It’s No Surprise. I Disagree.
by Frank Bilotto
Last week an attorney representing a well known medical publisher told me that most medical publishers are cautious to license their content to third party distributors. I found his declaration to be both surprising and intriguing, as I negotiated licenses for dozens of medical publications during my time as a content licensing lawyer for Thomson. Medical journals were among the highest revenue producing content sources in our portfolio. So, I thought I’d probe him a bit to learn why the caution. I began the dialogue by asking the most obvious leading question, “Why are medical publishers hesitant to broaden their reach and increase their revenue?”
His response was exactly what I expected. He said, “It’s not that simple. We (medical publishers) invest significant resources in creating high-quality content, such as research articles, textbooks, and clinical guidelines. Our users typically pay high subscription fees for access to the content. Licensing to third parties for distribution can potentially undermine revenue streams, as publishers risk losing control over how their content is used and monetized.”
The Only Thing We Have to Fear is Fear Itself
The publishing lawyer expressed an eloquent explanation of the age-old publisher’s fear of what used to be called cannibalization. Publishers used to fear that if their content was made available through third parties, revenue from direct subscriptions would decrease. We now have more than 25 years of evidence that cannibalization in any content category never materialized. From premium content to news to content, every publisher that has ever made its content available from multiple platforms has experienced increases in its gross revenue.
Even Thomas Register of American Manufacturers (now Thomasnet) the multi-volume directory of industrial product information covering distributors, manufacturers and service companies which was first published in 1898 understood the value of broad distribution. CLI’s CEO, Paul Gerbino, formerly the Director of American Export Group and Publisher of Product News Network for Thomasnet, was an early adopter of making content available from as many locations as possible. Paul spearheaded the transition from print to exclusively online. Then early in the 21st Century, Paul decided to license his content. The result was an increase in the publisher’s gross revenues by 17%.
Plain and simple, cannibalization is a myth. Paul’s example has been repeated hundreds of times. It is not even a debatable issue, any longer. The more places where users can see content, the more revenue the publisher will make. History has proven this statement to be 100% correct.
Wait! There’s More.
The publishing lawyer conceded that I may be right, but he said, “There is more to licensing than increasing revenue. For example, medical publishers prioritize the quality and accuracy of the information they provide. They may be concerned that third-party distributors might not uphold the same editorial standards, leading to misinformation or misinterpretation of medical content.”
I agreed that some aggregators and redistributors editorialize content they license. However, the majority of aggregators simply present the content in its original form. Additionally, licensing agreements typically include provisions for quality control and editorial oversight. I understand that publishers are still cautious about entrusting their content to third parties, but their concerns can be dispelled with an objective evaluation of content licensing.
Still Worried About Tasini?!? C’mon, Man
Like most good lawyers, a third argument was quickly presented. “Medical publishers are sometimes unclear about the intellectual property rights they hold in the content they publish, including copyrights and trademarks. And even though licensing agreements specify how third parties can use and distribute content while protecting the publisher’s intellectual property rights, publishers are hesitant to license content to third parties if they are unsure about the third party’s ability to respect and enforce these rights.”
His first issue is based on the 2001 US Supreme Case, New York Times versus Tasini. Tasini was not an employee of the Times, but a freelance journalist. The court held that the NYT, when licensing back issues of the newspaper for inclusion in electronic databases such as LexisNexis, could not license the works of freelance journalists contained in the Newspaper. At the time, I was working for Thomson and advised the New York Times and a number of other publishers on how to draft agreements going forward that permitted the licensing of content created by freelance journalists. If it’s not, IP rights of publishers should be a non-issue.
His second point has a bit more validity. There have been isolated instances of IP violations by third parties that license content. However, they have always been by smaller, less reputable aggregators. I’ve simply taken the approach that I only license to content aggregators around the world that have an impeccable reputation and have never been justly accused of questionable conduct. CLI also tends to be extremely cautious of new aggregators. When it comes to medical publications, the aggregators interested in licensing the content are not the ones who have had issues in the past.
Who Do You Trust?
