnership with the MIT Press to develop and host a new eBooks platform, MIT Press Direct. (link)
  • Silverchair announced today the addition of Rievent to the Silverchair Universe, a framework for rapidly integrating complementary products and services with the Silverchair Platform. (link)
  • Silverchair announced today a partnership with Portland Press, the wholly owned subsidiary of the Biochemical Society, to host its life sciences content. This partnership will assist the research community, advance the subject of molecular bioscience, and support the charitable activities of the Biochemical Society (link)
  • ASM International and Silverchair announced today the launch of the ASM Digital Library on the Silverchair Platform. The ASM Digital Library offers a single gateway to ASM's authoritative materials information resources (Link)
Tizra  
  • Tizra User Summit: What We Learned by Meeting Our Customers Where We Are (link)
  • Tizra announce that the new search feature we originally developed for the Einstein Papers Project has been named a finalist in the 2018 CODiE awards (link)
Trilogy Group  
  • Trilogy Group has announced the launch of ‘Trilogy Connect’ its new B2B Order Portal app to provide full B2B functionality on iOS and Android devices. (link)
Virtusales  
  • Virtusales Publishing Solutions, the leading software supplier to publishers worldwide, is delighted to announce that DK Verlag has selected Biblio3 to centralise their publishing processes. Monika Schlitzer, Publisher and Managing Director at DK Verlag comments "We are very much looking forward to working with Virtusales and to the start of a great joint project. The whole team strongly believes that working with Biblio3 will positively impact our processes” (link)
  • After considering the financial and operational cost of running its on-site data centre, HUP turned to its trusted partner Virtusales to deliver the complete Biblio solution. Dan Wackrow, Chief Financial and Operating Officer at Harvard University Press explained, “The decision to outsource provides Harvard University Press with significant cost savings and secure anytime/anywhere system access for its employees and partners. It allows us to focus our limited resources on publishing and not on hardware and hosting.” (link)
  • Virtusales were delighted to support the inaugural Biblio University User Group this month, hosted by Harvard University Press in Beverly, Massachusetts. With an increasing number of university presses choosing to implement BiblioLIVE, Virtusales’ customers can benefit from sharing ideas, innovations and best practice to maximize the utility of the BiblioLIVE suite. The Biblio University group is an engaging online community created to facilitate these conversations and was founded by Dan Wackrow from Harvard University Press and Dennis Langlois from Princeton University Press. (link)

Tuesday, January 08, 2019

Tracking the Technical Velocity of Publishing Software



One of the interesting aspects of the review I am engaged in for my annual publishing technology forecast, relates to the transition publishing industry software providers are undergoing with respect to their technology architecture.   Companies in this segment may be slow to the service oriented architecture (SOA) dance but, be that as it may, we are seeing important and significant redevelopment undertaken by the leading players.  In my report, I’ve tried to represent this as a reflection of ‘velocity’ by suggesting that those companies which are faster to adopt SOA and API driven architectures will accelerate their revenue growth and market share at the expense of other providers.

This chart represents my estimate of where some of these companies are in their development (names removed in this version).  Based on my interviews and interactions with these companies, there is a clear inflection point where companies are beginning to re-architect their platforms.  For any company, this would not be an inconsequential effort but it is especially risky for relatively small, low capitalized software development companies which characterizes this segment.  The investment effort therefore needs to be deliberate and controlled.




To reflect their development paths, I’ve estimated where I see each company’s starting point and how I expect them to move through my (self-defined) velocity funnel over the next few years.  Several segment leaders, which are advanced in their development, will move further and faster through the funnel as they convert older clients to their new solution and bring on new customers from competitors.   Those companies which are slower to invest may see customers defect and may not be able to fund further advancement through the funnel.

There will be more details on these and other market dynamics in my technology report which will be published at the end of January.

Monday, December 17, 2018

The Price is Right for Cengage


Cengage CEO Michael Hansen discussed the launch of their single price subscription at the recent Bank of Montreal Back to School Conference.

