From: Ann Shumelda Okerson <[log in to unmask]>
Date: Thu, 7 Jun 2018 02:54:36 -0400

Of possible interest extracted from the new issue Delta Think:  see lead
article on Consortia Cancellations, which concludes as below.  (To
subscribe to this newsletter, go to:
https://deltathink.com/open-access/sign-up-for-news-views/)

A move to open access appears to be acting as a catalyst, and its uptake is
being used as a wedge to prise apart the big deals. Only 10% of big deals
in Europe include APCs, but there is a possibility of 63% of them doing so
in future, with half the deals up for renewal in the next few years.

There are increasing moves on the part of buyers to take less for granted
and push publishers much harder than we have seen in the past. The power of
collective bargaining is taking hold. Buyers share negotiating tips;
German-run OA2020.org is spreading the word globally; lack of usage in long
tail big deal content is being increasingly studied and discussed. The net
exporters of research in the EU are now well-aware of rising publication
costs, and the EU appears resolute in its drive towards a fully open world.

So, while the few headline-generating consortia negotiations are having
little effect today, it seems conditions are ripe for change. Where
pioneers of hard bargaining make progress, others will feel emboldened to
follow. Nothing “bad” has happened to those who are prepared to walk away
from the negotiating table, so the big inhibitor is falling away.

It seems that the days of the big deal may be numbered.




[image: Delta Think Open Access News & Views]



*This month’s analysis: Will Consortia Cancellations Change the Market?
Scroll down to see the analysis, along with the latest headlines and
announcements related to Open Access. Delta Think publishes this News &
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[image: Views]



*Will Consortia Cancellations Change the Market?*

Swedish consortium Bibams’s recent cancellation
<https://deltathink.us6.list-manage.com/track/click?u=35fb1e45079f7ee11269d5583&id=610004bd1c&e=2ea13dcd72>
of its contract with Elsevier is the latest in a series of high-value
“publish and read” negotiations to make the news. It follows other examples
such as Germany’s Projekt DEAL (also affecting Elsevier) and France’s Le
Consortium Couperin
<https://deltathink.us6.list-manage.com/track/click?u=35fb1e45079f7ee11269d5583&id=46edb2b3cd&e=2ea13dcd72>
(affecting Springer Nature).

These multi-million dollar (or Euro or Kroner) negotiations have in common
the advocacy of increased OA adoption. So we thought we would take a look
at what effects they might have on the market place if the consortia
negotiators have their way and cancellations became commonplace.

*Background and Common Drivers*

Negotiations undertaken by the Netherlands’ VSNU consortium from 2014 are
now seen as a game changer for national consortia deals. Some aspects of
the deals are familiar – such as enterprise-style licensing, multi-year
contracts, and specified price rises, but there are some features which
suggest a shift in balance of power in favor of the buyers:



1.

*Lack of fear about publishers cutting off access to content if
negotiations fail.* Traditionally faculty demands for content have tied
buyers’ hands as they could not walk away from deals and risk being cut
off. However, this is now seen as less of a potential problem. Publishers
do not always choose this path (as with Elsevier and consortia in Germany
<https://deltathink.us6.list-manage.com/track/click?u=35fb1e45079f7ee11269d5583&id=f596421f7c&e=2ea13dcd72>
and South Korea
<https://deltathink.us6.list-manage.com/track/click?u=35fb1e45079f7ee11269d5583&id=97b3c3e6be&e=2ea13dcd72>),
but alternative access methods mean that this is not the problem it once
was. Sweden’s Bibsam, for example, lists
<https://deltathink.us6.list-manage.com/track/click?u=35fb1e45079f7ee11269d5583&id=502733d152&e=2ea13dcd72>
alternative legal suggestions for researchers to find content in its PR.
And, there is the elephant in the room of illegally-supplied content from
SciHub: few we speak to would acknowledge its role publicly, but few doubt
that it gives negotiators an advantage. Even if its usage is overplayed
<https://deltathink.us6.list-manage.com/track/click?u=35fb1e45079f7ee11269d5583&id=afc7944241&e=2ea13dcd72>,
if it incentivizes buyers to take a hard line, the end result is the same
whatever the usage stats.


2.

*An insistence on making deal terms public.* In a fragmented market,
opacity of individual deals obviously helps the sellers to maximise
revenue. But buyers are now beginning to push back. They are increasingly
sharing negotiating
<https://deltathink.us6.list-manage.com/track/click?u=35fb1e45079f7ee11269d5583&id=2b4e7e7fbc&e=2ea13dcd72>
tactics and are also prepared to make transparency a cornerstone of deals.
This helps their negotiating positions, and resonates with their sense of
mission of oversight of publicly funded activities. As well as VSNU sharing
terms
<https://deltathink.us6.list-manage.com/track/click?u=35fb1e45079f7ee11269d5583&id=bf08d147c5&e=2ea13dcd72>,
we also see freedom of information legislation used to obtain information
about costs in countries such as the Netherlands
<https://deltathink.us6.list-manage.com/track/click?u=35fb1e45079f7ee11269d5583&id=23181ff4f0&e=2ea13dcd72>,
the UK
<https://deltathink.us6.list-manage.com/track/click?u=35fb1e45079f7ee11269d5583&id=7bbfaa9943&e=2ea13dcd72>,
Finland
<https://deltathink.us6.list-manage.com/track/click?u=35fb1e45079f7ee11269d5583&id=d5e133e60f&e=2ea13dcd72>,
and New Zealand
<https://deltathink.us6.list-manage.com/track/click?u=35fb1e45079f7ee11269d5583&id=74e10a4dc6&e=2ea13dcd72>.



