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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
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Will Consortia Cancellations Change the Market?
Swedish consortium Bibams’s
recent cancellation
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
(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:
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1.
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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
and South Korea),
but alternative access methods mean that this is not the problem it once was. Sweden’s Bibsam, for example,
lists
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,
if it incentivizes buyers to take a hard line, the end result is the same whatever the usage stats.
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2.
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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
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,
we also see freedom of information legislation used to obtain information about costs in countries such as the
Netherlands,
the UK,
Finland,
and New Zealand.
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3.
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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.
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4.
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A questioning of the value of the big deal. Again, not new – SPARC has been
tracking
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.
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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
– 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 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.
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,
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.
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