BPN 1699: Reed Elsevier acquired LexisNexis 20 years ago

Twenty years ago the Anglo-Dutch publishing company Reed Elsevier acquired the pioneer online information service LexisNedis. It was in fact twenty years, since Elsevier mounted its bio-medical files, EMbase,  on the US information service Dialog. These two milestones were great moments in the history of Elsevier, but also in the history of the online information industry.
 

LexisNexis

In 1994, Reed Elsevier purchased one of America's oldest full-text information services LexisNexis. This pioneer had originated from an activity of the IT department of the paper company Mead Data Central. Since 1967 this department delivered full texts of legal rulings to the Ohio Bar Association. In 1970, the Lexis company was founded, that was to distribute legal information online. Later the news archive service Nexis was added. This service offered the full text of newspaper articles, for example, of the Boston Globe and the Philadelphia Inquirer. A great asset to the service in 1979 was the addition of the archive of the renowned New York Times. Thereafter it bought the news archive service Profile of the Financial Times. By 1994 Mead Corporation streamlined its paper and packaging business and sold LexisNexis for $ 1,5 billion to Reed Elsevier.

The acquisition of LexisNexis happened right at the turning point from online to the internet. Lexis was the main reason for Elsevier. Since 1970, the company had acquired the Congressional Information Services (CIS) as legal-political information service. In 1983, the CIS model was copied for the European market under the name of Europe Data. However, the company failed and in 1987 it was closed. But when LexisNexis in 1994 came on the market, it was an opportunity for Reed Elsevier as general publishing company with a consumer division, a business division and a scientific division buy the online information service. In addition to the newspaper archives as well as business and legal information, LexisNexis yielded many technical and marketing experience. This was used to establish online scientific information services such as ScienceDirect (1997) and citations index Scopus. Now LexisNexis has successfully converted to the internet world and has penetrated in companies, law firms, institutes, colleges and universities.

Excerpta Medica

Twenty years before the acquisition of LexisNexis by Reed Elsevier, in 1974, the first electronic publishing within Elsevier product was launched by scientific publisher Excerpta Medica (EM). This company was founded after the Second World War. The war had changed the scientific world. Before the war, the language used for scientific publications was German with publishers like Springer Verlag and Thieme Verlag. After the war this changed and English became the language of science. That meant new opportunities and new players in the scientific publishing world. EM was founded as an international publishing house in 1946 by Janos Freud and E. Landsberger, both German immigrants, in collaboration with Prof. M. Woerdman. The mission of the publishing house was to publish abstracts of biomedical articles. The medical discipline was divided into 15 sectors and from 1947, the first abstract magazine were distributed.

In 1957, Pierre Vinken arrived as an assistant abstractor/editor. Vinken studied medicine at Leiden University and was trained to be a neurosurgeon. Within Excerpta Media he eventually managed Section VIII, psychology and neurology. But besides work for this section, he also proved to be an excellent organizer and innovator. In 1964 he was appointed as chairman of the editorial committee and in 1966 as co-director of the publishing house. By that time the publishing company had a permanent staff of 54 medical specialists who took editorial responsibility for 35 abstract journals and reference works. The editorial staff produced the summaries of biomedical articles and allocated the index terms. In the mid-sixties the archive contained more than 1.3 million English-language abstracts and an even larger number of index terms.

 

(© 1980 NVB; Collectie Jak Boumans)

After his appointment as chairman of the editorial committee Vinken quickly developed plans for the publishing portfolio. He wanted enlarge the number of abstract magazines. In practice, this meant reusing a summary and index terms in several magazines. In order to avoid retyping the abstracts, to prevent typo’s and misspelled index terms and to save time and hiring extra hands, he thought about an automated production street.

During his tenure in the academic hospital in Leiden, he had come into contact with the Hospital Information System (HIS), under development by  prof. dr. A. R. Baker. Inspired by this computer project, Vinken ordered in 1997 a report with technical specifications, which the Excerpta Medica system had to meet. In his quest to realize such a system, Vinken met Frans van der Walle, an aeronautical engineer. He advised him the purchase of a computer, four linked NCR 315 machines. These machines and the data entry activities were integrated in a new software house, Infonet, a joint company of the publisher and Van der Walle. In 1968 a successful trial run was held and after the installation of the system in 1969, the production process was completely realised with the portfolio enlargement and all significant savings.

