Academic journal article Economic Inquiry

Collection Sales: Good or Bad for Journals?

Academic journal article Economic Inquiry

Collection Sales: Good or Bad for Journals?

Article excerpt

I. INTRODUCTION

Publishers perform several valuable tasks that an academic journal cannot usually do well on its own, such as marketing, negotiations with libraries, maintaining a Web site, and so on. When it acts for several journals, one function a publisher can perform is bundling. In this article, I discuss the pros and cons of bundling journals for sale to libraries (or "collection sales"). The perspective taken is that of an individual journal rather than overall welfare. For instance, bundling may be used as a vehicle for exclusion of new journals or rival publishers, but this is not discussed here. (1) In particular, in this article, the concern about possible high bundle prices from publishers is only that a journal's circulation may not be as large as it desires rather than that libraries may be exploited.

Library expenditure on scientific journals has significantly increased in recent years. (2) This has been the result of two main factors: significant merger activity among publishers, and the increased use of bundling as a marketing device as facilitated by the electronic distribution of journals. Regarding the former, Dewatripont et al. (2007) show that journal prices tend to be higher in those scientific fields where publishers are more concentrated. However, this article focuses on the second reason for inflation in library expenditure. The introduction of bundling as a business model is a powerful force for price rises, especially when combined with a concentrated market structure in which publishers each distribute many journals. When a publisher distributes many journals, packaging these journals as a bundle acts significantly to reduce the dispersion of libraries' willingness to pay for the bundle compared with their willingness to pay for individual journals. This reduces the asymmetry of information between publisher and library, which has two effects: first, it means that more libraries will gain access to a given journal (a positive efficiency effect) and second, a commercially minded publisher will better be able to extract a library's willingness to pay for the bundle (a monopoly exploitation effect). It is quite possible that bundling acts to improve overall welfare but transfers surplus from libraries to publishers (and then possibly onto the journals themselves). (3)

Journals differ in their ownership and their objectives. In this article, a journal is termed "for profit" if it aims to maximize its profit. Usually, such journals are owned by commercial publishers. The main alternative discussed here is that of "nonprofit" journals, which are assumed instead to wish to maximize their "reach" subject to a break-even constraint. (4) (Reach can be measured in various ways, but here, we take it to be the number of libraries that have access to the journal.) Such journals are usually owned independently of commercial publishers or owned by less commercial publishers (such as some university presses). In practice, the line between for-profit and nonprofit journals is not always so easy to draw. For instance, a journal that does not have profit as its ultimate objective may benefit when it receives more revenue, as a better financed journal may end up publishing better articles (for instance, by being more efficient at processing submissions or by paying authors when they publish an article in the journal), and this may maximize its reach or impact in the long term. (5) Nevertheless, in the formal model in Section III, I ignore these subtleties, and suppose that journals are exogenously partitioned into for-profit and nonprofit journals.

Subscription prices can vary hugely between these two kinds of journal. Bergstrom (2001) reports that in 2000, the six most cited economics journals were all nonprofit journals and their (stand-alone) library subscription prices were then an average of $180. Five of the top 20 most cited journals were owned by commercial publishers and their average subscription price was then $1,660 per year. …

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