‘Big Deals’ and Publisher-Library Competition

Andrew Odlyzko has a very interesting draft article on  “Open Access,  Library and Publisher Competition.”  The piece covers a lot of territory, but the core argument that (1) in the digital environment, publishers and libraries compete for the role of access provider to materials; (2)  the publishers/content owners have some important advantages in this match up, including that the libraries are still defending large physical plants; and (3) truly low-cost open access models have developed too slowly to challenge them.  Add piracy and you have something close to the model of the ‘ecology of access’ to educational materials at the center of our current work.

One important point Odlyzko makes is that Harvard’s widely-cited revolt against journal subscription prices last year happened in a context of extensive price discrimination by the publishers.  Elsevier and others charge the Harvards of the world a lot more than they do the U Montanas–or U Capetowns, for that matter–for the same journal bundles.  Obviously they can ill-afford defections at the high end, but one benefit of the strategy has been expanded access at schools with fewer resources.

Protesters, such as those who endorse the boycott [of Elsevier], tend to cite the high profits of commercial publishers, most commonly of Elsevier, the largest one, as injurious to scholarly communication, and unjust, being based on donated labor of academics. They also often complain about the “Big Deals” that large publishers, again with Elsevier in the forefront, force libraries into, cf. [4,11]. In these contracts, which are universally shrouded in secrecy, libraries are forced to accept multi-year commitments with steady price escalation and little flexibility in selecting what journals they get. This has all the obvious disadvantages for libraries and the academic community. However, such discussions almost universally ignore the positive effects of the “Big Deals,” as well as the degree to which those positive effects are key to the main action in scholarly publishing, namely the competition between libraries and publishers. ….

The median of the number of serials received by ARL [Association of Research Library] members almost quadrupled during the period under investigation, going from 21,187 in the 1989-1990 academic year to 80,292 in the 2009-2010 one.  Practically the entire increase took place during the last half a dozen years, without any big changes in [library] funding patterns, and appears to be due primarily to “Big Deals.”….

This socially positive development is the outcome of the growth in price discrimination, the selling of the same product or service at prices varying depending on customer. As an example, in 2007 unlimited access to the entire collection of journals published by Elsevier cost the University of Michigan $1,961,938.75, while the University of Montana paid $442,224.78.

The bearish views on Elsevier are based largely on the estimate that the “Big Deals” are becoming unaffordably expensive and will soon start breaking down. That might happen. However, the complaints about unaffordable journals go back many decades, yet they somehow have been afforded. To understand how this was possible, one needs to take a larger view of the economics of scholarly communication. The high profits earned by commercial publishers, as well as by many non-profit professional societies, are one of the lesser inefficiencies in that system. Those profits are just a fraction of the actual, and now unnecessary, real costs of the current scholarly journals. And those real publishing costs are much smaller than the (now) unnecessary real costs of the library system. Publishers have managed to continue with their “unaffordable” journal price increases by squeezing some of that inefficiency out of the libraries. And there is a lot more to be squeezed. ….

It will be interesting, therefore, to see the degree to which universities are willing, or are forced, to outsource their library functions to Google and publishers,. That might that serve as an indication of how likely more disruptive moves are to occur in academia. ….

 

But with electronic publications, it is far more efficient and effective to have the publishers maintain the files, migrate material to new formats, etc. (I am ignoring here issues such as censorship, which is far easier to carry out on a publisher’s few mirrors than it is on a thousand libraries.) ….

The basic and very promising approach open to publishers is to continue marginalizing libraries by extending the reach and scope of “Big Deals.” The consortium model, in which groups of libraries cooperate to get access to a “Big Deal” is already common, and can be pushed further. The ultimate situation might be national “Big Deals,” where some top- level bodies pay for access for everyone from a nation. Enlarging the “Big Deal,” especially through further mergers, but also by including additional information sources, can serve to create packages that simply could not be dispensed with. The most obvious move in that direction (which is already taking place to a small extent) is to make books, both current and old ones, a part of the “Big Deal.” (Recall that the process of digitizing old printed materials is extremely inexpensive.)….

It would also be wise for publishers to overcome their reluctance to tamper with copyrights, and to forcefully push for legislative solutions to the orphan works problem. Orphan works, which are those that are under copyright, but whose copyright owners cannot be located, provide a major justification for the existence of large physical collections in libraries, as that is the only legal way to make such works accessible to the public. To the extent orphan works are digitized and made freely available, the need for library facilities (both physical and personnel) declines. That would make it easier for publishers to appropriate even more of the resources now going to libraries…..

The “Big Deal” practices also appear to have enhanced social welfare. One can argue that the world would have been better had libraries and researchers moved to squeeze out publishers and move Open Access forward faster. But both groups have been slow to act, while publishers are providing visibly better service through “Big Deals.”

There’s a lot more in the piece, including a discussion of per-article journal costs and the relationship between price discrimination and the erosion of privacy.  I suspect I’ll be coming back to this one.

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