Breakdown of Harvard Business Publishing

If you have been to a business school or are just interested in business in general, it’ll be hard not to know about Harvard Business Publishing (HBP). Operating under Harvard Business School, the publishing arm is a well-known established name that offers great content, whether it’s case studies, articles or books on business lessons. Yet, very little has been talked about its unit economics and scale. In fact, nobody has spoken officially about HBP on record. Hence, I was really fascinated by Business Breakdowns’ episode on HBP.

HBP has a long history. Starting well over 100 years ago, the unit has evolved to being more than just a publisher of books. Today, it has four major business lines: case studies, advertising, print & digital subscriptions, and books. Together, these business lines generate $270 million in annual revenue with 40% from international markets, up from around $100 millions in the early 2000s. In terms of distribution, below is the estimated breakdown of HBP’s annual revenue

  • Subscription business: $35 million
  • Case studies: $80 – 100 million
  • Books: $27 – 54 million
  • Advertising: $90 – $130 million

HBP has great bargaining power as a seller and a buyer. From the supply standpoint, HBP has an unsurprising source of content. Harvard faculty members must contribute to the library of case studies to maintain tenure. Harvard is reportedly paying little for these case studies, yet making somewhere between $80 million to $100 million per year. These case studies from Harvard professors only make up 20% of what HBO has to offer. The other 80% are penned by professors from other places who are likely not better compensated than their Harvard counterparts. Even though we won’t find individual authors’ names on case studies, being able to show your work with a stamp of approval from Harvard means something.

On the other hand, HBP has no problems selling these case studies to business schools and companies. Universities love to add a flair of reality and pragmatism to theory by using real case studies. HBP carries a certain weight of authority and swagger in the academic world. Case studies are used semester after semester and they don’t need to be rewritten every year. In fact, my personal experience at a US university is that professors don’t like to change their curriculum every year either. As a result, HBP gets a sweet deal for them: pay little for a case study and milk revenue out of it every semester from every school that wishes to use it. The same goes for companies. If they want to train their managers and executives, what’s better than HBP case studies?

This goes to show what I think is the best asset of HBP: its brand. The brand draws readers to the materials that the publishing arm puts out and professors to create content for them. It makes everything tick.

While HBP’s achievements are admirable, there are two things that irk me. First, HBP can force professors, especially those employed at Harvard itself, to write case studies for them to avoid losing tenure and make a lot of money out of it while allegedly paying little for it. It would be a different matter if these professors weren’t under employment contract and voluntarily wrote for HBP knowing all the conditions. But since they already put in the work to keep the level of education worthy of the name Harvard, why can’t they be paid commensurately to what HBP earns on those case studies?

Second, a lot of HBP’s revenue is tax exempted. The speaker said that while HBP has to pay taxes on their advertising revenue, they don’t need to do so for the rest. I mean, Harvard charges arms and legs on tuition fees and has an enormous endowment fund of, wait for it, $53 billion as of June 2021. Do they really need tax breaks as much as small businesses that don’t even earn a fraction of what they do? I am not arguing that they can’t sell materials to other schools or whoever wants to read them. But there should not be any tax exemption on that revenue stream. That’s just absurd.

In short, I like this episode of Business Breakdowns as it sheds light on a business that few talk about. Have a listen if you are interested.