Episode one of the Common Stacks Podcast, diving deep into conversations around issues surrounding libraries. This week we're chatting about the ProQuest Clarivate merger. Let's dive in... listen below (and subscribe on your podcatcher of choice!) or read on for a transcript.
Check out this infographic Rob mentions on ProQuest's merger history.
Episode 1 Transcript: Breaking Down the Clarivate Acquisition of ProQuest
Heather:
Welcome to the first episode of the Common Stacks Podcast. This is the show where we do regular deep dives into the issues surrounding all types of libraries. And we discuss the ways that libraries are breaking down the phrase. This is how we've always done it and are adopting new ways of working to serve their communities. And so the show is with me, Heather, I am the podcast person editor, post and community steward of Common Stacks. And then we've got Rob and drew today. So Rob, can you introduce yourself?
More...
Rob:
Good day, everyone. I'm Rob Karen, CEO of Procurement Ventures, very excited to jump into a lot of topics, tackling what libraries us usually talk to me about email, uh, but excited to finally get out there on a modern platform and, and talking to you, the community that I miss. So I'm excited to get started,
Heather:
Not just email now, modern, modern forms, modern platforms.
Rob:
I can only talk to one person at a time and email look what I can do here.
Heather:
Awesome. And then Drew…
Drew:
Drew Podwal, I'm lean agile product development coach with, loads of experience and background in the publishing space. And it's been years since I've gotten to apply my skills to publishing. So I'm really excited to be diving back in again on this space.
Heather:
This show, this is a brand new show. This is episode one, you guys, that we are recording right now. And I think I'd like to just give listeners an idea of what to expect from this show. Rob and I have a lot of experience with library consortia working in library consortia, working with libraries, getting these questions all the time when things happen and with vendors and with different issues that come up writing back and forth, trying to figure out ways of working through some of these issues. I just said issues a lot there. So I'm expecting that what we'll do is, kind of, look at some of those questions we get and break them down. Like Rob said for a wider audience. What else do you guys think we're gonna talk about?
Rob:
I think we're gonna go all over the spectrum. You know, I'd like to talk about industry news. I'd like to talk about operational challenges. We should open topics around creative things during COVID, what you learned about yourself, what you learned about your libraries. You should talk about technology. We started this industry a long time ago, selling content, and now clearly we're supporting selling technology and need to shift the dialogue and discussion towards technology and content. Uh, they're, they're not differentiated. They're, they're really the same, but would love to talk about mentorship, and really supporting libraries, but also trying to tackle some of the problems that libraries and librarians have been dealing with with for a long time, yet there has never been a solution to some of these problems. So combining problem solvers with problems is our goal.
Heather:
And you had talked about the decades of experience that you have. Can you tell me some of the, can you tell me your experience in libraryland?
Rob:
My first job was selling a client server proxy server. I said server twice, but it was a client server technology based proxy for remote access. And I drove around with a beeper on and, uh, with sit in front of libraries, their, uh, tech teams to talk about technology. And this was early in the internet and realized that there was too much instability in both code and the internet, and decided to take a hard turn out of the tech space and land into the content space and started working as a administrative services coordinator for WALDO, which is the Westchester Academic Library Directors Organization, back in 2000 and after 21 years, I'll be exiting that role in about three weeks time.
Heather:
I met you for the first time. It was around 2002, 2003. When I was working for an online music service that was marketed to libraries, and WALDO did a deal with classical.com. Which ties in because they were bought by Alexander Street Press, which was then now part of Clarivate, which we're going to talk about today, right?
Rob:
There is no doubt that a $5 bill goes to anybody that could name a company that isn't bought by somebody or won't be bought by somebody...
Heather:
But then I spent 10 years at the Califa group as the assistant director. Well, I ended as the assistant director, which is the largest library consortium in California. And I did a lot of work there around eBooks, specifically as some of the challenges that public libraries have with eBooks and serving them up and publishers and all kinds of stuff. So I'm sure we'll get into that as well. Drew, what's your experience in publishing?
