Thursday, January 25, 2007

Running a Law Review like a Business

My recent post on online law review supplements resulted in some interesting responses both here and on Volokh. In particular, my First Movers colleague Luis Villa has asked me to elaborate more on how law reviews should "think like a business."

I could easily write hundreds of words on this issue, but in the interest of brevity I'll simply point to Jeff Harrisson's excellent post on perfect law school product development at the always excellent MoneyLaw blog. Though Jeff's analysis can apply to everything from LL.M. programs to research institutes, I think it applies particularly well to online law review supplements. This paragraph from Jeff's post is particularly insightful:
Auto makers with massive market studies make mistakes with respect to their product lines. So do clothes designers, pharmaceutical manufactures, and restaurants. Yet law professors, to hear them tell it, get it right nearly every time they introduce a new product. There is a possible explanation. In conventional markets, demanders and suppliers occupy different sides of the market. Law faculties tend to occupy both sides of the market – they supply the programs that they demand and are lucky enough to pay for what they demand with the money of others. Think I’m wrong on this? If so, when is the last time you heard someone proposing a new program say, “I am not personally interested in this but I am proposing it because I believe it is something the school ought to do.”
As I mentioned in my earlier post, the premise of online supplements is inherently flawed. Law journals do not need to be more timely -- in fact, one could make the argument that (blog/newspaper-like) timeliness and scholarship are mutually exclusive. Even putting the timeliness issue aside, there has never been any need to "bridge the gap between legal scholarship and blogs" -- yet for some reason the Michigan Law Review, University of Pennsylvania Law Review, etc. thought this was some sort of high priority that necessitated the creation of online supplements. Similarly, proactively choosing to exclusively publish online (and trying to spin that as a positive to boot!), using weird names and citation formats (seriously, is there anyone out there who actually thinks 155 U. Pa. L. Rev. PENNumbra 74 would look nice on a CV?), and other odd behavior that all likely contribute to people like Doug Berman having to question whether these things are actually scholarship indicates a fundamental misunderstanding of both the product and the target audience.

All of these issues could easily have been prevented if journals thought like a business. Thinking like a business isn't hard, at least not in this context. It's just a matter of asking questions like:
  • Why is an online supplement necessary?
  • Is that reasoning valid?
  • Are there any other things out there that fulfill the same purpose?
  • What value would we add by getting into that market?
  • What other things could we do with the money / manpower / etc. besides an online supplement?
  • Given the other things we can do, is this really the best use of our finite time and resources?
  • Who would use an online supplement?
  • Are online supplement users the same people as our main product's users? Who are our main product's users anyway?
  • What would attract or alienate those people from using our supplement?
  • What do we do if another (or thirty, or hundred, or five hundred) journal(s) decide to copy our idea and create online supplements that do the same thing?
  • What sort of impact will this have on our main product?
  • What's our exit strategy if things go wrong?
Answering these questions (and many others) honestly could have avoided a lot of pitfalls -- not just with online supplements, but with virtually all journal issues. None of this is rocket science or particularly difficult. Thinking these things through would avoid a lot of idiocy like "155 U. Pa. L. Rev. PENNumbra 74" and publishing exclusively online, as well as redirect some journals towards more efficient outcomes ("Hey, it looks like we could fulfill our actual goals by co-opting an existing blog instead of trying to make some blog/journal hybrid that possesses the worst qualities of both media.").

