Have I got your attention? Good. Let’s start with a thought experiment.
Elsevier publishes or helps to publish (through arrangements with society publishers) about 2,500 journals. Let’s imagine a world where Elsevier does not exist. In this hypothetical world every one of these journals is independently published. Thus 2,500 journals means 2,500 publishers. In that world, would the cost of these journals be higher or lower than the cost today (IRL — in real life), where Elsevier indubitably does exist and publishes a huge portfolio?
Fuente original: Elsevier is a librarys best friend.
A related question: Elsevier (or its parent, whose formal name is the unspeakable abstraction RELX) is often attacked for its high profit margins. They are over 30% — you can look these figures up, as RELX is a publicly traded company that perforce must release a great deal of information about its operations. Is it immoral that RELX makes so much money? As a matter of context I would note that 30% is a high figure if you run a shop or a services business, but not out of line with many companies in finance, media, and technology. Indeed, a fair number of not-for-profit publishers have margins that come close to 50%.
In the hypothetical world where RELX is broken into 2,500 different entities, the aggregate profitability of the publishers would come nowhere near 30%. Most of those one-journal publishers would lose money, as do most one-journal publishers IRL. I spend a great deal of time working with small publishers, who may publish anywhere from one to a dozen journals, and they mostly struggle to keep their heads above the water. It’s not that they don’t want to make money. They are not losing money because of the pursuit of their mission (though they will engage in some unprofitable activities on the basis of mission). The problem is that they just don’t have the scale to break into profitability. Of course, there are exceptions to the rule: the most highly ranked journals (measured by Journal Impact Factor) tend to be the ones that can survive outside of a large portfolio of publications, but, by definition, something can only be highly ranked if it is not the norm. We often hear that the monopoly in copyrights is what makes companies so profitable, but even publishers that lose money have full control of their copyrights. It is scale, not monopoly copyrights, that drives a high level of profitability.
Why would the 30% profit margin (in the aggregate) come down? Because scale brings many, many economic benefits. Large companies, not just RELX, have the benefit of spreading costs over a relatively large revenue base. As John McAfee, the software entrepreneur, once said to me, it’s very hard to build and manage a Web site, but it’s trivial to manage a thousand. With a thousand you can hire skilled professionals and negotiate with suppliers for better pricing. This is what RELX does. On a per-unit basis RELX is probably paying less than the average publisher for the materials and services it needs. Only its peers in scale (Springer Nature, John Wiley, and Taylor & Francis) have the same purchasing clout in the marketplace. The effects of scale extend to personnel, where the biggest companies can afford to pay handsomely for the top people in the industry, whose every decision has an impact across the huge product portfolio.
RELX’s shareholders have benefited from the company’s scale, but so have its customers — and, for that matter, the research community at large. Let’s imagine the cost of working with 2,500 individual publishers. The administrative cost of doing so would be prohibitive. The aggregations of Elsevier and its ilk reduce the cost of assessing and purchasing publications for libraries. This means libraries need a smaller staff in acquisitions and all the support services that go with it. It is simply remarkable how much libraries accomplish nowadays because of their intelligent focus on workflow planning. But if you were to add 2,500 individual publishers to the mix, libraries would lose their internal efficiencies and also, as an unintended consequence, face higher prices, as the lack of efficiencies on the part of these tiny publishers would force them to charge more.
I see a hand go up in the back of the room: Whenever a small publisher partners with Elsevier and its kin, the prices go up, so how can I say that Elsevier keeps prices down? What this question misses is that the price goes up for individual subscriptions, but when the journal is folded into an aggregation or “Big Deal,” the cost per article drops, as price increases for aggregations are for the aggregation as a whole. Of course, large publishers, whose interest is in selling those aggregations, increase the price of individual subscriptions in order to drive customers to renew aggregations (publishers naturally deny this). This is also how many consumer services work; think, for example, of your cable TV bill. It is a structural property of the marketing of media in a digital age, and in this Elsevier should not be singled out either for praise or opprobrium. Misunderstanding this point leads to the uninformed pieces we regularly see in The Guardian and The Chronicle of Higher Education wailing about the increase in journal prices. What these lamentations overlook is that fewer and fewer libraries pay retail any more.
This is the basic trade-off: libraries have won administrative efficiencies in exchange for the negotiating leverage of the largest publishers. It sounds crazy, but it’s a win-win situation. The losers? Small publishers, who cannot operate at the scale of Elsevier and its peers and that have trouble getting libraries’ attention. And many librarians recognize this in their heads even as their hearts resist. As the head of one of the larger library consortia told me, We don’t have time to meet with small publishers.
This is not to suggest that librarians should not fight Elsevier’s pricing — or anyone else’s for that matter. That is what purchasing agents do: they negotiate as hard as they can and they seek alternatives. Nor is this an argument to defend Elsevier’s trading practices. Elsevier does what it does because this is what companies do — when they are well managed. We would do the same if we sat in Elsevier’s chair (and if we were as bright). It is reasonable to object to Elsevier’s scale because of the asymmetry of power in negotiations. I would add that the pursuit of customer lock-in that my colleague Roger Schonfeld has written about is something that all libraries should be on the alert for. There is a case to be made that a company can be a publisher or a data analytics and workflow company, but not both. It is within universities’ power to insist that Elsevier be one or the other.
Which brings us back to the notorious 30% margins. It’s a bogus number. It’s real insofar as it reflects the profits Elsevier reports to the tax authorities every year, but it’s meaningless without putting it into context. Elsevier has saved libraries millions of dollars, perhaps more. It is churlish to resent them for being good at what they do.
11 THOUGHTS ON “WHY ELSEVIER IS A LIBRARY’S BEST FRIEND”