Drew:
Well, so I was brought into the publishing space, right before the Kindle had launched, to try to figure out for Bedford Freeman Worth publishers, now MacMillan Higher Ed, how do we take a textbook and represent it as an eBook on the Kindle platform, which was a lot of fun times. But one thing I wanted to add actually is one of the topics that I really think that we need to always remember as we're recording these podcasts, is that the reason why we're doing all of this, right, every one of us in the industry is students as learners, right? And so one of the things where I really want to add value to these podcasts is to make sure that we're, we're talking about is we're building experiences that facilitate learner's ability to access the content that they need to access to further their journey as learners.
That's the other thing that I, I wanted to throw out there as well, is that sometimes we throw jargon around, around just, what's a basic word. And, and that's, that's one of the topics that I want to make sure that we also talk about as well is how are we right now limiting ourselves from accelerating and advancing, because this is the way we've always done it. These are the words we've always used. We always picked the apples from the left side of the tree, so we could never pick 'em from the right side of the tree. That was my takeaway from leaving publishing actually. And that was why I left the space, was because I felt like I exhausted myself from being able to, to move the needle in that way. And so I've spent the past five or six years in the media space.
So it's all about student outcomes, student outcomes.
Heather:
Because I'm the, I'm the person who's gonna be like holding the flag for public libraries here, not just students, patrons. Patrons of all, all levels here in communities, a lot of which are students in, in academic libraries, but we have to think about all those other patrons too, in public libraries.
Drew:
And I'm sure that through these calls, Heather, that you and I are gonna figure out where our paths have crossed in the past, because like every bit of your story sounds super familiar every step of the way. And we're gonna find it one day. And it's gonna be captured, it's gonna be captured on, on one of our podcasts.
Heather:
Yeah. It's so funny. Cuz the first time we talked, like I know, I know you, I, I don't know how I know you. I don't, I don't know where we met, but we met.
Rob:
Someplace. You share a superpower, that's all it is. You have the superpower in common. And once you find that out, uh, the link will be solidified.
Heather:
It's true. Okay. So that's what this podcast series this podcast is going to be about, but we're gonna talk today specifically about some news industry news that Clarivate has bought ProQuest for $5.3 billion. I think it's 4 billion in cash. And then 1.3 billion in equity. So break this down, Rob, what does this mean?
Rob:
You know, it's big news, but it's not new news, right? This is the industry we're in. It is the direction that everybody enters this space hopes to travel, and that's grow, grow, grow, and grow. And the fastest way to grow is you buy your way through the industry. And, you know, I think it's the real answer why everything has gotten so expensive is because the premium that's being paid for these mergers and acquisitions tends to fall upon the buy side in libraries.
Whether you're public, whether you're special, whether you're, you know, higher ed, whether you're school, that's the cost - you know, content creation is pretty inexpensive right now. And I think the technology to create and support the content seems to be pretty commoditized as well. So this really is paying the overhead, who's paying back the private equity. Who's is paying back to bank note on this stuff. And it is kind of a standard way that this industry's operated for as long as I have been in this space. The goal of any small launch is, “Hey, I hope we get off bought by either company A, B or C, because that's, the narrative has been standard for so many years.” So once again, it's not big news. I mean, it's just news about what goes on in an industry that's just consolidating.
Heather:
Yeah. It's interesting, earlier this summer too, there was another big news in the public library world with the Overdrive buying Kanopy. So consolidating again, ways that people are getting eBooks and then bringing video into that too. So what do you think this consolidation means for users, for patrons and for librarians as they're trying to make this information more widely available to patrons?
Rob:
Yeah. Good question. I think there's a few things going on here. First it's the availability of cash, right? COVID, uh, has changed the ability for private equity and kind of investors to get a lot of cash. Crypto's out there that market's growing, and there's just a lot of money out there right now. And I think what we saw with Overdrive and Kanopy and what we're seeing with with Clarivate is just the availability of a lot of money that couldn't go normally into the economy as COVID closed down things. You know, I think this is when you flip the coin. I think it's good news for libraries on both sides. Anytime these companies decide to come together and get larger and larger, the opportunity for small new companies to come in the market with specialized solutions, with new technology and with the chip on the shoulder, that they gotta prove themselves that we have a better value proposition.
