Bibliotekenes rolle som formidler i et kommersielt landskap

1
Bibliotekenes rolle som formidler i et
kommersielt landskap!

• Arne Jakobsson
• Universitetsbiblioteket i Oslo
• Bibliotek for medisin og helsefag

2
Morgonbladet 21 april 2005
3
Academic Journal Pricing and Market Power

• Mark J. McCabe - Academic Journal Pricing and
  Market Power A Portfolio Approach. School of
  Economics, Georgia Institute of Technology, 2000.
  http//www.prism.gatech.edu/mm284/JournPub.PDF
• Published in American Economic Review, Vol. 92,
  No. 1, March, 2002.

4
The effective cost of journals!

• Professors worry about their job security
  (publish well, or perish), others -- their
  librarians -- are charged with maintaining free
  access to all relevant journals

5
Aggressive price increase

• Over the past decade or more, commercial firms
  have aggressively raised prices at a rate
  disproportionate to any increase in costs or
  quality. This appears to be especially true for
  the largest commercial firms
• Which role has the exercise of market power by
  publishers played?

6
Underlying demand behavior of libraries

• Library demand for academic journals is unique.
• Although individual users are interested in just
  a handful of STM journals, libraries maximize the
  usage of broadly defined collections, e.g. all
  biomedical journals, subject to a budget
  constraint.
• The result is demand for a portfolio of titles.
• Libraries avoid to cancel a subscription once
  started

7
(No Transcript)
8
Publishers pricing strategies

• Publisher pricing strategies are determined by
  the distribution of budgets and a titles
  relative quality.
• The budget distribution influences whether, for
  example, high quality titles choose low prices
  and sell to most libraries or set high prices
  and sell only to the largest budget institutions.

9
Pricing strategies

• The pricing model predicts that in some cases
  firms controlling larger portfolios of journals
  have an incentive to charge higher prices, all
  else equal.
• Past publishing mergers may account for some of
  the observed price increases

10
Pricing strategies

• If one or more of the publishers raise the price
  of their titles, then the remaining publishers
  can increase their prices almost as much, without
  being overly concerned about cancellations.

11
Two type of journal companies

• Non-profit companies are mostly intent on
  disseminating knowledge
• Profit companies are primarily interested in
  profits

12
Market power in the academic publishing market

• Profit-maximizing firms normally operate in the
  elastic region, how can we account for this
  apparent contradiction of economic theory?
• One possibility is that budgets for journals are
  sufficiently soft from year to year that price
  increases can be generally accommodated, i.e.
  demand is inelastic for observed prices.
• Each year publishers set new (higher) prices and
  libraries, trying to preserve their existing
  collections, respond by increasing journals
  budgets.

13
Market power in the academic publishing market

• The results indicate
• that the demand for journals is highly inelastic
• that quality- and cost-adjusted price increases
  have been substantial over the past decade
• that past mergers have contributed to these price
  increases.

14
Effects of two mergers 1980-81

• Reed/Elsevier and Pergamon
• Elsevier price increase 5,2
• Pergamon price increase 27
• Kluwer and Lippincott
• Lippincott price increase 30
• Kluwer prices dropped slightly

15
Antitrust decisions

• 1998 the proposed merger between Reed Elsevier
  and Wolters Kluwer collapsed
• To avoid future antitrust scrutiny the Elseviers
  of the journal publishing world are likely to
  grow by adding relatively small numbers of
  journals at frequent intervals. If pursued
  diligently, this stealth strategy can be just as
  successful as any blockbuster merger.

16
Conclusion

• McCabe states in his findings,
• Demand for journals is highly inelastic
• Prices are indeed positively related to firm
  portfolio size
• Mergers result in significant price increases
• This was true even though many of the publishers
  had relatively modest numbers of journals

17
Reed Elsevier

• Academic Press
• Beilstein
• BioMed Net
• Butterworth
• Cahners
• Cell Press
• Chilton
• Churchill Livingstone
• CIS
• Elsevier Science
• Engineering Information
• Harcourt,
• Holt LexisNexis
• JAI Press
• Martindale Hubbell
• Mosby
• Pergamon Press
• Rinehart Winston
• Saunders

