The Book Industry Study Group (BISG) has just published a study on the ROI of rights and royalties systems in book publishing, which I did along with my colleague Steve Sieck. It’s free to BISG members. We interviewed executives at over a dozen publishing companies and literary agencies, and we worked with them to quantify the financial benefits they get from their rights management implementations.
Publishers have been talking about the benefits of rights and royalties management for decades, and plenty of vendors have offered solutions. Some of these are standalone solutions from vendors like Fadel and RightsZone; others are modules of enterprise software suites for publishers from vendors such as Virtusales, Firebrand Technologies, knk Software, and Ingenta. There’s been plenty of anecdotal evidence of the benefits of these systems but precious little evidence of the financial return on investment from them.
To underscore this, BISG published the results of a survey three years ago that showed that the majority of publishers believed that they were missing out on revenue opportunities from rights licensing and that improved
rights management would lead to increased business opportunities with licensees. But the survey also found that only 40% of respondents planned to make meaningful investments in rights management in the ensuing 3-5 years.
This gap between general awareness of benefits and specificity required to motivate investment hasn’t changed much over the past two decades. I was involved in a roughly similar project with the Association of American Publishers’ Enabling Technologies Committee back in the mid-1990s–a project that led to the development of the Digital Object Identifier (DOI) standard but no meaningful increase in publishers’ rights management processes.
This new study is an attempt to remedy the lack of credible and useful estimates of rights management ROI—estimates that are quantitative, in actionable detail, and from a sufficiently unbiased source. Our interviewees spanned trade, STM, professional, and academic publishing as well as literary agencies; and they ranged in size from small to very large. Almost all of them had never before considered the quantitative financial benefits of their rights and royalties systems and processes in detail. We hope that this study will encourage publishing executives to take a fresh look at rights management in their organizations.
Here are a few of the study’s highlights:
- A midsize trade publisher was able to increase licensing revenue by $2.1 million over a period of 5 years.
- A large trade publisher’s system saves it around $3 million per year in costs related to permissions granting.
- A large professional publisher increased its licensing revenue by about $600,000 through analysis of data about prior licensing deals, enabling it to improve pricing and increase license renewals.
- A large STM and professional publisher has been able to increase translation rights revenue by 25%.
- A large educational publisher saves over $9 million per year through greater rights and permissions efficiency and reduction of licensing-in costs.
- A small literary agency has increased revenues by 10–15% by increasing foreign rights deals per year with the same staff.
- A university press saves the cost of 6 staff by using a cloud-based permissions licensing service.
In addition, we found that themes emerged from our interviews that go beyond those that we’ve heard over the past several years. The new themes include:
- Data analysis: the volume of permissions and subrights deals has increased to the point that it’s worthwhile using data analysis tools to optimize sales efforts and pricing.
- Capacity expansion instead of cost reduction: more and more publishers are starting to see benefits of rights process automation as enabling more licensing deals instead of reducing time and effort of processing them. And the financial benefits of the former are generally larger than the latter.
- Online licensing agencies: the volume of licensing deals, especially in non-trade publishing, has reached the point that it’s no longer feasible to process them in-house. The aggregate revenue that online licensing agencies like Copyright Clearance Center and PubMatch process is now high enough that these agencies have moved from “nice to haves” to critical services.