Of course there are more overt ways that law journals should act as a business. For instance, Christopher Yeung, one of the masterminds behind Virginia Law Review's In Brief, posted this over at Volokh:
Why don’t we publish In Brief articles in our print edition? Yes, doing so may increase the quantity and perhaps prestige of online publications, but that does not necessarily translate into quality. Additionally, adding 30 pages of additional content may not seem like much, but it does increase costs in a noticeable way. Finally, printing these articles does not address a major problem plaguing law reviews today: the problem of lost scholarship. While we were looking into creating an online companion, I spoke with many professors who found it unfortunate that so few people actually read law reviews in print. Indeed, including our online content in searchable databases like Lexis and Westlaw is probably more important, and we can do so even without the cost of printing an additional 30 pages per issue.
I have a lot of problems with that statement, ranging from the claim that it's "unfortunate" that so few people read law reviews in print (talk about a non-problem!) to the odd statement that greater prestige won't result in greater quality (newsflash: people who write high quality short works are not going to want to publish it in an unprestigious forum when more prestigious options are available). However, I think this paragraph betrays a fundamental problem with how law reviews operate. Let's take a look at the various problems here:
  • Okay, so for some reason your journal--one of the richest in the nation--is able to afford to print 2000+ pages per year but simply cannot afford to pay for an additional 30 pages. I don't buy this, but let's say it's true... why is it that the only option is adding 30 pages rather than replacing 30 pages?
    • Last year the Virginia Law Review published 12 articles, 22 essays, 11 notes, and 1 book review. If "In Brief's" content is such a wonderful thing, why not just publish 1 less essay, or 1 less student note, and publish all of "In Brief" in print?
    • And if publishing an extra 30 page student note is a better use of journal space than pubishing 30 pages of "In Brief," well, that says a whole lot about how unnecessary this whole "In Brief" project is, doesn't it?
  • Alright, let's assume Virginia's current content is just so wonderful that absolutely nothing can be cut, ever... so how about getting additional money to publish "In Brief"?
    • The Virginia Law Review's stream of revenue could be greatly increased if it adopted a price discrimination model: charging different prices for individuals and for institutions. The Virginia Law Review is in an excellent position to price discriminate, since the demand for the most prestigious law journals is inelastic for institutions with large budgets, such as law libraries. Law libraries are highly unlikely to cancel a subscription to a given journal if there is a price increase--even a large one. In contrast, individuals have more elastic demand curves, and are more likely to cancel a subscription due to price sensitivity.
      • Most peer-reviewed journals have already adopted price discrimination, with some charging highly exorbitant fees. A few examples include the Journal of Empirical Legal Studies ($265), the Food & Drug Law Journal ($299), and the Election Law Journal ($510). But perhaps most significantly, the Harvard Law Review has moved to a price discrimination model, charging $200 for institutions, $95 for non-profit institutions, and $75 for renewal orders from non-profit institutions.
      • I don't know what Virginia Law Review's subscriber base looks like, but I'll assume it's similar to the University of Pennsylvania Law Review. Penn L Rev has about 1,056 subscribers, and though I don't know the proportion of instititional subscribers, we can conservatively estimate that 190 of those subscribers are law libraries with inelastic budgets and the rest are individuals.
        • What might happen to Virginia Law Review's revenues if it adopted various price discrimination points? Let's take a look:

Price Discrimination: Revenue Possibilities

$75 institutional rate, $50 individual rate (matching Harvard)

$90 institutional rate, $50 individual rate

$150 institutional rate, $50 individual rate (doubling Harvard)

190 institutional subscribers, 866 individuals

+ $4,750

+ $7,600

+ $19,000

250 institutional subscribers, 806 individuals

+ $6,250

+ $10,000

+ $25,000

500 institutional subscribers, 556 individuals

+ $12,500

+ $20,000

+ $50,000


      • As the chart illustrates, simply matching Harvard's model could lead to a revenue increase ranging between $4,750 and $12,500 depending on the number of institutional subscribers in the law review's subscriber base, and adopting a more aggressive price point (as many peer reviewed journals have done) would result in even greater revenue increases. Keep in mind that these sort of subscription rates are completely standard in all other disciplines besides law.
    • Of course, additional revenues the journal may raise could go towards other things instead of adding 30 pages to the print version of the law review (for instance, the higher revenue from institutional subscriptions could be used to significantly reduce the individual subscription rate, thus encouraging more individuals to purchase subscriptions and read the print version). But if putting "In Brief" in print is such a low priority or somehow undesirable, does not say quite a lot about the quality of the supplement?

Wow, this post ended up being a lot longer than I expected. Comments would be greatly appreciated, particularly if you read through this whole thing.

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8 Comments:

Anonymous Steve H said...

Nice post. I think you are right on, especially on the prestige points. These companions will hardly get any quality scholarship if their quality or prestige is in doubt.

I wonder whether more readership of the print edition might not be a good thing, however. Searching online databases allows us to put on blinders to developments in legal scholarship outside of a limited scope of interest. But the tools applied in legal scholarship are transferable, and exposure to more varied pieces would be good. This is of course possible with the databases, but in some ways easier in print.

1/25/2007 10:36 AM  
Blogger Luis Villa said...

A really great businessman- a Ford or Gates- would not ask 'how can I improve the journal', but instead 'how can I replace the journal for most journal readers, with some new thing that is better for them than the journal was.' I think you're right that online supplements are probably not a good answer to the first question, but I don't think the question is that interesting. I haven't made up my mind as to whether or not they are a good answer to the second question, though I lean towards thinking they aren't revolutionary enough to actually make a difference.