Alas, the attorney put forth the health care and compliance issues argument. He said, “Medical content, especially clinical guidelines and drug information, can have significant implications for patient care and safety. Medical publishing is also subject to various regulatory requirements, including data privacy laws, industry standards, and guidelines for ethical publishing practices. Publishers are concerned about potential legal liability if third-party distributors disseminate inaccurate or outdated medical information that leads to patient harm or is subject to legal and regulatory consequences.”
This argument also has some validity. 15 years ago, I was CEO of a company known as MyEBMSearch. We were an online medical library designed for physicians. The marketing plan was to use pharmaceutical companies to sponsor the subscriptions for physicians. Initially, pharma companies wanted no association with MyEBMSearch, because a significant percentage of medical journal articles are about what is known as “off label use” of drugs.
Off label use essentially means that an article is written about using a drug for a purpose not approved by the FDA. The best example of this was in the early days of the drug now known as Viagra. The drug was approved for use in patients to treat hypertension and cardiovascular disease. A number of medical journals published articles that addressed its more commonly known effects before it was approved by the FDA for such use in men.
Drug companies were often fined for encouraging off label use. So, the companies I was pitching were fearful of potential fines for sponsoring subscriptions to a medical library that may include an article recommending the off label use of their drug. (The happy ending is after we recruited the first pharma company, others quickly followed, and we ultimately sold the company.)
Publishers and we at CLI must carefully select and vet third-party partners to minimize the risks associated with liability for outdated or non-compliant content. However, publishers must be objective on this issue. If the content is still available in their archives, then the legal risk is not unlike the risk if it is accessible to users from the databases of a third party. And if publishers elect to remove specific content from their archives, it is a straightforward process to remove the content from an aggregator’s databases.
Last Shot
FInally, one last argument raised by the attorney, “Medical publishers often have established brands and reputations for providing authoritative and reliable medical information. Licensing content to third parties for distribution carries the risk of diluting or damaging the publisher’s brand image if the third party’s practices or reputation are inconsistent with the publisher’s standards.”
This is a position for which I didn’t have a fair response. My only counterpoint is that if the content is licensed by the world’s most respected medical content aggregators, then it is likely to enhance the brand to be associated with such aggregators.
Note to Medical Publishers: Just Do It
Overall, while medical publishers may have reservations about licensing content to third-party distributors, the benefits and reasons why they should choose to do so are plentiful.
Licensing content to third-party distributors can significantly broaden its dissemination and accessibility. Third-party distributors typically have established networks, platforms, or channels through which medical content can reach new audiences, including healthcare professionals, researchers, educators, and patients.
By licensing content to third-party distributors, medical publishers can tap into additional revenue streams beyond traditional publishing channels. Licensing agreements involve payment of licensing fees or royalties, providing publishers with an additional source of income without the need for significant upfront investment.
Partnering with reputable third-party distributors can enhance the visibility and recognition of a medical publisher’s brand. Distributors with a strong presence in the healthcare industry can help promote and market the publisher’s content to a wider audience, strengthening its brand identity and authority in the field.
Third-party distributors play a crucial role in facilitating the translation and application of medical research and knowledge into clinical practice. By licensing content to distributors specializing in medical education, clinical decision support, or patient education, publishers can help bridge the gap between research findings and real-world healthcare settings, ultimately improving patient outcomes.
Collaborating with third-party distributors allows medical publishers to leverage their expertise, resources, and technology infrastructure to enhance the delivery and dissemination of content. Strategic partnerships can enable publishers to innovate and adapt to evolving trends in digital publishing, mobile technology, and multimedia content formats.
While there are certainly risks and challenges associated with licensing content to third-party distributors, including concerns about quality control, intellectual property protection, and regulatory compliance, many medical publishers recognize the potential benefits outweigh these challenges. By carefully selecting and vetting distribution partners, establishing clear licensing agreements, and maintaining ongoing oversight and collaboration, publishers can effectively leverage third-party distribution channels to maximize the impact and reach of their content in the healthcare community.
