An article by Ian Sample in the June 17 Guardian summarizes a paper by Theodore Bergstrom et al.published in the Proceedings of the National Academies of Science (reference and abstract below) about how academic publishers price their electronic journals when selling access to libraries (and hence members of a subscribing university).

Although many for-profit academic publishers keep the prices of their library contracts secret (they do this so they can charge different prices to different universities), state universities are required by law to divulge this information under the Freedom of Information Act. Using that , Bergstrom et al. wrote to 55 university libraries and 12 library consortia (e.g., the University of California system) to find out how much they paid for their journals (often sold as “bundles: groups of journals published by a single academic publisher).  They got information for 360 contracts. The the results are disturbing, especially with regard to private publishers like Elsevier versus nonprofit publishers like Oxford University Press. They also divided universities into three classes:

• Class 1: “Research extensive” universities that are highly devoted to research and award many Ph.D.s
• Class 2: “Research intensive” universities that award Ph.D. but are not devoted as much to research
• Class 3: “Master’s” institutions that award at least 50 master’s degrees but fewer than 20 Ph.D.s per year

They also got prices for six for-profit publishers of academic journals: For-profit publishers:

Elsevier

Springer

Wiley

Emerald

Sage

Taylor & Francis

The nonprofit publishers included Oxford University Press, Cambridge University Press, the American Chemical society, and a whole group of publishers (U.S. National Academy of Sciences, etc.) listed in the second table below. To make things equitable, the authors did legwork calculating how many times each firm’s journals were cited, so that the price of an electronic bundle for a library sold by a publisher like Springer or OUP can be expressed as “dollars charged per times articles in their journal was cited”. This gives an idea of how much “bang for the buck” university libraries pay when they buy a contract. In other words, that’s how much they pay for the scientific value of the journals, as measured by the impact those journals make on the field. First, here are Bergstrom et al.’s mean prices (most of these are negotiated for profit-making journals) for “bundles” of the press’s journals. Bundle sizes vary from just a few of the publisher’s journals to the entire catalogue. This is the mean price across all bundles bought, not weighted by citation:

You can see two things from the above: contracts, especially for for-profits, are extraordinarily expensive. You pay over a million bucks for a year’s access to an average Elsevier bundle if you’re a top-flight research university. Prices are much less for less research-intensive schools, but still appreciable. Remember that university libraries have to buy many of these bundles, so you see why tuition costs are rising (journal bundle prices go up 5-10% per year for the profitmaking firms). You can also see that, with the exception of Emerald (whose bundles may be small; I don’t know), the nonprofit publishers charge much less: $62,743 max for the American Chemical Society bundles for a top-flight university. Now let’s look at the important figure for a bundle-buying university: the per citation cost. First I’ll give Bergstrom’s table for NONPROFIT publishers.

These are divided into three types of bundles: those for which the individual library negotiates a bundle price (“negotiated pricing”), those publishers that simply price journals by the size and nature of a university (“tiered pricing”: set prices, no negotiation), and those journals that charge every university the same for a bundle of journals (“uniform pricing”). Again, this is the “scientific bang per buck” cost of buying a bundle. For the nonprofits, the library pays usually less than a dollar for each article cited in a bundle (Cambridge University Press is an exception, though my own university’s press and the American Psychological Association are higher. Overall, there’s not much of a price differential among the three types of universities.

Here are the figures for for-profit publishers. Look at the difference!

The mean prices are higher except for master’s universities:  I calculate $5.93 for the research-extensive universities, $2.10 for the research intensive universities, and only $ 0.94 for the master’s universities. The most research-oriented universities pay over three times the money per citation from for-profit publishers than from nonprofit publishers. And of course those are the universities that buy most of the bundles, because they require access.

The prices for research-extensive universities are ludicrous, for production costs are nowhere near that different for profits and nonprofits (I expect publishers’ representatives to issue statements explaining why they must charge so much!) It’s pure profit. And we know this because the article also reports the profits for Elsevier, Springer, and Wiley which were, respectively, 36%, 33.9%, and 42% of total sales revenue. (Nonprofits, of course, make 0% profit.) That is a huge profit for any type of organization. Publishers like Elsevier and Springer and Taylor & Francis are simply gouging their library customers, and that’s why they keep bundle prices secret. As the article reveals (judicious inquiry will yield you a copy), universities can bargain for bundles, but since the universities contracts with many for-profit publishers specify that all prices are secret (imagine if you couldn’t tell your neighbor what you paid for a car!), nobody knows how to bargain. It’s a monopoly! Ian Sample sums up this gouging in the Guardian:

___________________

Reference: Bergstrom, T. C., P. N. Courant, R. P. McAfee, and M. A. Williams. 2014. Evaluating big deal journal bundles. Proc. Nat. Acad. Sci. USA, early edition, ww.pnas.org/cgi/doi/10.1073/pnas.1403006111