David C. Prosser
© David C. Prosser 2004
ABSTRACT: The combination of decreased income as a result of the RoweCom
collapse, cuts in library budgets internationally, and the success of ‘Big
Deal’ bundling arrangements has serious repercussions for smaller and
This paper argues that the scholarly communications environment is going to become increasingly hostile for these publishers and that their best chance of survival may be to adapt to new business models, in particular open access.
2003 did not start out well for the STM journals market. The collapse of RoweCom left many publishers wondering if they would ever see their money and librarians wondering if they would see the journals they had paid for. While the purchase of RoweCom’s European business by EBSCO has mitigated some of the potential loss, many publishers will have seen 2003 income fall below budget as not all of the money within RoweCom has been recovered.
In isolation, this would have been a serious enough problem for many publishers, especially the smaller, often society, publishers, who operate on tight margins. Unfortunately the RoweCom débâcle may be just the first of a number of problems that will combine to make trading conditions especially difficult for small publishers over the next few years. (In the following I will use ‘small’ to mean publishers with less than about 20 titles.)
Many theories have been put forward to explain the origins of the ‘serials crises’ over the past 20–30 years. Whatever the cause, there is one incontestable fact: library budgets have not risen as much as the increase in the price of journals. For example, statistics collected by the Association of Research Libraries (ARL) show that between 1986 and 2002 the serials unit cost in the US rose by 227% while the library materials budgets for the ARL libraries rose by only 184%.1 (As a comparison, inflation rose by 64% over the same period.)
In 2003 and 2004 this mismatch between price and budgets will be even more acute as many libraries are faced with real-term cuts in their budgets while most publishers will continue to increase their prices by 5–10% (at least). Worryingly, these cuts are being seen in all of the major STM markets.
It is well known that over 40 of the 50 states in the Union are facing budget
deficits (with that of California estimated to be in the region of $38 billion).
These deficits will have an effect on those university and college libraries
that receive state funding.
Many individual libraries are facing massive cuts in their budgets. For example, UC Berkeley must manage ‘an almost $700,000 budget deficit for 2003–2004, and absent an infusion of new funds, will face an additional deficit of over $800,000 in 2004–2005’ in its collections budget.2 Similarly, the library of the University of Virginia faced a $1.3 million cut in 2002–2003 and expects ‘to cancel at least $300,000 of journal subscriptions, in addition to buying fewer books’ in 2003–2004.3
Further, universities that are not state-funded but which rely heavily on their investment portfolios and endowment income are expressing concern with the current condition of the stock market. Cornell, for example, is looking at a significant reduction in its general-purpose budget, although they hope to be able to protect its materials budget. This will, no doubt, depend on the state of the economy over the next few years.
The situation in Europe is not uniform, but for many libraries a flat budget would be a relief! While budgets in Ireland will, at best, be flat (so decreasing in real-terms), German university libraries have seen a 3% decrease in 2003 with talk of a 5% decrease in 2004. In The Netherlands, the Ministry of Education, Culture, and Research is cutting total university budgets, with some libraries looking at both long-term cuts (17% over five years) and significant immediate cuts (around 10% this year) to faculty library budgets.4
Japanese libraries face two issues. Firstly, a declining birth-rate has meant fewer students entering higher education. This has resulted in declining budgets and the merger of at least 24 universities with the possibility that more will be closed or merged, so reducing the total market in Japan. On top of this, although government science spending in 2003/2004 has increased by 3.9% it is not clear how much of this increase, if any will be seen by libraries: general government funding is only increasing by 0.7%.5
There is no indication that these are short-term problems, that the world economy will soon turn around, or that libraries will see their budgets significantly increased, allowing them to make up lost ground quickly. This crisis in funding will last at least until the end of 2004, but may well extend beyond into 2005 and subsequent years.
It is no great insight to note that academic libraries are having budget problems and that this will make life more uncomfortable for publishers in the next few years. Surely this is all part of the economic cycle and just as there are always bad years there will be better years again in the future. Well, no doubt things will improve, but the market is significantly different today and some publishers, especially smaller ones, may not be able to survive this phase in the economic cycle. The difference from previous downturns is that we now have online publishing and Big Deals.
In previous years when a library had to make cuts a well-rehearsed process was acted out. The librarian looked at the list of journals and decided (often with input of one sort or another from the university’s researchers) which of the journals were ‘must have’. Those ‘must have’ journals were considered the titles that the researchers could not do without and which if removed from the library would seriously affect their efficiency. The other titles, those that were not ‘must have’, were then cancelled until the budget was balanced. Interestingly, the price increase of an individual title was not necessarily considered when making a decision whether or not to cancel. If it was an essential title it was kept, even if its price increased by 15%, while a title that held its price steady from one year to the next could be cancelled if it was not considered essential. Publishers were not rewarded for price moderation!
Today, librarians do not have the same flexibility with respect to collection management. A growing percentage of a library’s collection consists of online access to titles bought either through the so-called Big Deals (where the library purchases access to all or a specific subset of a publisher’s titles) or though consortia deals. Previously libraries could cancel non-essential journals to save money, but now they are no longer able to do so if the journals are part of an ‘all or nothing’ package. The library needs the package as it will typically contain some essential journals, but now online access to those essential journals has been coupled to purchase of online access to non-essential journals.