18
Reed Elsevier

• Reed Elsevier
• Listed on the London and Amsterdam Stock
  Exchanges
• Sales 7,074m Euro
• Employees 35,000
• Operating margin 24
• Operating margin in Science Medical 34
• Profit 1,704m Euro
• Dividends 454m Euro
• Dividend per share up from 0.30 Euro to 0.33
  Euro 2004
• Acquisition spend 970m Euro
• Free cash flow 546m Euro
• Institutional budgetary pressure in part
  countered by widening distribution

19
Wolters Kluwer

• Aspen Publishing
• CCH
• Lippincott Williams and Wilkins,
• Ovid
• SilverPlatter
• Waverly

20
The Academic Publishing Industry

• Walter Kluwer
• 2002 Sales 4.02 billion
• One-Year-Sales-Growth 20.1
• 2002 Employees 20,833

21
Taylor Francis

• I dag en av de 3 største gruppene i verden og
  omfatter
• Brunner-Routledge
• Carfax
• CRC Press
• Europa Publications
• Frank Cass
• Martin Dunitz
• Psychology P
• Routledge
• RoutledgeCurzon,
• RoutledgeFalmer
• Scandinavian University Press
• Spon Press

22
Candover and Cinven

• 1977 Cinven Ltd is established. Firm is a venture
  capital investor in the European market.
• 1980 Candover Investments plc is established as a
  specialist in arranging and landing large buyouts
  and buyins.

23
Candover and Cinven

• January 2003 - Candover and the 2001 Fund
  complete the buyout for Kluwer Academic
  Publishers from Kluwer for 600 million. Cinven
  backs the buyout.
• September 2003 - Candover and Cinven acquire
  BertelsmannSpringer for 1.1 billion. Candover
  and Cinven will merge its business with KAP, and
  the new entity will be known as Springer.

24
Candover and Cinven

• Since 1980, Candover has invested in 119 deals
  with a total value of over 24 billion.
• Derk Haank will take on the role of the new
  Springer Science Business Media. Together the
  companies will publish 1,350 journals and more
  than 5,000 book titles with revenues of about
  880 million.

25
Digital future (2000)

• Commercial publishers have begun to exploit these
  new opportunities by bundling their individual
  journal titles and providing libraries with
  electronic access to article databases.
• To gain access to the entire database or some
  customized subset, a library is required to
  maintain its Elsevier paper subscriptions. The
  access price is typically calculated as a
  percentage markup on the librarys Elsevier
  paper budget.

26
(No Transcript)
27
(No Transcript)
28
(No Transcript)
29
(No Transcript)
30
(No Transcript)
31
Konklusjon

• Tre aktører
• Forlag
• Bibliotek
• Brukere
• Bibliotekene kjøper på vegne av brukerne
• Brukerne er beskyttet fra å vite noe om prisen på
  varene
• Forlagene har en klar prisstrategi for å
  maksimere gevinsten
• Lav pris for å selge til mange bibliotek eller
  høy pris for å selge til færre bibliotek
• (Publisher pricing strategies are determined by
  the distribution of budgets and a titles
  relative quality)

32
Konklusjon

• Markedet domineres av store forlag
• Store forlag som kontrollerer mange tidsskrifter
  har høyere priser sammenlignet med små forlag med
  få tidsskrifter
• Fusjoner og oppkjøp leder til økte priser
• Hyppige små fusjoner gir samme resultat som en
  stor fusjon men leder til mindre oppmerksomhet
  
• Når de dominerende forlagene øker prisen kan
  mindre forlag uten risiko øke prisen
• Bibliotekene kjøper uavhengig av hvor mye
  forlagene øker prisen
• medfører at forlagen kan fortsette øke prisen

33
Konklusjon

• Big deals binder bibliotekene til forlagenes
  tidsskrifter
• Gevinst marginen er meget høy
• Risiko kapital aksjeselskap finner investering i
  store akademiske forlagshus svært interessant

34
Børs og bibliotek

• JA - Det er bonanza i kunnskapsmarkedet!
• Hvor lenge kan det fortsette?
• Er kollapsen nær?
• Tack för uppmärksamheten!

35
(No Transcript)