No such thing as a Free Library
Fecha Martes, noviembre 26 @ 10:21:39
Tema Bibliotecas Digitales :: Digital Library
| Amid a media recession, Crispin Davis is coining money at Reed Elsevier. How did he pull that off?
If you are not a scientist or a lawyer, you might never guess which outfit is one of the world's biggest companies in online revenue. Ebay will haul in only $1 billion this year. Amazon's got $3.5 billion in revenues but is still famously losing money. Outperforming them both is the London-based publishing firm called Reed Elsevier. Of its $8 billion in likely sales this year, $1.5 billion will come from online delivery of data, and its operating margin on the Internet is a fabulous 22%.
Reed's (nyse: RUK) success is freakish in another way: It's a media stock doing well. Shares of AOL, Disney and Vivendi have collapsed during the last three years, but at Reed they're up 9%. Its $18 billion market capitalization places it above Vivendi and Pearson as Europe's largest public media company (but unlikely to bid for troubled Reuters). Worldwide, it's fifth. The company, predicts Merrill Lynch, is on track to boost earnings 10% this year, to $1.1 billion (before goodwill and amortization), or $1.75 per ADR.
Credit this accomplishment to two things. One is that Reed is primarily selling not advertising or entertainment but the dry data used by lawyers, doctors, nurses, scientists and teachers. The other is its newfound marketing hustle: Its chief executive since 1999 is Crispin Davis, formerly a soap salesman.
But Davis will have to keep hustling to stay out of trouble. Reed Elsevier has fat margins and high prices in a business based on information--a commodity that is cheaper than ever in the Internet era. New technologies and increasingly universal access to free information make the company vulnerable to attack from below. Today pirated music downloaded from the Web ravages corporate profits in the music industry. Tomorrow it could be the publishing industry's turn.
Some customers accuse Reed Elsevier of price gouging. Skadden, Arps, Slate, Meagher & Flom patent lawyer Daniel DeVito is a fan of Reed's legal-search service, but does free science searches on the Google site--before paying for something like Reed's ScienceDirect--and often finds what he's looking for at no cost. Reed can ill afford a rest.
Just a couple of years ago Reed Elsevier was being held up as a classic failure. The publisher was created in 1992 when Britain's Reed, a trade book and magazine publisher, merged with the Netherlands' Elsevier, a science publisher. It was a muddle from day one: London-listed Reed Elsevier Plc owns 50% of the operating company, Reed Elsevier Group, and 5.8% of the separately Amsterdam-listed Reed Elsevier NV, which in turn also owns the other 50% of the operating company. The new company set up two different management boards, one each in London and Amsterdam, with both local bosses exercising veto power over the other.
"There were two sets of people who didn't want to give up their power base," says Morris Tabaksblat, then an outside director and Unilever's executive chairman. "It was unworkable. They were screaming at each other. People were offensive. Abusive."
While brass clashed, basic business suffered. In 1997 the company had to write off $740 million compensating advertisers for a travel publishing unit (since sold) that had inflated its circulation figures. In 1999 Tabaksblat agreed to become Reed Elsevier's chairman, and he forced through a new management structure and brought in Davis, a 53-year-old Englishman, as the company's sole chief executive. An unlikely choice. Davis had previously worked for Procter & Gamble, mostly in Cincinnati, before messing up at Guinness Plc. and then resurrecting his reputation at Aegis, a midsize European buyer of ad space.
Davis, pleasant and reserved in person, but intensely competitive in business, is the son of a middle-class lawyer. Maybe sibling rivalry has something to do with his drive; his brothers are a judge, a City lawyer and a McKinsey & Co. boss. "I can think of some families where there are one or two stars," says David Webster, chairman of British supermarket Safeway and a past director at Reed, "but for all four brothers to be stars is quite unusual. When I interviewed him, [it was clear] he was very keen to be a chief executive of a Footsie [FTSE 100] company."
Davis discovered that beneath Reed Elsevier's warring senior management stood high-quality publishing assets--what they needed was more urgency on the marketing side. Davis immediately replaced 11 of the top 12 senior executives at the various headquarters, reduced head-office personnel by 40%, and interviewed 110 managers across the company. He then issued a simple edict: Each unit had to create "demonstrably superior products" that could achieve "above-market growth rates."
Balanced Portfolio
Business 31%
Legal 26%
Science 24%
Education 19%
Search and Ye Shall Find
The brain of multinational Reed Elsevier is in Dayton, Ohio. There, with technology first developed in the 1960s for a local Air Force base, 1,000 engineers work to hone the company's database search systems. The databases themselves, 15,700 of them, reside in a server farm below Reed's Dayton campus. The collection is growing 13% annually in terms of searchable documents, of which there are now 4 billion online. The engineers' job is to standardize the latest court cases, news articles, scientific journal writeups and bankruptcy filings for the company's giant mainframes to catch.
In the early days this meant assigning a programmer to code each item into the right format. Today nearly every data vendor and many government sources, like courts and motor vehicle agencies, offer data that can be sorted automatically, freeing Reed's engineers to focus on grouping by subject relevance according to the company's proprietary taxonomy.
Popular free Web search service Google, by comparison, will include items posted online, but it ranks them not just by germaneness to the search query but by how many different Web sites link to a particular posting. An obscure but rich article--if it's posted at all--is therefore likely to be buried among hundreds of "hits."
Because each piece of data can be sorted, Reed's services can offer customized alerts as well. ScienceDirect can notify a researcher each time one of his articles is cited in another published work, a big ego-boost for scientists. Lawyers working with the Lexis legal research service can also get an e-mail whenever a case is filed relating to a particular client or legal issue.
Price comparisons between Reed and its competitors are difficult because fees--often discounted--are related to what services the clients want and how many users they have. But even a premium service can be cost-effective: A university using ScienceDirect, for instance, could save perhaps two-thirds of what a paper-journal subscription would cost.
So how do Reed's offerings match up? We tried them, à la carte, on the Web, against competitive pay and free sites.
LEGAL
Search: Benzene
Lexis.com (Reed Elsevier)
Our search for benzene cases in New York's courts yielded 24 cases. The list had an overview of each case and citations of the benzene mentions within the decision. Each case download costs $9. The company touts its linked legal and news research databases, which allow lawyers to find not only cases and laws but also dirt on potential witnesses or experts using public records and news clips. A demographic database also allows lawyers to learn about jury pools and shop around for an amenable venue, like a blue-collar town for a workers' comp case.
Westlaw.com (Thomson)
Westlaw's online offering allows users to pay $5.50 for an individual case listing, including Westlaw's signature editor-penned headnotes, detailing the key legal points of the case. We counted 30 New York State cases involving benzene. Each case had a listing of linked citations to both other cases and relevant statutes, including state constitutions. The case listings came with color-coded flags indicating if a case had been overturned or superseded by another ruling. Westlaw claims that its 90 attorney-editors catch and fix mistakes in court filings that Lexis' staff misses, like a bankruptcy case filed in Delaware earlier this year that missed a point of Pennsylvania trade-secret law.
NEWS
Search: Richard M. Schulze, billionaire
LexisNexis (Reed Elsevier)
We wanted articles that not only named Schulze, the founder and former chief executive of electronics retailer Best Buy, but also discussed him at length. So we searched for his name in the headline or lead paragraph and at least five times throughout the story, as well as for Best Buy. We located 22 articles, with the first hit an in-depth trade magazine interview with Schulze, followed by an article about Schulze's formal retirement at this year's annual meeting. LexisNexis' service has rights to the New York Times archives going back beyond 90 days.
Source: http://www.forbes.com
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