Treasurer's Report - Spring 2003
Charles E. Robertson
Announcer, Vol. 33, Iss. 1
Corporate Bankruptcy Hits AAPT Subscription Income
High-profile companies such as WorldCom and United Airlines have filed for reorganization of their debts while maintaining their services. In fact as I write this at the end of December, I am scheduled to fly on United Airlines to Austin for the 126th AAPT National Meeting, and I have an MCI phone card. But not all companies can continue service. A little-known company is facing the same fate as those headline cases, and it won’t continue service. The name of the company is RoweCom, a subsidiary of divine Inc. RoweCom is apparently in severe financial trouble. Their European branch has entered bankruptcy, and their North American division is threatened with a similar plight. This company is important to the AAPT because we may lose up to $100,000 with its demise. Someone said we have been the victim of divine intervention. Let me explain.
I wrote earlier about the importance of library subscriptions to the Association and that these subscriptions are the single largest source of income for our Association. Many of those subscriptions are handled by subscription agencies that work closely with libraries. On behalf of those libraries, these agencies order the hundreds or even thousands of journals that are received by a major library. This means the university or college must write a check to only one company instead of hundreds of different publishers. The agencies collect money from the libraries and then forward these funds to the journal publishers. The money they collect from a major university is on the order of three-quarters of its total budget for journals. It is the normal way of doing business. RoweCom/divine is one such subscription agency, and it appears that it is in financial trouble.
The $100,000 is near to the worst-case scenario. divine Inc. handles about $120,000 of our subscriptions for the American Journal of Physics and The Physics Teacher each year. This is embedded in about $6.8 million worth of subscriptions handled by the American Institute of Physics (AIP). (AIP handles our non-member circulation and fulfillment chores for these two journals as part of $60 million collected for itself and other societies.)
RoweCom/divine Inc. has indicated that although it has collected subscription orders and monies from the libraries for 2003, it will not submit the order information to us (or other publishers) because it does not have the money to pay us. Of course the situation is more complicated than this, but I’m not going to write the details.
All of this news broke about the middle of December 2002, so no one knows what exactly will happen. Committees of big publishers with millions of dollars involved are being formed to investigate. AIP has representatives on some of these, and it is through them that AAPT will be represented. I suspect that the publishers, like AIP, will be asked to make financial concessions and know that lawyers will be involved. No one expects resolution in the near future.
I cannot speak for the AAPT Executive Board, but speaking for myself, the possible loss of $100,000 does not concern me nearly as much as the loss of circulation of our journals. Hopefully RoweCom/divine Inc. and the publishers can come to a quick agreement that will allow all of us to continue to disperse our publications in 2003. If Purdue University, Coastal Bend Community College, and Hazen High School do not get their subscriptions, the physics community of faculty and students will be hurt, and that is something no one desires.
I’ll try to keep you posted.