Barry Stern, head Sales EMbase (© 1980 NVB; Collectie Jak Boumans)

By 1974 Excerpta Medica - in 1972 acquired by Elsevier - began to distribute electronically its publications both to pharmaceutical companies for internal use of the research departments as well as to electronic online services such as Dialog Information Service and ESA/IRS. With the launch of the online version, EMbase, the company had become a pioneer of the online industry in the Netherlands and had become a money maker for Elsevier in time. 

Illustration from a brochure of Excerpta Medica is printed in the book Tegen idealisme, een biografie van Pierre Vinken, written by Paul Flentrop; Dutch publisher Prometheus (2007)

 

BPN 1182 Looking forward to a new (Reed) Elsevier

On Monday I wrote a posting on Reed Elsevier and I mentioned its forthcoming sale of Reed Elsevier Business division. This would make the slimmed down Reed Elsevier (or will it just be Elsevier again) a one-segment publishing company: scientific, technical and especially medical information (STM). Thinking about it I saw some similarities between the company histories of those two companies, which started out from The Netherlands and started there internationalisation and specialisation strategies in the eighties.

In the eighties The Dutch publishing company VNU started its internationalisation program. It bought publishing companies in Europe and the US and grew and grew. It sold its printing plants, followed by the sale of the newspapers and later on the book division, than bought and five years later sold its fast money maker, the directory division. In the meantime the strategy was to become a digital data company with more than 50 percent of revenues from databases. It started to specialise in marketing data company as those companies are less dependent on advertising revenues. And it collected a host of those companies with Nielsen as a pearl in the crown. From that point onwards it was no longer a publisher, but rather a data intelligence company. When the board wanted to buy the Kohi Noor diamond in the crown, IMS the shareholders, specifically venture capitalist started to revolt. In the end the board had to give up the acquisition and carve up the company into Nielsen and VNU Media (which sold most of its subsidiaries outside The Netherlands; it aims to become an digital publisher and is well on its way to become one).

For the former Elsevier the change into an STM company is the fourth step of the company to become a one-segment publisher. Elsevier began as a conglomerate of print plants and consumer, business and scientific publishers and over the years it sold off the division by division. The print plants were the first to go in the eighties. After that the newspapers in the consumer section had to go, followed by the consumer book publishers. The business division which got a big impulse when Elsevier merged with Reed, is now up for sale. So by the end of the year Reed Elsevier will be solely a STM publisher and might be re-named Elsevier or Elsevier Science again. Elsevier will be a full fledged science publisher with mighty databases like Science Direct. Of course the new company will be faced with all kind of new initiatives in the academic publishing world: open access and the public library of science.

The history of the two companies which were both Dutch by origin contains many similarities. They followed the same internationalisation policy and had the same strategy towards revenues from digital publishing (except Reed Elsevier and especially the scientific division was more aggressive than VNU). Now the new Reed Elsevier (or the future Elsevier or Elsevier Science) has also the intention to become a one-segment company, be it not an data intelligence company. Projecting into the future for the new Reed Elsevier (or the future Elsevier or Elsevier Science), the question can be posed, what the strategy will be of the new Reed Elsevier. Is the scientific publisher moving towards a break-up like VNU or will the company find fresh grounds in its one segment of publishing? Or will it also move out of publishing and more in the direction of running research organisations or other directions?

I wonder what the Elsevier Science people think about the new direction. Comments are welcome.

Blog Posting Number: 1182

Tags: scientific publishing, academic publishing, STM

BPN 1064 Another Dutch educational Publisher for sale

ThiemeMeulenhoff, the educational division of the Dutch newspaper and book conglomerate PCM, is for sale. That was a surprise announcement at the presentation of the annual report.

ThiemeMeulenhoff had a turn-over of 64,5 mln euro, growing 5 percent. The division is good for 10 percent of the total turnover of PCM Publishers. The division employs 255 people. PCM withdraws from the educational market as the company expects more investment, while ThiemeMeulenhoff does not have the scale to justify these investments.

PCM Publishers limits its activities to newspapers and books for the coming years. It will use the money its gets for ThiemeMeulenhoff to consolidate its position after the Apax affair, which left the company with a great loss. It is funny to see this decision of withdwawel from the educational field by the new board, after that the Apax dominated board had announced to sell off the book division and stick to the educational division.

So ThiemeMeulenhoff is one of the latest victim in the educational field. Just a month ago Sdu announced to sell its educational activities with a turn-over of 5 mln euro. Earlier VNU, Wolters Kluwer and Reed Elsevier sold their educational divisions.
Now only the division VBK Educatief with 150 employees is part of a newspaper and book conglomerate, NDC/VBK. Some time ago PCM and NDC/VBK were in merger talks, but they broke off.

