Scholarly Communication Toolkit

Journal Publisher Mergers and Acquisitions

Access to important scientific, technical, medical (STM), and legal research is threatened by the anticompetitive behavior of large commercial publishers who are controlling more and more of the academic publishing arena. Since 1997, at least five major commercial publishers of STM journals have been acquired by competitors, in addition to numerous mergers among smaller entities. For example, LexisNexis, Martindale Hubbell, Butterworth, Harcourt, Holt, Rinehart & Winston, Cahners, JAI Press, Chilton, CIS, Academic Press, BioMed Net, Engineering Information, Pergamon Press, Beilstein, Cell Press, Mosby, Churchill Livingstone, Saunders, and Elsevier Science, among other companies, are now all owned by Reed Elsevier. [1]

Economic research shows that mergers among large publishers increase the prices of academic journals for consumers. In the biomedical field alone, significant price increases occurred in 10 of 11 mergers over the past decade. [2]

Individual library associations have expressed concern about major mergers to the United States Department of Justice. Because scholarly publishing is a mulit-national enterprise, competition authories in other countries also review potential mergers. U.S. library associations have worked with their counterparts in Europe and England to make library concerns known to the appropriate agencies.

In 2002, a coalition of seven library associations joined forces to create the Information Access Alliance with the idea that pooling efforts and resources will help to bring more public attention to this issue. The Alliance argues for a more consumer-friendly definition of the STM journals and legal serials markets by taking into account the decision-making process used by libraries because the vast majority of revenue generated by publications of commercial STM and legal serials comes from libraries and institutions, not individuals.

Regulatory authorities should consider a number of important factors when analyzing proposed mergers of STM and legal publishers including the following:

• Researchers read journals more than any other type of publication and find them essential to their work. Studies show that a typical scientist spends 11.7 hours per month surveying the literature, with cancer researchers spending about 24 hours per month. Researchers depend heavily on the library for access to journals. While individual scientists subscribe to an average of 2.7 journals, they obtain 64% of the journals they read through the library, in either print or electronic form. [3]
• Publisher mergers contribute to inflation in subscription prices. Subscription prices for research journals have been increasing well beyond the consumer price index for several decades. Research shows a very strong correlation between mergers and rates of inflation that are even higher than the general trend noted above. Over the past two decades, increased concentration in the publishing industry, along with significant escalation in the price of serial publications, has eroded the ability of libraries to provide faculty and researchers with needed publications.
• Access to a broad spectrum of research information is essential. Research contributes significantly to the overall health and wealth of our society. Public and private investment in research and development (R&D) in the U.S. topped $265 billion in 2000, accounting for 40% of the total global investment in R&D. Publication of research results assures not only a record of achievement, but, more importantly, ensures that current and future researchers will be able to build on this work. A 1998 study found that 73% of the articles cited in U.S. industrial patents resulted from publicly funded research projects. [4]
• Traditional antitrust analysis of publisher mergers does not adequately account for consumer purchasing decisions. Mergers of STM journal publishers are not likely to face scrutiny because of the narrow market definition used by the Department of Justice. The DOJ assumes that the products the merging companies sell are book or journal content. The market is thus defined to include books or journals with similar content. The approach does not take into account the central feature of the scholarly journals market: different journals in the same academic field are not substitutes in the same way that two brands of consumer products, like auto tires, might be. Since academic journals are the source of original research, each journal is a poor substitute for any other in the same field. In addition, when deciding which journals to purchase, libraries select those that provide the most benefit to their patrons per budget dollar. Many libraries estimate a ratio of cost-per-use, intended as a measure of the subscription price discounted by the value of the journal to the library's patrons. Cost-benefit analyses are then performed across a large portfolio of journals, rather than only within sub-disciplines. At first glance, neurology and biochemistry journals would not be considered competitors. However, if a publisher of a neurology journal raises the price without any significant improvement in quality, it is possible that a library will cancel its subscription. If that occurs, budget dollars freed from that cancellation may be used to purchase a biochemistry journal. By allocating budget dollars across a broad spectrum of academic fields, libraries turn journals whose content overlap may be minimal into direct competitors. If the market analysis performed by the DOJ more closely tracks the decision-making processes of libraries, the government will have a better understanding of the dynamics of the serial publications industry and will be better able to carry out its responsibility to the consumer.

Learn More

Information Access Alliance
A coalition of seven library associations that argues for a more consumer-friendly definition of the STM journals and legal serials markets. The site contains links to a number of studies and background documents.

Publisher Mergers: A Consumer-Based Approach to Antitrust Analysis
Thomas M. Susman & David J. Carter. A white paper commissioned by the Information Access Alliance, this publication outlines the issues very clearly and is easily understood by those of us without backgrounds in law or economics. Section 2: "Access to a Broad Spectrum of Research Information is Essential" contains many examples of how wide dissemination of research results leads to scientific innovation, medical advances, improvements in public health, and the sustenance of our legal system. These examples help advocates constuct powerful and compelling stories.

Mary M. Case, "Information Access Alliance: Challenging Anticompetitive Behavior in Academic Publishing," C&RL News, vol. 65, no. 6, (June 2004).

The Academic Publishing Industry: A Story of Merger and Acquisition
This site profiles twelve large European and North American publishers. The timelines are the most interesting feature, tracking the firms' struggles to find a steady, but profitable niche for their publication efforts. The mergers and acquisitions as well as the sales strategies are clearly attempts to find niche markets for the publishing activities of the companies. Created by Mary H. Munroe, Associate Dean for Collections & Technical Services, Northern Illinois University Library.

Can Antitrust Save Academic Publishing?
Albert A. Foer, President, The American Antitrust Institute, (July 2004).

Law Serials Pricing and Mergers: A Portfolio Approach
Mark J. McCabe. Appears in Contributions to Economic Analysis & Policy, vol. 3, issue 1, article 11, 2004.

Mark J. McCabe, "Journal Pricing and Mergers: A Portfolio Approach," The American Economic Review, vol. 92, no. 1, (March 2002): 259-269.

Mark J. McCabe, "The Impact of Publisher Mergers on Journal Prices: An Update", ARL, no. 207, (December 1999).

Michael A. Stoller, Robert Christopherson, and Michael Miranda, "The Economics of Professional Journal Pricing," College & Research Libraries, 57(January 1996): 7-21.

1. Mary M. Case, "Information Access Alliance: Challenging Anticompetitive Behavior in Academic Publishing," C&RL News, vol. 65, no. 6, (June 2004): p.1.
2. Mark J. McCabe, "Journal Pricing and Mergers: A Portfolio Approach," The American Economic Review, vol. 92, no. 1, (March 2002): p.265-67.
3. Carol Tenopir and Donald W. King, "Toward Electronic Serials", Special Libraries Association, Washington, D.C. 2000, p. 159-75; and Education for Change Ltd., SIRU, University of Brighton, and The Research Partnership, "Researchers Use of Libraries and other Information Sources: Current Patterns and Future Trends," Higher Education Funding Council for English, 2003, p. 20-21.
4. Elisa Eiseman, Kei Koizumi, and Donna Fossum, "Federal Investment in R&D", Rand Science and Technology Policy Institute, Project Memorandum PM-1336-OSTP, Arlington, VA, July 2002, p. 15.