So I think it could be daunting for new companies to look at this industry, because there's such a high barrier to jump in there because how do you compete against a billion dollar entity? Well, you do it by ringing on doorbells, and, and sending out emails, and building relationships, and doing it the traditional way that this industry was built. What Clarivate is doing through their acquisition, and what KKR, which is the private equity behind Overdrive and Kanopy is all supporting a concept called surveillance capitalism. There was a recent article from Roger Feld from Ithaca group, who did a really good job explaining that this is really a data play, right? Clarivate is doing this because they want the data. They're going to capture the workflow, the data from start to end, nobody's ever had that visibility in this space.
I think it comes less and less about their intellectual property and their services, and it comes more and more about data they're capturing. And the reason I say that is neither Clarivate or ProQuest publish anything. And I think that would be my first position that this is not a bad thing. It's a good thing. These are not publishers consolidating. I think when you see, you know, large publisher consolidation when Penguin and, and Random House consolidates, that's a different discussion. But when you see technology cut companies and players within the value stream coming together, I think that speaks to where we are as the normal in this industry and libraries are used to it by now. And let's, let's find a way to benefit from this.
Heather:
Drew, what do you think about this from an agile perspective?
Drew:
Really more from the data perspective, right? Because when you've got a company that is making such a huge data play, you’ve gotta wonder, are they prepared to have the responsibility for the content, for the experience. And you know, if your focus is on getting people to you use your platform so you could have the data, so you could do, who knows what with it, it becomes less important that the content is ideal. Perfect. Polished. Now, like you might say that like, it becomes more important because if you want to make sure you get more people, trafficking through your platform and creating more data point needs to capture, then you want to have new, fresh content that is compelling and, and usable. But it's easy to forget that it's easy to just say, “Well, we're getting lots of traffic and we've got lots of data and we know what people are using and you know, they're coming back for it.”
So from an agile perspective, everything we talk about is, is driven by the voice of the customer. What are they saying? What do they need, what are the gaps do they fill? They like the way it works, and let's build to that. Because if we build to that, we'll have a product that has a huge lifespan, and we're guaranteed that the product will always be in existence because we can continue to pivot as the voice of the customer changes. Right. But if we're doing it based off of data, then it's less about the value we're delivering and more about were receiving
Heather:
Interesting perspective. Rob, I also wanna ask you just talking about the reactions to this. There have been some folks who think it's a negative. Do you wanna talk about SPARC and anything that they've put out there?
Rob:
Yeah, sure. I think that the reaction in our industry has become so somewhat predictable where we all share a concern about market conditions. But I think action overstatement is really our only choice. How, how do we do this as a community? How, how do we look at the, the positive side of any of these M&A’s and come to an agreement on how to support it, understand it and take advantage of it. That's hopefully why Clarivate bought ProQuest - they want the market to take advantage of the services that they're creating. You know, when I, I think one of the negative outcomes in this is call brand retirement, right? Where a lot of the startups that have been swallowed in this industry, created a brand, had a product and a market fit, and had passionate customers and, and that got compromised and that always gets compromised during these types of events.
So I think that's the negative side is that, um, we're now forced into one kind of brand and one experience where when we have hundreds and hundreds of brands, everybody can relate and connect to them and, and the product fit is unique. And, you know, I guess shout out to all the, the, the entrepreneurs that started these companies, discovering a product fit and a brand fit. I know that's exhaustive, it's messy. It takes time. You might fail a few times before you get it right. But that to me is the, the, the, the negative side of that is, is all, all that brand equity that's created, kind, kind of goes away. You know, if we, if we kind of go back in time, you know, ProQuest really, they put plays years and years ago to make this happen, right. That, that, that pro was a company that believed in a vision executed that vision. And they did it really well. There was a content play which allowed them to get market consolidation. Then I think they realized there was an ed tech play. Then they started to realize that, “Well, you know what, we have all this access to equity. We, we better go bigger and by large,, and, and what I'd like to do is just pop up that screen, and show you just all the brand consolidation that happened over time.