The Dutch educational publishing landscape has been shaken dramatically over the past years. VNU sold its educational division Malmberg to a private equity fund, which found a home for the company with the Finnish publisher Sanoma. Wolters Kluwer sold its educational division to Bridgepoint Ltd. Also Reed Elsevier sold off its educational division. So now the consolidation race starts affect the smaller educational publishers. It is unclear what company will be eager to acquire the educational activities of Sdu. Will ThiemeMeulenhoff be acquired by Sanoma or NDC/VBK?

The changing of the landscape has been going on for some time. VNU, Wolters Kluwer and Reed Elsevier disposed of their educational divissions to specialise in resp. market data, legal and health and scientific and business information. But Sdu and ThiemeMeulenhoff dispose of their educational activities now that the Dutch government has decided to organise the free book acquisition for secondary schools.

Update 12/4/2008: NDC/VBK has shown interest in acquiring the educational division of PCM. Synergy between the two educational divisions would be an argument. The turn-over of the primary school sector rose 30 percent for ThiemeMeulenhoff. In the vocational sector the turn-over rose 17 percent.

Update: PCM Publishers, the Dutch newspaper and book holding, has sold its educational division Thieme Meulenhoff to NDC/VBK for an undisclosed sum. Thieme had a turn-over of 65 million euro in 2007; this was 10 per cent of PCM’s turn-over.

The newspaper and book holding NDC/VBK will combine Thieme Meulenhoff with its own educational division, Veen Bosch & Keuning-educational. The new combination will have 400 employees and an annual turn-over 100 million euro. Together with Malmberg Educational and Noordhoff Publishers the combination Veen Bosch & Keuning-educational will belong to the top three educational publishers in the Netherlands.

Blog Posting Number: 1064

Tags: education, educational publishing

BPN 1040 Sdu to sell off its educational activities

Another Dutch publisher is getting rid of its educational division. After VNU, Wolters Kluwer and Reed Elsevier sold their educational divisions, Sdu Publishers has indicated that their educational activity is up for sale. Sdu considers these activities no longer as core activities. In 2007 Sdu made a turn over of 5 million euro with these activities.

The educational title list consists of school books for secondary and higher vocational education in the field of ICT and technology; Sdu is market leader in those sections. However Sdu does no longer see those publications as core activity. Financially the activities are small in comparison to the company’s turn-over of 200 million euro in 2007. In terms of focus, the publishing house, the former government’s print office, profiles itself as a home for information professionals, especially in government. With the announcement of the sale, Sdu announced the acquisition of JobsRepublic.nl, an online job database operator for government, semi-government, provinces and municipalities.

Sdu is the latest Dutch publishing house selling its educational activities as non-core activities. VNU sold its educational division Malmberg to a private equity fund, which found a home for the company with the Finnish publisher Sanoma. Wolters Kluwer sold its educational division to Bridgepoint Ltd. Also Reed Elsevier sold off its educational division. These publishing companies have all chosen to be active in a specific field of professional information (VNU, now Nielsen in market data, Wolters Kluwer in legal and health, while Reed Elsevier is active in scientific information). Sdu has now chosen to disband the educational activities and focus on governmental information. Given its present composition of core activities it will mean that the section Business Information with a strong component of ICT will be the next section to be sold off. After the sale of Sdu’s educational activities, only the newspaper conglomerates PCM and NDC/VBK have educational divisions in their publishing mix. So far these conglomerates have not chosen for a specific focus and still have newspapers, books, including educational books and methods, magazines and capital intensive print plants.

In time and space, Sdu is late in abandoning the educational activities in order to grow to a more focussed publishing house. For PCM and NDC.VBK it will also be a question of time given the market size and politics in the Dutch educational market. There are roughly 22 million people who speak, read and write Dutch, mainly in The Netherlands and Belgium. Also politics is now meddling in publishing as the present government team intends to fund books for secondary school from September onwards; book packages will now have to be tendered according to European rules. This will make the marketing and selling of school books unnecessarily complicated; besides it will be difficult for small educational publishers to conquer a market share. It will also complicate the change-over from books to e-learning.

Blog Posting Number: 1040

Tags: education, educational publishing

FT to be sold off in five years time and more sales

Since the demise of VNU Publishers and the change into The Nielsen Company, the former VNU CEO, Mr Rob van den Bergh had hardly been seen on stage to tell the story about the change of a traditional publisher into a data company. I was very eager to hear his presentation The Case of VNU Publishers, when I read about the conference on Publishing in the Digital Age, organised by two Master Programmes (Book and Digital Media and Journalism and New Media) of the Faculty of Arts of Leiden University.

