BPN 1591: CEO WK: mobile is more profitable than online

Yesterday I attended an award ceremony of the Dutch media association of professional and scientific information providers. Part of the program was a speech by Nancy McKinstry, the CEO of Wolters Kluwer. Of course when a CEO of a publically listed company speaks at such an occasion you should not expect news as company information is stock-sensitive.

However Ms McKinstry spoke in the framework of the award ceremony, focussing on the development of digital publishing. I almost had used the word electronic publishing, but that term stems from the time that I worked at the Kluwer subsidiary Oosthoek Reference from 1973 till 1979 and that I was pioneering - what we call now - the digitalisation of the workflow. In 1987 I was involved with the Kluwer team in producing their first legal text CD-ROMs. So, I was interested to hear from the CEO how far they had come in digital publishing.

She started out with the usual figures of the last annual report, dividing the publishing segments in: law, finances, accountancy and health. The segment health has been fine-tuned recently by selling the pharmaceutical products and focussing more on professional information and clinical decision support solutions. In this way the segment would be more comparable with the other three segments. In all these segments Wolters Kluwer delivers software, products and services. Wolters Kluwer sees itself as a content provider for professionals, not for academics like Elsevier.

Interesting was het statement about the evolution of digital publishing in Wolters Kluwer. She recognised three phases: printing, online and mobile. The conversion from print to online was not very profitable. Technically it was expensive and a lot of advertising money and reader profile details had been lost. But the conversion from online to mobile was really profitable. Distribution costs were lower than delivering print. Advertisement could be targeted thanks to the reader profile and usage details. The company has already 170 mobile apps in the Netherlands and will take in the next 36 months all journals and loose-leaf publications to the tablet.

Besides this technical turn-around, Wolters Kluwer is experiencing the editorial turn-around. When Nancy McKinstry was CEO of the US medical publisher CCH, editors were not allowed to have contact with the clients. Presently contact with clients is stimulated not just to see how they use the software, products and the services, but also to create and evaluate content; this can range from user generated content to user team collaborations between professionals. And the cooperation between editors/marketeers and professionals does not limit itself to content, but also reaches into the innovation strategy. They participate in innovation boards and can contribute innovative software, products or services.

Wolters Kluwer has come a long way from print to mobile and from a general publisher with newspapers, consumer magazine and book publishing, trade publishing and academic publishing. It followed the technology and shedded its general publishing in order to become a focussed solutions provider for professionals and in co-operation with professionals.

BPN 1580 Dutch pioneer of electronic publishing passes away

Last Monday, 6 September 2011, Joost Kist passed away. In his last function he was a vice CEO of the Dutch legal and medical publisher Wolters Kluwer. Before that he was a member of the Board of the publishing company Wolters-Noordhoff Samsom. He played an important part in bringing Wolters Samsom and Kluwer together, when Elsevier made a hostile attempt to incorporate Kluwer. So he played a part in the consolidation of the Dutch publishing companies forming a third conglomerate after Reed Elsevier and VNU. He also was instrumental in the internationalisation of the Dutch publishing companies. One of the first acquisitions in which he was involved, was Aspen Publishers in USA, a pioneer in databasing, clearing houses and information management.

Joost Kist figures in my book on Pre-internet twice: once on Samson Data Systems and once on Bibliodynamica. 

He was involved  in setting up an international  host organisation in the early nineteeneighties. Samsom was at that time  printer and a publisher. Phototypesetting had already been introduced and tapes could be used to be entered into computer systems. Hat was the sign for Samsom Data Systems to start an international host system. From the start in 1981 SDS gave out 50 access codes. But they were not all paid accounts. By the autumn of 1982 there were 200 access codes, but the holders of these access codes were no heavy users. SDS costed 1 million Dutch florins (450.000 euro). To break even 100.000 connected hours should be made. But this goal was never reached. In December 1983 SDS crashed in a reorganisation. Mr Kist said that the service was temporarily closed. But the president of the Board, Mr C. van Brakel, said that the host adventure should have never been undertaken.

 

But besides being a smart executive, he showed a great passion for the changes in the publishing industry and especially for electronic publishing. As such he was one of the few executives in the publishing world taking a fundamental interest in studying the changes, the processes and the chain. In 1988 he published a book Electronic Publishing, looking for a blueprint. He attempted to define electronic publishing, mainly from the viewpoint of the process.

Having taken pension he started to work on his Ph.D. in information sciences, having already a degree in law.  As a 67-years old he took his Ph.D. at the University of Amsterdam in 1996 with his thesis Bibliodynamica a book about the success and failure factors for innovation of informative systems, especially in publishing. In this thesis of no less than 386 pages, he focussed on the full process from creation to consumer. Besides setting up a theory, he made 11 case studies of Dutch and international companies, services and products. Looking back, he struggled with the introduction of internet.

Up to his death Joost Kist was active writing, delivering speeches and presentations, searching for roadmaps in the new landscape.  I would have been eager to hear his reaction to my book.

BPN 1580

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

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