Today, in looking at the scholarly publishing sector, equity markets are focused on the European national-level consortial negotiations. If analysts are not surprised at the strong rhetoric about cancelling Big Deal packages that has emerged from the university sectors, they are troubled to see entire nations actually canceling their licenses. They have watched publishing revenue from a major country like Germany disappear all at once from one major publisher’s income statement. And they want to know whether this “contagion” will spread to North America. My view is that, while the germs are circulating, at least in the near term, publishers are unlikely to face a global pandemic.
University libraries have tended to have relatively weak negotiating positions with respect to publishers. They have have felt locked in to renewing materials because they serve as “agents” for faculty members who have much more political weight at universities and yet no direct exposure to the costs of the material they require. Yet libraries have long been frustrated by the ever growing share of their materials budgets devoted to subscriptions from a very small number of publishers. I have tried to help libraries strengthen their position at the negotiating table, in part through efforts to drive greater internal alignment about value which can be acted upon. But, the politics of canceling access to resources has certainly been a constraint on libraries and an advantage to publishers.
It is always risky to try to judge a negotiation from the outside, especially while it is in progress. That said, there are key elements of the European dynamics that are not in dispute. The European countries and consortia that have received attention in recent months for canceling their Big Deal agreements — including the Deal Projekt in Germany, Couperin in France, and Bibsam in Sweden — share certain key elements.
- First, they are all looking for various kinds of open access (OA) Big Deals, flipping from a pay to read model, to an increasing or exclusively pay to publish model. Richard Poynder has some of the best coverage to date of these deals, finding several of them strategically troubling from the academic sector perspective. More on these models in a future post.
- Second, they are national-level consortia, and some, as in the case of Germany’s Deal, claim to speak with a single voice for the entire university sector in a given country.
- Third, they are taking a stronger negotiating posture than we have seen before, driven in part by the strong negotiating approach for which Germany is widely regarded and its ability to capture the attention of university presidents, who in turn provide a degree of political cover beyond what a library might find possible.
In some cases, announced cancellations have seemed to be negotiating tactics by the consortia, while in other cases they are having a more dramatic impact on publisher revenues, in the sense that funds allocated for licenses have been spent on alternative purposes. Will this “contagion” of stronger negotiations and outright cancellations grow into a global pandemic?
My answer is that, regardless of what may happen in Europe, the dynamics in the United States are likely to be quite a bit different. This is not to say that North America is a safe haven for commercial scholarly publishing revenues. Not at all. Broadly speaking, it seems increasingly evident to me that the value of traditional publishing activities, certainly as captured through subscriptions, has plateaued. Downward pressure on publisher revenues is the natural result.
Consortia are emboldened by one another. We have seen this happen in Europe, where Germany’s Deal is carrying the torch for others. And make no mistake, the consortia and university systems globally are paying close attention. Their leadership meet with one another regularly through ICOLC, and there is more informal communication as well. While consortia ultimately strive to represent their members, and notwithstanding the fact that so many of their license agreements are covered by some form of nondisclosure agreement, there is no doubt that they influence one another strategically.
And today, in the Sci-Hub era of rampant piracy, with libraries more directly recommending its use, albeit with a wink, the value of the subscription model is under substantial threat. My fellow Chef Kent Anderson may be right that subscription models add value to those that can maintain them, given the benefits of steady recurring revenue, but the models as they have existed are fading. I side with Joe Esposito in recognizing the not so hidden hand of Sci-Hub – “an unacknowledged reserve army prepared to enter the battle with publishers” – which interferes with publishers’ ability to rely on fairly easy subscription renewals. Put in economic terms, the equilibrium price of journal subscriptions is facing a massive readjustment as piracy eliminates publisher exclusivity.