Heather:
For people who are just listening to this, we will put this slide up at commonstacks.com.
Rob:
This is a, a infographic that Marshall Breeding creates, and he's done several, and this is just a focus on ProQuest’s evolution. And it's interesting from my industry experience, I've experienced this whole graph. <laugh> I think on almost everybody on this chart, I've worked with, from Chadwick Healy, to Cambridge Scientific Abstracts, to Aquabrowser, Webfeet, Ebook library, Ebra dialogue, Coots. I mean, there's just, 20 brands that have been consumed over time. And look, this is an accomplishment, for any two companies coming together, any three companies coming together. So, you know, this is taking intellectual property, it's taking technology, it's taking developers, it's taking sales teams, it's taking sales strategies and fun of, of leading into one large entity and look ProQuest is trying to, uh, grow their business. They're trying to grow their brand. And, and to me, it's amazing, uh, cuz we saw this early on, right. Uh, if you looked at what a consortia, in my opinion, if they were doing it right, had contracts with all of these companies already and believe it or not, we had contracts with a good number of these companies and yeah -
Heather:
We did too. I recognize some of these names that I'd completely forgotten about.
Rob:
Yeah. It's really interesting. And remember, look, if, if we go back in the time machine and, and mine's not working, hopefully I can get it fixed here soon. The reason why Ebrary started was drastically different than EBL, and then that was drastically different than why the Ebook Library started. They all had different business strategies that publishers felt comfortable with, and that all got aggregated into a larger business model. So I think this is about getting models out there, getting content in the hands of libraries and yeah, there's a cost in doing that. I think the job that consortia have done for a long time is making sure libraries don't overpay, but I don't think that's the only value that libraries need going forward. Whether Clarivate decides to do things with certain product lines, well, everybody does that, right? They're gonna realize that there's some competing products that have to come to some type of either end of life or convergence. But I have confidence that both companies have enough experience here, uh, on how to do this in a way in which libraries will benefit from going forward.
Drew:
The question I’ve got here is where are the incubators though? I remember that one of the things that always frustrated me was that I would see these fantastic startups. That's the thing about the publishing space. I loved going to the conferences and there was always that pocket corner of the conference for the technology geeks, you know, you would walk in and go through all the rows and rows and rows. And they were in the very far back corner. Each year I remember there'd be like a dozen of these new startups that had gotten enough capital to get a booth, to be able to talk about what it was that they wanted to build. And throughout the duration of that year, you know, I'd be chatting with the technologists there to get really excited.
And the conundrum that they always had though, was that in order to get customers, they needed the publishers to license the content. In order to get the publishers, to license the content, they needed the customers. And it was this cash 22. And then a year later, they exhausted through their funding and they went away. In the map that you showed, Rob, where do you feel like the incubators are like, where's the place where innovation, you know, trying something that isn't the proven way that you've always done it. Right? Like, um, where does that exist in this industry?
Rob:
Yeah, it's a good question. I think it's difficult for visionaries to come in the market to really get an audience and get an audience quickly, right? There's a real race for eyeballs and, and to - you have to pay for your audience. And I think there has to be a better balance between the listening and the noise, right. We have discussed through, time and time again is, you know, one of the goals of our podcast is to tune out the noise. And the noise here is look, this industry is changing. I think with AI and, and machine learning, we're just on the cusp of seeing a huge change in product incubators and innovation, and the days in which true content being created, don't want to see is going away.
But there's visionaries out there that are understanding how to use either AI or other new technologies, to create content. It's interesting because we're all looking over the horizon. But it's a little fuzzy at the moment because it’s unclear where that next Elon Musk is in our industry. What gonna come out and change this industry? You know, I should pull back a little bit and say, look what Clarivate is doing as a business that is for profit. And publicly traded also happens when we see nonprofits growing the same way. And going back to that link that we'll share, you'll see how OCLC as a nonprofit has grown their business. You'll see how the consolidation of LYRASIS was created. So this isn't an us versus them position. It's the industry. If you want, my, the big opinion is, by running a business in operating in a small business environment for 20 years, the benefits of operating as a nonprofit and avoiding taxes is probably the biggest benefit that libraries need to realize that that if you're a nonprofit, you are coming out ahead when it comes to your P&L and bottom line compared to some of these larger companies.