3.

*Bundling of open access publishing costs with subscription costs.* This is
not new – it was originally pioneered by Springer, CDL, and Max Planck
around 10 years ago. However, the buyers’ press releases cite inclusion of
APCs as a pre-requisite of reaching an agreement. Further, buyers are now
able to use today’s higher rates of OA take-up as an argument to push back
on the subscription price rises within the bundle.


4.

*A questioning of the value of the big deal.* Again, not new – SPARC has
been tracking
<https://deltathink.us6.list-manage.com/track/click?u=35fb1e45079f7ee11269d5583&id=17ba764d33&e=2ea13dcd72>
this for a while – but data suggesting low usage of significant parts of
big deals it is being used as an argument to limit price rises or even step
away from the bundle in favour of a la carte access.

*Putting the cancellations in context*

The changes in negotiating approach may be significant, the cancelled deals
worth millions, and the headlines numerous. But each of the small number of
headline-grabbing cancellations affects just one publisher and together
they represent a tiny fraction of the ~$10bn scholarly journals
market. The SPARC
cancellations list
<https://deltathink.us6.list-manage.com/track/click?u=35fb1e45079f7ee11269d5583&id=a749adffc3&e=2ea13dcd72>
– which does not claim to be comprehensive and covers institutional as well
as consortia activity – shows around 40 cancellations with a median deal
size of $1.2m across the 9 values supplied.

With around 350 consortia licensing content, and many more institutions
outside consortia, there would be a long way to go before these
cancellations have any substantial financial effect on the market.

*Market implications*

Modelling the changes in the market at scale around consortia deals is
particularly challenging because of the confidentiality around the deals.
The few countries where data are available are mainly small. However, the
recently-published European University Association’s EUR Big Deals survey
<https://deltathink.us6.list-manage.com/track/click?u=35fb1e45079f7ee11269d5583&id=6cddb74f23&e=2ea13dcd72>
provides insight into the costs of big deals at scale for the first time.
Representatives of 27 (of 33) member countries provided information
including spend on their top 3 big deals. The data were aggregated to
preserve confidentiality and address differing practices between countries.

Annual spend in 2016-17 on the largest deals totalled €384 million ($425
million at average 2016/17 exchange rates) across 66 periodicals
subscription contracts. This represents a subset of the market, as
respondents only included their largest three deals. 10% of the contracts
included APCs; a further 6% had provision for offsetting. 53% (by far the
largest proportion) were 3-year contracts, with 50% including annual price
rises of between 0 and 4%.

By combining this sample with our own data points, we can develop a model
of effects of consortia renegotiations on the overall market. Table 1 below
shows what the effects might be on 2016-2017 market growth for various
scenarios in big deal subscription rises.

[image: Figure 1]

The table models the effects of an EU-wide roll-out of three pricing
scenarios. Couperin mentioned 8% volume of OA articles in its press release
<https://deltathink.us6.list-manage.com/track/click?u=35fb1e45079f7ee11269d5583&id=0206240553&e=2ea13dcd72>,
so we took that as the most aggressive cost reduction scenario. Underlying
assumptions we have made are based on ratios and proportions of large
publisher market share, EU market share and annual market revenue growth by
aggregating a variety of public and private sources from our Open Access
Data and Analytics Tool. We assumed an underlying journals market growth of
2.5% (including OA) at constant currencies.

If aggressive cuts in consortia prices occurred at scale across the EU, the
models suggest that annual revenue *growth* in the scholarly journals
market could reduce by as much as one-third compared with long term
averages. If prices were capped, *annual growth* could fall by almost 10%.
(Note: this is a reduction in growth, not a reduction in market size, which
will continue to grow, albeit at an anemic rate.)

*Conclusion*

A move to open access appears to be acting as a catalyst, and its uptake is
being used as a wedge to prise apart the big deals. Only 10% of big deals
in Europe include APCs, but there is a possibility of 63% of them doing so
in future, with half the deals up for renewal in the next few years.

There are increasing moves on the part of buyers to take less for granted
and push publishers much harder than we have seen in the past. The power of
collective bargaining is taking hold. Buyers share negotiating tips;
German-run OA2020.org is spreading the word globally; lack of usage in long
tail big deal content is being increasingly studied and discussed. The net
exporters of research in the EU are now well-aware of rising publication
costs, and the EU appears resolute in its drive towards a fully open world.

So, while the few headline-generating consortia negotiations are having
little effect today, it seems conditions are ripe for change. Where
pioneers of hard bargaining make progress, others will feel emboldened to
follow. Nothing “bad” has happened to those who are prepared to walk away
from the negotiating table, so the big inhibitor is falling away.

It seems that the days of the big deal may be numbered.



[image: News]




 *[SNIP]*



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