Cengage announced this week that they have extended their “all you can eat” digital subscription package to the Amazon.com store.   Since the company launched this subscription model, students have been able to gain digital access to everything the company publishes, all for $119.99 a semester and $179.99 for the full year (Corrected).   Other publishers are watching carefully from the sidelines – perhaps half hoping this experiment fails miserably – to see how this program does in the market.  This expansion into the Amazon store could be an act of desperation or inspiration.  Either way, I believe it represents a fundamental shift in the way educational materials will be sold and will accelerate the disappearance of the textbook.

At a recent conference, I heard Michael Hansen, CEO of Cengage, discuss his new program and the “affordability crisis” in higher education.  He noted that the industry has long heard that their products are too expensive and that not one person would say that college textbooks represent ‘good value’ for money’.  Pretty damning comments from the head of a college publisher.  But his company is tackling this issue by choosing a “radical change in the model and pricing”.  He went on to say that the notion that “taking the old print model and transferring it to digital, expecting everything to be fine. is simply not viable”.  Cengage proposes a model whereby the student can get everything for $120 per year – forget individual pricing, codes, complicated discount schedules, etc.  It is one simple solution for the student and, under this model, they get hundreds of dollars’ worth of content.

There are many publishers in the college market whose answer to stagnant or declining print textbook sales has been to add more complication: Unintelligible discount models, multiple and conflicting channel relationships, rental programs with demand driven pricing and other models, all designed to prop up a format – print – that is increasingly irrelevant in most other publishing segments.  Most effective will be simple pricing models, supporting an easy to understand value proposition which seems to be the road Cengage is traveling.

Interestingly, Hansen also discussed how their business arrived at this strategy.  Naturally, they did research and found a few things of interest.  Some were obvious, such as the process to deliver student materials is expensive, inefficient and often painful (in a shopping sense) for the student.  They also questioned the idea that ‘faculty don’t care about price’ which I’ve heard a lot and had some experience with at SharedBook.com.  Cengage research showed that faculty did care when they were shown that this subscription option could be available for students because they are concerned about drop-out rates and unprepared students who can’t or won’t buy the textbooks.  (The ‘performance’ of faculty and schools in delivering a quality education was a recurring theme noted in other sessions as increasingly important and educational materials, to the extent they affect faculty performance, are a component of this evaluation).  Another key research finding was that subscription models and different concepts of ownership are already familiar to students and students wouldn’t resist applying those to education content.  In some cases, students may welcome it.  For example, in certain situations, the student may want to subscribe for a set period, drop the subscription and then pick it up later.  This is exactly their experience with other subscription programs like Netflix and Spotify.

Hansen went on to suggest that the educational market and products need to move away from the “expensive” textbook and ‘inadequate’ materials to focus on what publishers are really good at and that is to produce effective course materials.  Hansen believes the top publishers have some inherent strength including ‘franchise’ authors and products and the opportunity and capability to address much wider markets (see my last blog post).  If Cengage can combine affordability and strong branded content Hansen believes, as a company, they have long-term advantages.

During the question-and-answer session, Hansen was asked why other publishers haven’t followed suit.   This is, in my view, inevitable.  But he did note some of the infrastructure and administrative obstacles that were overcome in their own transition to this model.  Real change requires answering the difficult questions and, he noted, their relationship with authors which have been problematic:  At a basic level, does the publisher have the right to include the content in this form?  Cengage believes their author contracts support their online model.  Can the publisher’s infrastructure handle it?  This online subscription model can produce a massive increase in usage and the company better make sure their platforms are saleable and that the user interface (UI) is simple and intuitive to use.

The final point he made was to emphasize that all primary stakeholders need to be aligned and he specifically mentioned his management team and board directors.  The Cengage model really is a case of ‘making it up in volume’ since a massive decrease in pricing has to be made up in higher (subscription) units.   Many scholarly and academic publishers know this ‘valley of death’ from their digital transformations during the late 1990s and 2000s; it can look dire when high-priced print volumes free fall and web subscriptions haven’t caught up yet.   If not well messaged and anticipated this journey can make for some very difficult management and board meetings.  Hansen is not surprised that his competitors have not followed because Cengage is clearly accepting significant risk.  