Market analysts who track the fortunes of large, publicly quoted companies are very excited by these new market conditions and have followed the logic of this situation to its inevitable conclusion. In September 2002 two reports were published on Reed Elsevier’s future prospects (although the comments could probably apply to all the major commercial publishers able to offer significant online collections). Exane noted (positively!) that ‘the leader in a monopolistic market is driven by a virtuous circle that powers growth and enables it to gain ground gradually from competitors’.6 This was followed by a report from Morgan-Stanley who predicted that ‘Market leader Reed should outperform the market . . . as librarians trim peripheral suppliers who can’t bundle journals as effectively.’7 The obvious translation of ‘peripheral suppliers’ is small, often society and not-for-profit, publishers!
The irony of this situation is while the large commercial publishers take a growing percentage of the library budget at the expense of small publishers, it is often the smaller, society publishers who produce some of the leading journals in a given field. (For example, looking at random at three ISI categories – biology, organic chemistry and multidisciplinary physics – about half of the top 20 highest-ranked journals for 2002 come from small or society publishers.)
Of course, many librarians have noted the problems associated with purchasing access to journals they do not consider essential. However, there is no general consensus among the library community regarding the overall benefits or otherwise of Big Deals, and even among those librarians who believe that there are significant problems with Big Deals only a very few have cancelled or refused to renew existing agreements.
So small, society, publishers face a nightmare scenario. Margins in 2003 are already tight as the RoweCom collapse has reduced income. The library market internationally is looking to make substantial cuts in serials spending in 2004 (if not beyond) above those made in 2003, to try to balance reduced budgets. However, a growing proportion of those reduced budgets is ear-marked for Big Deals with large publishers, leaving an ever-shrinking residue from which librarians can pay for journals from smaller publishers. The world economic situation and the Big Deals are coming together to create a big squeeze for small, society publishers.
What is worse, the journals produced by small publishers may enter a vicious cycle whereby as they lose subscriptions more quickly, the dissemination and circulation of the work published in them is reduced, resulting in a fall in impact factor. As the impact factor drops, their position on librarians’ ‘must have’ lists falls, leading to even greater cancellations, reduced dissemination, lower visibility and exposure, falling usage, further decreased impact, etc, etc. Conversely, the inessential, low-impact journals from large commercial publishers will have expanded dissemination through the Big Deals, leading to greater impact and a strengthening position.
I can see three possible solutions for small publishers, but only one of them gives the promise of long-term stability together with the independence that small and society publishers cherish.
Most obviously, a small publisher can sell-up or have their journals published by any one of the large commercial publishers, so ensuring a slice of the Big Deal revenue. For many, however, this would be unacceptable. It would mean losing autonomy and independence and the right to set publishing practices specifically tailored to best serve the traditional users (both as readers and authors) of the journal. The larger the publisher they deal with, the less likely it is that they will be able to gain concessions and the unique journal will be compelled to fit into a standard template.
If the problem is that small publishers do not have enough journals to offer as a package, then surely if a number of publishers came together they could create a package of journals that could be offered to libraries. This is, in fact, happening in a number of areas:
• The Association of Learned and Professional Society Publishers (ALPSP)
recently announced its intention of bringing together a number of journals from
its members into a package to sell to librarians. Twenty-five publishers have
come together to offer access in 2004 to almost 250 journals, split roughly
equally between sciences, medicine, and the humanities.8
• BioOne is a collection of over 65 high-impact bioscience journals from a variety of (mainly US) small societies and non-commercial publishers. Not only is BioOne providing an effective means of allowing these small publishers to come together to present an attractive package of journals to libraries, it has also provided infrastructure to help make the transition to online publishing.9
• Project Euclid fulfils many of the same functions for mathematics and statistics journals as BioOne does for bioscience journals, enabling smaller journals to move online and presenting a package of journals to libraries. The service was launched in April 2003, and 20 journals currently participate in it.10
These initiatives are obviously very worthwhile and give much needed extra coverage to journals from smaller publishers. In addition, they are attractive to librarians as they provide bundles of journals in well-focused subject areas rather than the complete output of an individual publisher which may not be a good match for any given library. However, they have the problem of scale. It is very difficult to put together a collection of journals to rival the collections from the large publishers in terms of size (although such collections do often rival and exceed the large publishers in terms of quality). The STM bundle within the ALPSP collection (which is one of the largest multi-publisher packages), is in the lower half of the top ten bundles on the market (behind Elsevier, Springer, Kluwer, Taylor & Francis, Blackwell, etc.). Unfortunately, important and valuable though they are, these multi-publisher packages often do not have the same attraction in terms of size as the larger collections and librarians may leave negotiations with them to last – by which time the budget could well be spent.
Open access publication has been mainly presented as a public good. Those who promote it (including myself) believe that publishing papers freely to all over the Internet will, among other benefits, increase the impact and dissemination of research, increase technology transfer, narrow the information gap between rich and poor nations, enrich education, and give access to research to the general public (who have paid for much of the research through taxes). However, open access is rarely promoted as a survival mechanism for small publishers.
