The impact of technology on European small and medium-sized publishers

Abstract

In the debate on the impact of technologies on content industry, there are some cliches that are useful to analyse. The first is that technologies stimulate content un-bundling. While readers need to access individual articles, the print technology obliges publishers to bundle such articles in journal issues or books that contain a number of articles that is not possible to buy separately. This essentially depends on the cost structure of the printing production process and book distribution that makes it impossible to trade individual articles in printed form. This is very similar to what happens in music industry, in the trade off between albums and tracks. From mere technical point of view it is true that digital technologies allow un-bundling, since scholars may download from the Internet individual “un-bundled” articles. However, to allow does not mean to stimulate. Market trends may determine totally different equilibrium. In printed industry, publishers are used to package articles not only in the bundle determined by the technology (the issue or the book) but in journals sold through annual subscription. This formula fits library requirements in pre-determining the annual budget and in simplifying administrative procedures. At the same time it is convenient for publishers since creates inertia in the market, provides value to the journal brand and thus allows publishers to invest on long term projects. For the same reasons, when journal publishing became digital, publishers have been stimulated to create packages that include many journals. “Technology changes. Economic laws do not” was a key statement of Shapiro and Varian in their book Information Rules (Harvard Business School Press, 1999). The final effect was that in the digital market un-bundling did not prevail. But this does not depend only on the publishers’ policy: the demand behaviour is more relevant, in my opinion. Libraries demand subscription to many journals, and prefer to have single deals with publishers for the whole campus, when content are accessible in intangible form. Having single deals also implies to negotiate once the terms and conditions of the license, thus saving transaction and organisational costs, and often means to obtain discount off the full price of the individual subscriptions. On the other hand, publishers tend to exploit such a market trend (not a technological feature), since offering large packages increase barriers to entry in the market. It is evident that this weakens the position of smaller players, since they have not valuable package to offer.