It is worth noting that Hansen spent time at Elsevier Health and does have a deep awareness of the business benefit of online versus print access to content and the potential upside this transition will have on Cengage’s prospects.   This will be particularly true as students gain access to online materials and the efficacy of the materials becomes transparent creating more accountability and market power in understanding what works and what doesn’t.  Together with the enhanced ability to rapidly deploy more expansive and interesting products, Cengage is positioning itself to move ahead of the field in delivering more effective educational materials for students. Watch this space as other publishers begin to test their own single price models, and I believe we will finally see real change in how we think about the textbook: It will finally disappear completely.

Note: Cengage reached out to me and asked me to correct the pricing above and they also let me know that on their recent investor call they announced over 500,000 Cengage Unlimited subscribers in the first 8 weeks since the Aug. 1 launch. They expect Cengage Unlimited will save students up to $60 million this academic year.

Michael Cairns is a business strategy consultant and executive. He can be reached at michael.cairns@infomediapartners.com or (908) 938 4889 for project work or executive roles.

Monday, December 10, 2018

Newsletter Update. Hot Articles and Happy Holidays!

https://mailchi.mp/infomediapartners.com/200-million-students-await

Periodically and irregularly I circulate a collection of recent articles via my email newsletter.  In case you missed it, take a look at a selection of my articles from this year which generated a lot of traffic.  

Take a look at some of my recent projects and let's talk if you are looking for strategy consulting expertise or you have a C-Level search or board role I can help support.  - 

Michael Cairns

Happy holidays and Merry Christmas.

Friday, November 23, 2018

Publishing Technology Software Market Report 2019

My annual publishing software report for 2019 is currently being produced and among a few changes compared with the version last year, I have changed the format of the market map.  As you see below it is now spread over two pages (and I have temporarily dropped some of the membership and association software providers).

For the 2019 edition, I have met in person with many of the companies profiled and I am still completing those interviews.  I expect to complete at least 20 meetings which compares with only a few in 2018.  Last year, I relied on existing market reports, web pages and marketing materials.  In the 2019 report I hope to gain a deeper understanding of the vendors market expectations and business strategy.  This process is going well and I anticipate the final report will be ready by mid-February.

Vendors covered: Klopotek, Consonance, Virtusales, Fadel, Real, Lumina, AdvantageCS, Filmtrack, ScholarStor, Aries, Media Services Group, MultiPub and many others.


Analysis Areas Covers: Technology platform, business strategy, marketing and sales positioning, market feedback.

Pricing:  Pre-pub price $990.00  Publication Price $1500.00

Purchased product will be delivered on or around February 15th in pdf format and will include up to 2 hours consulting time (via phone or in person if local).


If you would like to pre-order the 2019 report for $990.00 (versus the publication price of $1,500.00) use this button to purchase.

PURCHASE NOW 2019 Report

Here are the draft versions of the market maps for the 2019 version of my report:



Monday, November 12, 2018

The Opportunity in 200 Million Students: Education Publishers Must Retool


Three macro-economic changes facing traditional publishers will help open up a market of 200 million potential students far beyond their existing markets.  Expanding their reach beyond college level students to employer-based education, certification and life long learning programs relies on existing competencies but also presents significant operational and strategic challenges.  The rewards will be considerable. 

Textbook publishers have but a fleeting opportunity to sell their books to students.  Each student for that Psych 101 textbook is replaced from one semester to another.  Despite owning “franchise” titles which hold high value for the purchase decision makers – administrators, board members and faculty – the student is generally indifferent, exerts little control over the selection of this content and frequently they don’t even buy it.  In the best of cases, the publisher has a ‘one-off’ relationship with the student and over the past 15 years the only thing making this a sustainable model for publishers has been the constant raising of textbook prices.

