Business | Academic publishing

Of goats and headaches

One of the best media businesses is also one of the most resented

Something to chew on
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Something to chew on

HOW much would you pay for an annual subscription to Small Ruminant Research, Queueing Systems or Headache? University librarians pay rather a lot. In Britain, 65% of the money spent on content in academic libraries goes on journals, up from a little more than half ten years ago. With budgets tight, librarians are trying to resist price increases. But Derk Haank, the chief executive of Springer, a big publisher, is firm: “We have to make a living as well.”

And what a living it is. Academic journals generally get their articles for nothing and may pay little to editors and peer reviewers. They sell to the very universities that provide that cheap labour. As other media falter, academic publishers have soared. Elsevier, the biggest publisher of journals with almost 2,000 titles, cruised through the recession. Last year it made £724m ($1.1 billion) on revenues of £2 billion—an operating-profit margin of 36%.

Academic publishers have jumped deftly from paper to the internet. For more than a decade the dominant model has been the “big deal”. Publishers sell access to large bundles of electronic journals for a price based on what colleges used to pay for paper ones. Prices of big deals rise at about double the rate of inflation.

This model has provided an unprecedented wealth of material to researchers and fat profits to publishers. But fiscal crises, particularly in America, are straining big deals. State funding per university student in Arizona has fallen by roughly half since 2007-08. Libraries have taken a hit.

A library with a bundled subscription deal cannot make ends meet by dropping a few journals, as it could in the old days. Instead it must take the drastic step of leaving the all-you-can-eat buffet for the à la carte restaurant. Some universities have dropped big deals in favour of subscriptions to a few key journals, topped up by pay-per-view downloads of individual articles. Academics have not complained, they say. British universities are threatening to do the same en masse if subscription prices are not cut. Are they serious?

Certainly, some journals are more valuable than others. Ted Bergstrom, an economist at the University of California, Santa Barbara, has a nifty way of quantifying this. He divides the annual subscription price of a journal by the number of times its articles are cited in other journals. Results vary a lot. Influential journals such as the Lancet cost a few pennies per citation. Others cost hundreds of dollars.

If many universities drop big deals it will be calamitous for the publishers. They could raise the prices of individual journals to make à la carte buying less attractive. But that would stimulate a private trade in e-mailed articles. Claudio Aspesi of Bernstein Research points out that academic authors tend not to care much about copyright protection. Their main interest is in being read and cited.

Many customers resent high prices and have the means to bypass them. The music industry provides a salutary lesson in the dangers of building a business around charging too much for too-large bundles of content (in its case, CD albums).

Yet academic publishers do not have the rabbit-in-the-headlights look that music executives did a few years ago. They have moved quickly to cut or freeze subscription prices for the most troubled universities. They have minimised the threat from open-access journals, which seemed considerable a few years ago, in part by buying some of the best ones. And they are pushing into emerging markets, where universities and government research budgets are swelling.

So far, says Youngsuk Chi of Elsevier, publishers have behaved a bit like hunter-gatherers of research. They are trying to become information providers. That means investing in search and data-management tools to make sure relevant articles find their way to researchers. Earlier this year Elsevier opened some of its article databases to software developers, who have begun to build apps on top of their content. If publishers can hook academics on such innovations, and drive them to articles in relatively obscure journals, dropping big deals will seem a lot more painful.

Academics are heroic complainers and not always well disposed to profit-maximising businesses. So the gripes are likely to continue. The best that the publishers can hope for is that they escape the fate of the music business and come to be viewed rather like pay-television companies. Customers complain about their cable bills, too. But they keep paying them.

This article appeared in the Business section of the print edition under the headline "Of goats and headaches"

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