In his presentation he addressed the turn-around of VNU Publishers in general term, placing the development in a larger publishing framework. In the eighties VNU was a publishing conglomerate serving the consumer, educational and professional market with a wide package of products ranging from magazines, books, newspapers and online database. By the beginning of the nineties a strategy to become a professional information provider was developed, but this meant a complete turn-around of the conglomerate. The book division was sold off. After that VNU disinvested in the newspapers division, the magazine division and the education division. The Board foresaw that newspapers would be a losing division as it was an inflexible industry with not much sense for commerce; besides the revenue stream diminished on the subscription and the advertisement fronts. The magazine disinvestment was an emotional one, as most people knew VNU Publishers from the range of magazines from cradle to grave.

By the mid nineties, VNU saw that internet was a global operation, which pushed aside local players. Monsterboard became a global player in the recruitment market. E-Bay and its local subsidiaries such as Marktplaats took a large part of the market share of classified ads. So the basic revenue sources of consumer publishers slipped away.

He sketched the activities of the various big consumer publishers. Towards the end of the nineties the traditional publishers and the new publishers seemed to meet. Time Warner merged with AOL and divested in books. Disney picked up digital publishing companies.
On the other hand News Corporation took another approach. He does not believe in focussing, but in combining newspapers, cable and internet. Bertelsmann is a traditional publisher which combines print, music and television and has book clubs.

Pearson seems to have another diversified strategy. It is still successful, especially in education according to Van den Bergh, but he would not be surprised when the Financial Times would be sold off in five years time.

To Mr Van den Bergh these examples are proof that the strategy of VNU going for the B2B market was the right one and that the players active in this market are now focussing sharper. He pointed out that Reed Elsevier was successful in scientific publishing in print and online, but he predicted that the business publishing division will be the first division on the list to be sold off after the educational division. Thomson had sold off its educational division to concentrate on the financial information market, buying Reuters.

He also pointed to the influence of private equity. Kluwer Academic and Springer had been sold to private equity and merged. All the big companies (Reed Elsevier, VNU Publishers, Wolters Kluwer and Thomson) had sold off their education divisions and had sold them to private equity, awaiting consolidation.

He stopped short of pointing to VNU Publishers when it was on the brink of concentrating on market data with Nielsen; but the shareholders blocked the board in acquiring MSI and forced the board to sell off its business publishing activities.

At the end of his presentation, Mr Van den Bergh offered ten predictions:
1. From local to global; local site might be popular but will be overtaken or acquired by global sites; see the social networks;
2. There is a quick decline of the newspaper and the magazine industry;
3. The task of the journalist will change;
4. Specialist sites will generate revenues;
5. The music industry has had the worst problems in the content industry with regard to copyright;
6. Innovations do not come from large companies;
7. The content industry gets complex, so focus is needed;
8. New players enter the game and can move fast without legacies;
9. Education divisions have been sold off by big companies and so will B2B publishing companies;
10. Advertising online will increase at great speed over the next five years.

And just for the record, Mr Van den Bergh, forecasted the sale of the Financial Times by Pearson within five years and the sale of the B2B publication division by Reed Elsevier.

Blog Posting Number: 872

Tags: publishing

STM publishers in foreign aid

More than 100 STM (Scientific, Technical and Medical) Publishers will extend programs to provide information for free or almost free to countries lacking access to information, training that can help save lives, improve the quality of life, and assist with economic development. You can say that STM publishers, small ones and major ones like Elsevier, Springer and Blackwell, are going into development work. So far they have been working with three UN organisations (WHO, FAO and UNEP) setting up programs, trainings and technical facilities to access information online for scientists, policymakers and librarians. Also Microsoft has been involved. The companies and organisations are extending the program and committing themselves until 2015, marking the target for reaching the Millennium Development Goals.

The publishers have committed to the three sister programs – HINARI (research on health), AGORA (research on agriculture) and OARE (research in the environment) – to provide online research access to more than 100 of the world’s poorest countries.

HINARI (Health InterNetwork Access to Research Initiative), launched in 2002 under the leadership of the World Health Organization (WHO), with technical assistance from Yale University Library, enables developing countries to gain access to one of the world's largest collections of biomedical and health literature. Over 3750 journal titles are now available to health institutions in 107 countries, benefiting many thousands of health workers and researchers.