But the higher education sector in most of North America is very different from Europe, in one key element: North America is as decentralized as Europe is, at a national level, centrally coordinated. While all of UK universities are governed by the same set of research funding incentives, there is no similar common funding policy in the United States or Canada. To the extent the public universities receive public funding, it generally is supported at a state or provincial level, with research funding more commonly allocated through competitive project-level grants. Many states have an array of different public higher education systems — Pennsylvania has two, California has three — and only a subset have established performance-based funding models. Finally, the private not-for-profit sector is strong, such that even if all the publicly funded institutions in the small state of Connecticut were to follow a common model, institutions like Yale, Wesleyan, Connecticut College, and Trinity, would not be impacted. The upshot is that decentralization, for all its benefits, results in no common policy or incentive structure about open access or scholarly communications.
For this reason, we can expect no national-level common negotiating posture in North America, certainly not in the United States. Instead, we must look to other groupings of institutions to understand what might result. Some of these groupings are as large or larger than some European national consortia, so their impact is potentially significant. In the United States, anyway, there are different kinds of systems and consortia, and for the purposes of scholarly publishing we can identify at least two basic archetypes.
One kind of system or consortium includes only large research universities. One well known example is the University of California system, with 10 major research universities, all of which are represented in license negotiations through the strategically sophisticated California Digital Library in its central system president’s office. Another is the Big Ten Academic Alliance, which represents the members of the Big Ten athletic conference plus the University of Chicago at a provostial level, and has developed a robust library program. It is difficult to imagine these kinds of consortia (or the vast majority of their members) walking away from the Big Deal outright. Much as they might wish to strengthen their negotiating position, they are probably more inclined towards trying to flip to a pay to publish model (a hybrid version of which MIT last week announced with the Royal Society of Chemistry) than they are to cancel outright. That said, I am keeping an eye on both these consortial groups and several others like them; a key indicator is whether presidents or provosts become more actively involved in negotiations, as has happened in Germany.
Another kind of consortium includes academic libraries of many types. These include state systems like SUNY in New York, incorporating 64 institutions from community colleges to major research universities; state-supported entities like OhioLINK, which speaks for many private institutions as well as the public university sector; and consortia like Orbis Cascade, which includes nearly every academic institution in the Pacific Northwest states. Some of these systems and consortia use central funds to support their licensing activities, but more often they have allocation formulae for member contributions. These multitype consortia are likely to be the greater source of threat to publisher revenues. After all, even as the Ohio State University, or SUNY’s University at Buffalo, might seek price adjustments in light of the new market reality in the wake of Sci-Hub, the teaching institutions that make up the bulk of these consortia will have to consider whether there is any measurable value left to them in journal subscriptions. There is a real risk to publishers that these consortia will break up, and the revenue from their members will fall accordingly. Models where costs are allocated among members more by historical print spend, especially in states with dynamic higher education systems, may be the first to fold. It appears that this process may already have begun in Florida.
There is another way that the Big Deal is breaking up in North America. Several prominent universities, including a number in Canada driven by exchange rate challenges such as Montreal with Taylor & Francis, decided to cancel selected bundles and rely instead on licenses for a subset of individual titles. This approach may only modestly reduce the price paid to a given publisher, and it may eliminate multi-year inflationary caps, but it is an important harbinger of change. For, having reasserted its ability to select content at a title level, the university is now prepared to cancel with greater granularity, and therefore to negotiate from a stronger position. Rick Anderson first tracked these cancellations comprehensively last year, asking if the wolf has finally arrived, and SPARC has subsequently continued this important tracking work.
So the view from North America is not altogether bleak: the germs may be circulating, and the symptoms should be watched carefully, but no pandemic has yet emerged. Publishers will continue to try to fight piracy. But thus far they have not succeeded, and piracy remains uncontained. Because license agreements typically run three or more years, change is not sudden. From realizing that its negotiating position has improved, to generating the political position to drive change, necessarily takes a consortium some time. Without the looming 2020 European target, or an exchange rate crisis, the urgency is comparatively muted. But a new generation of library leaders is interested in driving change to the system. And, thus we are seeing only the leading edge of change since Sci-Hub came on scene. The next year or two will be telling.