And I think the optic is on shares. The optic is on return to investors and let's just take a step back and remember what are these nonprofits doing when it comes to taxable obligations in contributing their share, uh, into the economy. So, uh, it's everybody, it's, it's us, it's them, it's me. It's you are all by affected, uh, on how pro nonprofits and for-profits are acquiring each other
Drew:
Well. But the other side of that coin though, is that one of my career goals is to be able to say I work a hundred percent for a nonprofit, right? Like I would love that. I'm a Navy veteran and I spend as much time as I can with veterans.. But the, the reality is, is I can't afford to, you know, quit my day job and go work for a nonprofit because nonprofits to not have the budgets that can afford to pay me a living wage, um, to, to be able to make a change like that. And so like, yeah, they might not be paying the taxes, you know, and they might not have that, um, to, uh, to get in their way, but they also don't necessarily have the funding to be able to attract, um, you know, forward thinking talented -
It's not to say that nonprofits don't have that. I should actually completely bite off my tongue as I'm saying this, but when, when a company like Google or, you know, any other handful of companies is gonna throw a first year college graduate, like almost $200,000 a year out of the gate to come work for them, or I can go work for that nonprofit, that's gonna, you know, struggle to pay me a hundred thousand dollars a year, if that right. Um, they're just not, they don't have the talent, uh, pools, the talent pools, um, to, to, to sift through and, and, and get these people who can really generate innovation, you know? Um, so that's, that's the other where I see the other side of that coin.
Rob:
I think capital is really a theme here, right? For nonprofits, they get their capital and they get funding through grants. And they're really good at grant writing and they're really good continuing to show value into their community and getting funding through grants. And then they're, they're balanced through a product fit in selling services, the access to capital, if you're a for-profit is, you know, private equity. So they seem to have similar business opportunities, but a hundred percent agree that the talent that's going to one sector versus the other is, is pretty -
Heather:
Okay. So you guys, we have gone over half an hour here now, and I think it would be good if we just kind of summed up the, the thought of like in 20 seconds or less for you to, on what to take away from the Clarivate/ProQuest merger, and just kind of final thoughts on this?
Drew:
I think, you know, from my perspective I'm curious to see what comes out of this from a product innovation perspective. Is it just like, you know, are we adding something to a new, you know, an existing portfolio and, you know, that has, you know, profitability or is it we're adding something to the portfolio and we're gonna apply some talent to it to try to figure out, like, how do we, you know, um, how do we improve? How do we enhance? How do we, you know, um, so that's, that's what I'm, that's where my curiosity lies in, in all of this. What about you, Rob?
Rob:
I think we would, uh, like to see a engagement strategy come out of this, that, uh, leans forward versus stagnant or leans back. What is the dialogue to all size libraries as publishing is changing dramatically. And as open access is dominating both, uh, the nonprofit space, uh, the discussions, uh, of research intensive institutions, you know, what is the message from claque to the small and medium size market? And, and, you know, are we gonna see libraries come to the table and say, oh, well, I'm too small, Clarivate doesn't really care about me. I’d really like to see that addressed pretty quickly. Uh, traditionally this is a top down market. Uh, if this is an acquisition and a bus, that's going to change this space, I would really welcome a bottom up approach, uh, in talking to all libraries, with a focus on the small and mediums to start.
Heather:
Awesome. So this was episode one of Common Stacks, and we're gonna be back regularly with guests to break down into street news and talk about all of the, uh, all of the exciting things that are going on in the library space. With the new ways that libraries are working to serve their communities, their patrons, make sure you hit subscribe and, um, follow along so you can get the new episodes and you can check out the website at CommonStacks.com and you can us on Twitter, all of the socials @commonstacks. So thank you, Drew. Thank you, Rob. And we will talk again soon.