Looking forward, sustainability for textbooks publishers will be defined by the significant macro-economic changes which are forcing them to reexamine every aspect of their business – no longer just the price, but their addressable market, the concept of ‘product’ and their delivery options.  Some publishers, such as Cengage, are showing flexibility and creativity as these challenges manifest, but many will find it difficult or impossible.   My consulting work with publishing company executives provides me with a unique opportunity to evaluate how publishers are addressing these changes.  Success is far from certain as more focused and nimble competitors present themselves.

Market expansion: The order breaks down.

The paradigm for delivering education content is largely the same as it was 100 years ago:  Top down, prescriptive and generic.  In today’s environment, as technology and culture change at an ever-faster rate, it becomes increasingly clear that not only do our skills not match basic job requirements, but they fall short at an ever-increasing rate.   So, education needs to do two things: Provide a solid basis for students entering the workforce and supply a mechanism to further develop and expand skills to meet new and changing job requirements across their career.   The good news for publishers is that their addressable market has expanded significantly: There are 200 million people of working age in the US.

One particular issue facing college students concerns the relevancy of their education program.  The bottom line is will it provide them with meaningful employment when they graduate?  (43% of college graduates are underemployed in their first job). Evidence shows that students (and their parents) are becoming more discriminating about education choices based on desired outcomes, and prospective students are forcing schools to provide real data that proves the ability of the school to graduate employable students.  Additionally, these students are also exerting influence over the career management advice and skills guidance they receive during their schooling. 

As students question the practicality and relevancy of their educational choices and concern themselves more deeply with the outcome of their education programs, we will see a breakdown of the traditional four- year degree program.  Students will increasingly want to ‘drop in and drop out’ of structured education as they make early career choices, adopt new interests and seek fresh skills.  This doesn’t mean they won’t graduate with BAs and MBAs but they may also get certifications, credits, badges and other credentials.  Collectively these awards establish core foundations and will contribute credits toward traditional degree programs and give employers confidence in the abilities of the student.  Parchment as one example is helping students in this space.

So education will not end with the “traditional” degree.  Recent research shows that a newly graduated engineer will hit a career roadblock within 10 years of graduation.  That exerts tremendous costs on the employer not least because many workers exit their chosen career at this point.  Businesses also suffer as they must continually find and train brand new employees.  A far better and more cost-effective outcome would be for employers to develop proactive continuing education programs to help employees maintain and develop their skills.  We are beginning to see publishers, educational institutions and businesses partner to create a broader market for their content, materials and programs.  Education and life-long learning programs tied to continued employment success will eventually play a far larger role in our lives from ‘cradle to first job’ to ‘cradle to retirement’.  Increasingly the greater market opportunity for education is not in the delivery of foundational skills (K-16) but in the delivery of life skills, career-based programs and personal fulfillment.  As noted, this market is several orders of magnitude larger than the market for traditional education.

Concept of product: Decoupling content and the separation between knowledge and proficiency

Traditional textbook publishers are adapting and changing to address the larger market opportunities springing up and some have made acquisitions to broaden their product lines.  But more fundamental changes are in play.  When education needs to be delivered ‘on demand’, the content must be decoupled from traditional “containers” and processes.  This is happening fastest around the edges of the traditional education marketplace which is developing into a vibrant and expanding marketplace, of ‘alternative’ education services and providers.  These encompass skills-based training (such as code academies) as well as companies like UConnet which help students pass assessment and accreditation tests.  Additionally, traditional modes of education delivery are being expanded as colleges and universities leverage their brands and educational reputations to wider regional and global markets.  Companies such as Embanet, 2U and Wiley offer Online Program Manager (OPM) solutions to universities to do just this and Wiley recently paid $200mm to acquire Learning House an OPM provider.

