By Kevin Smith

Siglufjordur is a small fishing village in the north of Iceland that my wife and I had the pleasure of visiting this past summer.  It nestles between the mountains of the Icelandic highlands and the sea in a way characteristic of towns on the northern coast.

What is unusual about Siglufjordur is its economic history.  It was a boom town in the 1940s and 50s, the center of the North Atlantic herring trade.  In addition to fishing, a great deal of processing and packing was done in Siglufjordur, and the town was triple its current size.  In the early 1960s, however, the herring industry in Siglufjordur collapsed quite suddenly, because the fishing grounds had been overfished.  Now the town is a shadow of its former self, surviving on sport fishing and tourism (the Herring Museum, perhaps surprisingly, is very much worth a visit).

We often refer to scholarly communications as a kind of eco-system, and I think the problem of overfishing has an important place in that analogy.  The proliferation of new journal titles, whose sole function seems to be padding out the “big deals” that publishers sell, using the growing number of titles to justify the ever-increasing cost, strikes me as a kind of overfishing.  It is an example of pushing the market too far.  In Siglufjordur, it was the product that dried up, however; in commercial publishing it is the customer base, which is being systematically priced out of the market.

A sign that they are creating a market where monopoly pricing is slowly pushing customers out is the growing gap between bundle pricing, which publishers now like to call a “database model” in order to distance themselves from the unpopular phrase “big deal,” and the list prices of journals.  I was recently part of a conversation where a rep for one of the large commercial academic publishers told us, inadvertently, I think, that while the bundle she was selling cost $800,000, the list price for all those journals would be about 9 million.  If she intended to tell us what a great deal the bundle was, her comment had the opposite effect; it emphasized how absurd the list prices are.  They are punitive, and obviously unrelated to the cost of production; when list prices are 11 times the price most customers actually pay, I think they qualify as pure fiction.  This pricing practice is equivalent to throwing an explosive into the water to drive the fish into the nets.  It represents a blatant effort by these publishers to force customers to buy the bundled packages, so they can profit off junk titles they could not sell on their own merits.

There was a time when similar practices were called illegal tying under the U.S.’s anti-trust laws.  Movie companies, for example, were found to be illegally using their intellectual property monopoly to force theaters to rent unwanted titles in order to get the movies they really wanted to show; the Supreme Court forbade such “block booking” in 1948.  But anti-trust enforcement has changed dramatically over the years, and this kind of tying is now tolerated in the cable TV industry, as well as in scholarly publishing.  (For the record,  a U.S. court has held that bundling channels on cable is not illegal tying, but there are ongoing antitrust lawsuits over related practices.)  Publishing, in my opinion, has pushed the practice even farther than cable TV has, as the bundle prices spiral upward, the list prices become more and more penal, and customers are forced to consider a draconian loss of access, the academic equivalent of “cutting the cable.”

The problem with this kind of “overfishing” is that it is unsustainable; the commercial academic publishers are pushing the market so far that their customers simply can no longer afford the resources they need and, incidentally, create in the first place.  The profits generated by these companies are still extremely high, in the range of 35% and rising, but, as happened in Siglufjordur, the bottom can drop out quite suddenly.  In recent months we have seen whole nations, not to mention individual universities, start to reconsider not only whether the value offered by these publishers is worth the price, but even whether the price itself is simply out of reach.  And back in June, the Financial Times reported that RELX, the parent of Elsevier, had suffered its biggest decline in value in 18 months, and the financial services firm UBS was advising investors to sell, to take their profits and get out, due to “structural risks.”  Structural risk is a very accurate description of the problem you create when you push your market well beyond its capacity.

Kevin Smith

Kevin Smith is a librarian, a lawyer focusing on copyright issues, a scholarly communications advocate, and the Dean of Libraries at the University of Kansas.

Comments (3)

  1. If the “big deal” bundles are more like cable packages, which are certainly consumer-unfriendly but presently legal, then I wonder if the case can be made that it is illegal “tying” if journals are bundles with non-journal products, such as citation databases and RIM platforms?

  2. Hey, maybe we’ll return to the day (in the late 19th century) when university presses and societies were the principal publishers of scholarly journals? Then ,making profits would not be the driving force in the sector it is now.

  3. Indeed thought provoking post!!!

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