More thinking over the weekend, maybe, particularly on what aspects of 'better' might look like, and who the relevant customers are.

1/25/2007 10:42 AM  
Blogger Anthony Ciolli said...

I'm not convinced that replacing the journal is what a businessman would necessarily want to do in this situation, given that doing that would likely result in a significant revenue hit (honestly I think that's the main function print versions of law reviews serve nowadays).

A better question, however, would be what sort of support services / products / systems / etc. can be offered in conjunction with the journal. This has actually already been done with the Bluebook, with the participating journals receiving significant financial benefits as a result of that.

However it seems like journals no longer are innovators in that area, as demonstrated by SSRN, ExPresso, etc. being formed by private companies. Honestly, if journals want to have an increased web presence or have a greater impact online, those are the institutions they should be imitating / attacking, not blogs. But that's a whole other issue...

1/25/2007 11:25 AM  
Blogger Luis Villa said...

Many memorable businesses were built exactly because existing dominant competitors were afraid to take a hit to their existing revenue streams, and a new, small, nimble business attacked them at that weakness.

I'm guessing you've already read it, Anthony, but others following the thread (or journal editors wondering where to go from here) should read The Innovator's Dilemma. There is a decent summary here.

Bluntly, if journals don't cannibalize that publishing revenue stream, someone else will do it for them, so they'd better start thinking about how to do it sooner rather than later.

1/25/2007 11:35 AM  
Blogger Anthony Ciolli said...

This comment has been removed by a blog administrator.

1/25/2007 3:17 PM  
Anonymous Christopher Yeung said...

I just wanted to respond to some of the points that Andrew raises:

First, let's accept Andrew's premise that law reviews should think like businesses. Accordingly, the correct business question isn't whether we can afford to publish online content in print editions, but whether it makes any sense to do so. Indeed, the only way additional print content is going to lead to additional revenue is if the additional print content increases subscriptions. As evidenced by these posts, the extent of online content's readership is unclear even when it's free, let alone if you have to pay for it. Additionally, most law reviews generate their revenue not from subscriptions, but from contracts with Lexis, Westlaw, and other databases. If these databases are willing to pay more to include our online content as well, printing it would simply cut down on our revenue, which again, would make little business sense. As a result, until we can better determine what the market is for online content, the prudence of providing online content in print will be debatable from a business standpoint.

Second, Andrew pu-pus my concern that so few people read law reviews, characterizing it as a "non-problem." To this, I must ask: without increasing readership, how do you generate more revenue? Certainly not by providing more print content that few people read. Also, although aspiring professors may want to publish with journal X instead of journal Y because of the "prestige" factor, don't underestimate the importance that potential readership has on publication decisions. Aside from any prestige proxy value that journals bring to the table, academics do want their work read, and their ideas heard, because this too increases the worth of their research, and enhances their reputations and tenure prospects accordingly. Furthermore, it would not surprise me that one of the reasons journals are seen as prestigious is the extent of their readership. Although there is a chicken/egg problem here (did readership cause prestige, or did prestige motivate readership), the point is that increasing readership is a concern that should not be ignored.

If thinking like a business entails asking the questions that Andrew mentioned in his post, looking at ways to increase revenue, and adapting strategies to better fit advancing technologies, I'd have to say at the very least, the Virginia Law Review is doing a pretty decent job. I'm sure editors at other journals would agree that is the case with their respective organizations as well. I do not claim to have the best answer to the questions resulting from a business-like approach. All I am saying is that if thinking like a business were the key to success, then the Virginia Law Review is well on its way there. Indeed, as I read through Andrew's list of "business" questions in his post, I was struck by the fact that we discussed all of them and more before launching "In Brief."

1/28/2007 6:47 PM  
Blogger Luis Villa said...

By the way, I just saw this great summary of what a Christensen industry disruption looks like:

1) A new entrant joins the market
2) Their offering is perceived as limited and technically inferior
3) The new entrant starts to gain a toehold in a few niches
4) The incumbent waits and watches
5) The entrant becomes "good enough"
6) The niche market starts to boom
7) The incumbent responds by trying to cram[/copy] disruption
8) The new model wins

We're definitely in step (3), at least, with the pro-active journals trying to avoid step (7) by taking action before (4). I have no idea if that will work- as Anthony pointed out, most journals are too tied to their existing revenue streams- which is a textbook Christensen reason for firms to do (4) instead of taking action early.

1/30/2007 8:18 AM  
Anonymous ashok said...

This comment has been removed by a blog administrator.

3/21/2007 4:37 PM  

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