Textbook content can be expensive to produce, franchise product market share can be hard to break down and direct connection to students hard to establish.  In a decoupled world, business cases, problem sets, test prep and other similar components can attain more value than a full textbook especially when those component items are tied directly to achievement and/or certifications.  This environment provides new market entrants the opportunity to think differently about the competitive environment and dispense with old assumptions about content development, marketing and sales. 

Perhaps creating a whole educational program is not the right approach to entering the market.  I met a company recently named UConnect.  They are not an ‘educational publisher’ in the traditional sense, yet they have been able to draw a direct connection between the 'publishing' content they produce and student achievement.  UConnect is building a highly profitable and expanding business based on creating problem sets, test prep and achievement tests tied to established test programs such as MCAT, LSAT, NCLEX and even SAT and AP.  Not only is their approach to “content” creation (building test modules) different from traditional publishers but their subscription model for students is easy and simple to understand.  Proof of their different approach and their aspirations can be seen in the types of employees they are seeking to hire.  UConnect understands that in a decoupled content environment they can draw a distinct line between the students skills and knowledge – which their products help assess – and the students’ ability to pass a critical achievement test. 

Delivery options - Certifications, job training and lifelong learning: “Think differently about the diploma”

Delivery isn’t only about the method of delivery, but also about the form and function of the delivery.  If education occurs increasingly throughout a person’s life and career, the delivery can’t (only) be via a structured program.  Those companies and institutions which benefited from the old paradigm where methods were tightly prescribed, and outcomes hazily defined (or completely ignored) will need to adapt or die.  Partnerships between traditional publishers and corporations as well as investment by large companies like Oracle in learning platforms indicate how important the post-college education market has become.  Employers have a lot at stake: They want to retain employees who have basic skills when hired to easily source new skills over their career to match the company’s changed priorities.  HR policies will not only become oriented around career development but should also become competitive advantages.  Publishers which maintain large content libraries have advantages if they can de-couple that content from traditional packaging (as do legacy education institutions, which still retain significant market brand power).   UConnect’s product offering genesis evolved out of a medical student’s specific problem:  How to better prepare for the MCAT test.  By placing a relentless focus on the goal of the student (acing a test) the company has expanded their products significantly and grown dramatically. 

All traditional publishers have test banks, but they don’t necessarily think of them as foundational or standalone products (or product platforms in and of themselves).  Their publishing activities are still tied to the limited textbook ‘container,’ which is a liability in a decoupled world.  Another advantage UConnect (and companies like them) have established is a direct sales relationship with the student and they use this access to seek their advice during their product development cycles.  This is very different from the model of traditional publishers who rarely dealt directly with students and certainly would not allow them an active role in the product development as UConnect does.

The dynamics of the education market are changing rapidly, in part due to macro-economic changes in the way education supports career development, corporate objectives and student fulfillment.  We all want to feel valued and fulfilled in our personal and work lives and how we interact with learning sources will become more dynamic and more evenly distributed over our lives.  Current and future generations of K-16 students will expect to be continually educated over their lifetimes and traditional publishers, institutions and employers will need to position themselves to support those expectations. And if that is not enough change, the direction of education on a global level will be even more profound as globalization creates large middle-class populations in developing nations who will demand education programs to support their personal and professional objects.

Publishers and institutions which fail to understand the relevance of the macro changes impacting education and fail to position themselves to participate in the market for career and life long learning will be pushed aside.  The bigger market opportunity will dwarf traditional education markets and will produce larger, more aggressive competitors and, if traditional education players aren’t ready, they will fail their biggest test.

Michael Cairns is a business strategy consultant and executive.  He can be reached at mcairns@infomediapartners.com or (908) 938 4889 for project work or executive roles.

Wednesday, November 07, 2018

McKinsey Article - Digital strategy: The four fights you have to win.

