SpringerNature has had quite a spring -- its parent Holtzbrinck launched Dimensions through the unrelated-to-SpringerNature company Digital Science; its IPO went nowhere in quite a public manner; and now it has published a progress report on OA in the UK (the acronym juxtaposition bringing to mind the John Mellancamp song, "ROCK in the USA" for me, at least).
It's tempting to lump these three things together, and I am not resisting temptation in this circumstance. (I've already brought up a John Mellencamp song, so we're on an indulgent wavelength today, you may have surmised.) If there are three elements that could quash an IPO, it would be:
- A digital-native growth-oriented company held out of the IPO by the owners, so not available to potential investors
- A debt-laden core company with strong recurring revenues but threats like piracy and market headwinds
- Major growth coming in non-recurring revenues like APCs that are less valuable and more risky to investors by definition
As David Worlock has pointed out elsewhere, the IPO market in Europe and Germany in particular was not looking especially chilly, having sustained IPOs from other, more fashionable companies quite nicely recently (e.g., Spotify, iZettle). This puts the SpringerNature pullback in even starker contrast.
It also seems unlikely that the IPO was pulled so another option -- acquisition, another round of private financing -- could occur. SpringerNature has been loaded with about 3 billion Euros of debt, so while interest rates are low, the attractiveness of a company with significant debt that also lacks fashionable assets like Digital Science and is moving toward non-recurring revenues would seem limited.
If the SpringerNature IPO was pulled because it was too unappealing to the market to generate the level of investment Holtzbrinck sought, a sobering lesson for scholarly and scientific publishers is that the erosion of our industry may now have set in as fundamental rot, with the mold spores of non-recurring revenues, piracy, recalcitrant institutions, and disintermediated individuals spreading on a substrate of anti-publisher sentiments, information entitlement, and magical elixirs. A recent analysis by Delta Think of the effect of OA policies on societies in the UK underscores this concern, as publishing revenues -- the foundation of most societies' revenues -- are also rotting away as they become more transactional in nature.
When OA started, Harold Varmus told me he supported it because he "wanted to see what the Internet would do." Now, 20 years hence, we have seen it disrupt elections, divide society, erode journalism, and now it seems poised to impoverish the scientific publishing economy right when giant markets like China are moving mainstream and we're pushing students to do more in STEAM fields.
Bragging about progress with APCs (non-recurring revenues) while seeing those same shifts contribute to a retracted IPO seems a little uncoordinated on the messaging front at least, if not on the strategic front. Maybe that's another factor in the pullback.
So much winning. Here, hold my IPO . . .