AGORA (Access to Global Online Research in Agriculture) [www.aginternetwork.org], initiated in 2003 and led by the Food and Agriculture Organization of the UN (FAO) with support from the Mann Library, Cornell University, together with major publishers, enables developing countries to gain access to an outstanding digital library collection in the fields of food, agriculture, environmental science and related social sciences. AGORA provides a collection of 958 journals to institutions in 107 countries. AGORA is designed to enhance the scholarship of the many thousands of students, faculty and researchers in agriculture and life sciences in the developing world.

OARE (Online Access to Research in the Environment), an international public-private consortium introduced in 2006 by the United Nations Environment Programme (UNEP), Yale University Library and School of Forestry and Environmental Studies, and leading science and technology publishers, enables 70 low income countries to gain free access to over 1,300 scientific journal titles owned and published by over 300 prestigious publishing houses, scholarly societies, and scientific associations. Another 37 countries will be added by 2008.

In a World Health Organization (WHO) survey conducted in 2000, researchers and academics in developing countries ranked access to subscription based journals as one of their most pressing problems. In countries with per capita income of less than USD $1000 per annum, 56 percent of academic institutions surveyed had no current subscriptions to international journals. These three programs, which are in line with the UN Millennium Development Goals, hope to solve this problem and make research as easily accessible in countries such as Sierra Leone as it is in England and the USA.

It is good to see that STM publishers take their social responsibility in this project. They provide scientists, policy makers and librarians with open access to scientific, technical and medical information, so that they can level themselves with other scientists, policymakers and librarians in other countries.

It is the first time that STM publishers go collectively into a social program. But the publishers are not into the project just for charity. For the STM publishers this project is a major occasion to test open access; they can see how open access works online and how they should formulate licenses. Also people in more than 100 countries are trained up, so that they know how to retrieve information; but once they are on information dope, they will stay on it.

Blog Posting Number: 809

Tags: STM publisher

Educational publishing consolidating for a new future

This week Reed Elsevier announced that it will get rid of its loss leader, the educational division. The company wants to concentrate on medical, scientific and business information. Reed Elsevier wants to pay the revenues of the sale, estimated on 2.4 to 2.9 billion euro to the shareholders. Reed Elsevier is the third publishing company, after Thomson and Wolters Kluwer, putting up the educational division for sale; VNU sold its educational division Malmberg to a private investor at an earlier stage. In the meantime HM Riverdeep in Ireland, the investment vehicle of Barry O'Callaghan, ponders about an offer of 2,78 billion euro.

It is interesting to see that all big publishing companies at a particular stage want to get rid of their educational division after that they have abandoned the newspapers and the consumer publishing divisions. The three companies, originating from The Netherlands, VNU, Elsevier and Kluwer all followed the same strategy, be it on different times. In 1980 they all three declared that they would start the internationalization process and they did. Kluwer, not yet part of Wolters Kluwer got first rid of the newspapers, and followed by Elsevier and VNU. After that the consumer divisions were sold; first Kluwer did away with consumer books and magazines, then Elsevier followed by VNU, selling the magazines to The Finnish company Sanoma.

By the turn of the century the three companies were not all clear about the ideal company. VNU never made a secret of the fact that it wanted to change from publisher to market data provider. Now VNU has changed into Nielsen Co. and sold its European business publications division VNU BME to 3i. But Wolters Kluwer wrestled with internet and the future direction; it sold off Wolters Kluwer Academic. The ideal would be Legal and Accountancy and business publications; in that order. Reed Elsevier was striving after medicine and scientific information and business publications.

The newspaper and consumer move left the companies with educational, scientific and business information division. The sale of the educational division was a question of time; the educational division was sold to the British venture capitalist 3i. Recently Wolters Kluwer put up it educational division. Now Reed Elsevier follows suit. And at the other side of the pond, the Canadian publisher Thomson has also put its education division in the window.

The future of the educational divisions is unclear. The former VNU educational division Malmberg has been bought by a private investor, most likely to sell it on. HM Riverdeep wants the Reed Elsevier educational divison to put Houghton Mifflin and Harcourt Education together. The other companies are still in the process of selling the divisions and they most likely will also be bought by venture capitalists as the potential buyers are publishing companies, which are not international or not financially strong. So, the venture capital companies will perhaps break up the divisions and try to sell them nation by nation. This would be analogue to the making of the German Springer company. The academic press Springer was sold to a venture capitalist as was Wolters Kluwer Academic; now they have merged and are operating as Springer.

After a consolidation, the educational divisions in whatever shape or form will get a new future.

Blog Posting Number: 667

Tags: educational publishing