The primary reason why open access could be beneficial to smaller publishers is that taps into a new revenue stream. Currently, the greatest area of debate surrounding open access concentrates on how, in the absence of subscribers, open access journals can be financed. For many, the most attractive model is that where on acceptance of the manuscript a payment is made by the funding body or institution, via the author The attraction of this model is that increases in funds for publication should scale with increases in funds for research – something that does not happen at the moment.
By having the researcher pay for open access (through their funding bodies) the journal is able to tap into a new source of income, one that is often separate from the library. In addition, small publishers will be able to compete for this source of revenue equally with large publishers as it is the impact of the journal and quality of publishing experience for the author that is important, not the ability to bundle large packages of journals.
(As an aside, publication charges should be thought of as being distinct from
page charges. Page charges gave no direct benefit to the author – the
benefit went to the library in terms of reduced subscription charges. Publication
charges, on the other hand, directly benefit the authors by offering open access,
and the associated potential increase in dissemination and impact.)
The past year has seen an increase in awareness of open access issues among funding bodies worldwide and there is growing acceptance that they should regard publication and dissemination of research as part of the whole research project. In particular:
• A meeting held in Bethesda, USA on 11 April 2003 brought together an
influential group of representatives from international funding bodies (including
the NIH, the Howard Hughes Medical Institute, the Rockefeller Foundation, the
Max-Planck-Gesellschaft, and the Wellcome Trust) to address issues of open access.
The meeting produced a series of draft statements, including the following for
funding bodies: ‘We encourage our faculty/grant recipients to publish
their work according to the principles of the open access model, to maximize
the access and benefit to scientists, scholars and the public throughout the
world.’11 It is expected that a second meeting will be convened
to endorse the relevant statements.
• In June 2003, the UK’s Joint Information System Committee (JISC) agreed a deal with BioMedCentral (BMC) such that researchers at the 180 universities in the UK will have their article-processing fees waived when publishing in any of BMC’s journals. That JISC (a committee of UK further and higher education funding bodies) should consider such a deal shows the growing commitment of funding bodies to the principle of open access. (BMC maintains a useful list of funding bodies worldwide who explicitly allow use of their grants to cover article publication charges at http://www.biomedcentral.com/info/authors/ apcfaq).12
• In the US, new legislation has been proposed by Representative Martin Olav Sabo stipulating that the results of all scientific research which is ‘substantially funded’ by the US Government should be placed in the public domain. If the ‘Public Access to Science Act’ becomes law in its current form it will have a profound effect on the publishing activities of hundreds of thousands of authors. Even if it is significantly amended or even thrown out, the mere fact that it has been tabled shows that the pressure and momentum for open access are growing and are being supported at the highest, policy-forming levels.13
These three initiatives are symptomatic of a fundamental shift in thinking from funding bodies worldwide. Previously many of them did not overly concern themselves with the dissemination of research results; they now see that as an important final stage of the research process.14
So, if the environment for open access continues to improve as funding bodies embrace the idea, providing new sources of income and lowering the reliance of publishers on shrinking library budgets (of which a growing proportion is spent on Big Deals), how should small publishers proceed to take advantage of the new scholarly communications landscape? In the July 2003 issue of Learned Publishing I outlined a mechanism whereby journals could undergo a smooth transition from closed, subscription-based access to open access.15 The model allows authors to make a choice – whether to pay a publication fee, so making their paper open access on publication, or to not pay a fee, with their paper available only to subscribers.
I suggested that there were a number of advantages of this mechanism, especially:
1. The owner is provided with a smooth transition period as the decline in
subscription revenue is matched to the increase in publication revenue.
2. The journal moves at the same rate as the international research community. It is not left behind (as other open access journals proliferate) or bankrupted (as subscription revenues fall without a matched increase in other revenues).
3. As the proportion of open access papers increases so should the journal’s impact factor.
By offering this option, publishers could mitigate the effects of declining subscription revenue by increasing revenue from authors, so ensuring the journal’s long-term future as well as performing a service to authors and readers.
Some may suggest that my analysis is scaremongering, if not rather apocalyptic and hysterical. That may be so. In many ways I hope that it is for I have no desire to see high-quality journals from society and small publishers either fold or be subsumed into large publishing companies and lose their independence. Readers of Learned Publishing will have a much better idea than I of whether income is declining and subscription attrition is increasing. It will be for them to decide whether it is better from a purely financial aspect to hold out with the existing subscription-based model, hoping that it is not their journals that are squeezed out, or to embrace a new business model that gives access to new revenue streams and allows them to compete on an equal footing.
I strongly believe that irrespective of the financial difficulties of the international STM serials market open access is something we should strive for. It gives authors greater dissemination of their work and it allows researchers access to all the relevant literature they require, not just a subset. However, I also increasingly believe that open access will provide the best means to preserve the quality, diversity and breadth of the STM literature in these troubled financial times. For many small publishers, the choice may not be between open and closed access, but between open access and the continued survival of their journal.