The reassurance is double-edged when it involves a disruptive technology like generative AI. It may just reinforce the belief that there are good reasons to worry.
This problem applies to a trio of large specialty publishers: pearson and Relx, listed in London, and Wolters Kluwer, listed in Amsterdam. All three have hosted analyst calls over the past two days with the message, “GAI is more of an opportunity than a threat.”
It is understandable that they want to calm down investors. The use of chatbots by some students triggered a descent three-fifths in the shares of US tutoring services company Chegg. Analysts may have sensed that something was coming. Their consensus estimate of 2023 earnings per share had halved in two years.
The threat to Pearson, Relx and Wolters Kluwer is theoretical for the moment. GAI is currently full of bugs. But it has the potential to hurt the business models of all three companies. Thomas Singlehurst of Citigroup, while seeing many opportunities in AI, rates them as high risk.
Consider Pearson. His activities include exams and study materials. Exams can proliferate if graded courses are undermined by chatbot ghostwriters. But improved GAI programs might just as well be able to write custom textbooks to order.
Relx and Wolters Kluwer specialize in academic and professional publishing. The GAI run by tech companies could function like a drone flying over their fenced data gardens, logging content and selling economic summaries.
It would be difficult in practical terms to deny tech companies access to libraries that include everything from history textbooks to medical research and legal documents.
The best defense is offense. Relx has already defeated attempts to shut down its business by mutual aid groups of academics who have sought to weaponize cheap online publishing. Superior curation and network effects have enabled the group to triple its share price in 10 years for a company value of £53bn.
For publishers, a natural extension of this strategy is to sell subscriptions to own-brand chatbots with full access to their content.
The trio should also be prepared to take legal action to enforce intellectual property rights. The development of GAI is a high investment activity. For example, Microsoft is investing $10 billion in ChatGPT maker OpenAI.
The disadvantage of such opponents is their vast resources. The upside is that publishers will know who to sue if GAI programs loot their intellectual property, even if inadvertently. Investors should keep their cool.
Lex’s team is interested in hearing more from readers. Please tell us what you think about GAI’s impact on intellectual property in the comments section below
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