Interesting article from McKinsey about how to address challenges in executing a digital strategy:
Leaders in many organizations lack clarity on what “digital” means for strategy. They underestimate the degree to which digital is disrupting the economic underpinnings of their businesses. They also overlook the speed with which digital ecosystems are blurring industry boundaries and shifting the competitive balance. (For more on why companies often fall short, see “Why digital strategies fail.”) What’s more, responding to digital by building new businesses and shifting resources away from old ones can be threatening to individual executives, who may therefore be slow to embrace (much less drive) the needed change.
https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/digital-strategy-the-four-fights-you-have-to-win

Saturday, October 20, 2018

K-12 Education Market Survey Report for Publishers

I completed this overview of the education market dynamics with publishers and content owners as the intended audience for a recent client. Also of interest to private equity and other investors.

Saturday, September 08, 2018

Paywall: The Business of Scholarship (CC BY 4.0)

Paywall: The Business of Scholarship, produced by Jason Schmitt, provides focus on the need for open access to research and science, questions the rationale behind the $25.2 billion a year that flows into for-profit academic publishers, examines the 35-40% profit margin associated with the top academic publisher Elsevier and looks at how that profit margin is often greater than some of the most profitable tech companies like Apple, Facebook and Google. This film is free to view both in personal and public venues.

Friday, August 17, 2018

The Publishing Industry’s Blindspot: Technology Spending

I wrote the following for the BISG newsletter this month:
Sharing operational data and information does not come easily for publishing companies. Many other industries benefit from benchmarking data that enables business improvement but, as an industry, publishing seems uninterested in this philosophy of continuous improvement.
Seeking detailed information about technology spending for a series of investor presentations, I found that this information doesn’t exist. While the Association of American Publishers (AAP) has long collected high-level sales and operating data, this effort is of marginal value if a business is truly committed to benchmarking and measuring their performance across a set of key performance measures.
The AAP numbers do have value, but they lack the specificity and detail needed for true and close comparisons of operating data that can drive performance improvement. Based on my experience, the way that publishing thinks about data has not changed even as the industry migrates from legacy-based technology and operating environments (where “fixed” models rule) to one where flexibility drives everything from content packages to cloud-based applications. 

Wednesday, August 08, 2018

AP Report: New ways for publishers to capture digital revenue

The AP has released a report on ways publishers can generate digital revenues:
Converting audiences into paying customers is core to building a sustainable future for journalism. To provide a broad view of capturing digital revenue — from industry standard paywalls to emerging alternative methods of capturing digital revenue — we spoke with experts and practitioners from news organizations, related startups in the space and the big tech platforms.
In this report, we look at many of the models being implemented and explored, breaking out best practices where available, highlighting ideas that are still looking for a foothold in the marketplace, and evaluating what experiments haven’t borne fruit and why.
Report:  https://insights.ap.org/industry-trends/new-ways-to-capture-digital-revenue

Tuesday, July 31, 2018

M&A Activity in Digital Services H1/18 is Very Active

Some interesting observations from boutique M/A advisor Pharus Advisors on the state of play for transactions in the digital services sector:

From their report:

Acquirer appetites for digitally-focused services firms are becoming increasingly voracious
  • There have been 147 digital and innovation services transactions in H1 2018, up 58% from H1 2017
  • Dentsu and Accenture remain very active in 2018
  • Consultancies such as EY, Deloitte, KPMG, and smaller agencies such as M&C Saatchi have been active acquirers
  • PE acquirers have doubled their digital services platform acquisitions from a year ago - a trend we predicted in our 2017 report
Buyers seek subject matter and technical expertise, as well as impressive client lists and local market leadership
  • Sought-after specialties include digital design, as well as cloud consulting and cloud migration services capabilities
  • Subject matter expertise within financial services, healthcare, cyber and retail has also been in high demand
  • Leadership in a particular geography (e.g. ANZ, Benelux) has been particularly attractive to large global buyers
  • Data-focused and tech-enabled services firms remain in high demand
A diminishing supply of targets with highly-valued capabilities are pushing multiples higher
  • When coupled with buyer competition, higher multiples and better terms for sellers of the most unique firms are more attainable
Unique differentiators include top-tier management and industry leadership, as well as scalable business and service delivery models
 Pharus.com