Is it time to nationalise academic publishers?

With state intervention back in vogue, and publishers’ profit margins still sky-high, journals could be the next monopoly to come under scrutiny

March 2, 2018
John McDonnell
Source: Alamy

After decades of free-market ideological dominance on both sides of the Atlantic, nationalisation (or at least anti-monopoly state intervention) is back on the agenda.

“Rail, water, energy, Royal Mail, we’re taking them back,” shadow chancellor John McDonnell​ (above) told a Labour Party on the brink of power last year. Even the Financial Times has run a series of investigations asking hard questions about the wisdom of past privatisations.

Meanwhile in the US, monopoly-busting, in industries ranging from health insurance to airlines, has become a rallying cry of Democratic Senator Elizabeth Warren. Critics have also taken aim at tech companies, which Warren has compared to the US oil, sugar and railroad trusts of the 19th century, accusing them of exploiting the scale of their digital networks to create natural monopolies over advertising. Eye-watering profit margins for Google and Facebook (24 per cent and 50 per cent respectively) are the result.

As many researchers are uncomfortably aware, similarly whopping margins, which aren’t supposed to exist in a competitive free market, are alive and well in academia. Last week, Elsevier, the world’s biggest academic publisher, announced profits of more than £900 million, and unchanged margins of 36.8 per cent.

Its rivals are little different. The academic publishing division of Informa, which includes publishers Taylor & Francis and Routledge, made more than £160 million in 2016, with a profit margin of 38 per cent. Wiley managed a margin of 29.6 per cent in 2017, raking in $252 million (£183 million)*. Between these three companies, that’s more than £1.25 billion a year siphoned off from the research system annually: not far off enough to fund another University of Oxford.

Some of this is doubtless reinvested in new publishing tools. But hundreds of millions go to shareholders (Informa and Elsevier’s parent company RELX collectively paid out nearly £900 million in dividends), while tens of millions more go to executives (the boss of RELX was paid more than £10 million in 2016).

Complaints about publishers’ profits are far from new. In 1998, The Economist hoped that, with the rise of electronic journals, “the days of 40% profit margins may soon be as dead as Robert Maxwell”.

But with a change in the political wind – and a sense that all other measures have failed to bring publishers’ profits to heel – I wonder if we might start to see calls for the likes of McDonnell or Warren to intervene.

Take open access. There was once hope that switching to paying per article published, rather than for bulk subscriptions to closed journals, might reduce costs and perhaps slim margins.

But there are few signs of this happening. In the UK, university libraries are paying more than ever for journals despite speedy progress towards open access. Average article processing charges (the fees paid to publish a paper open access) are increasing at more than 5 per cent a year. Nor does the rise of the pirate site Sci-Hub seem to have dented margins.

Indeed, it is possible to imagine a world that has switched entirely to open access, yet publishers’ profits are as high as ever. The reason, as argued by Alex Holcombe and Björn Brembs, is that publishers control prestigious, legacy journals with high impact factors. Researchers are compelled to publish in these journals for the sake of their careers, even if they are more expensive than alternatives (they point to Scientific Reports, which has used the Nature brand to help squeeze out the cheaper, near-identical PLOS One).

This points to academic publishers’ rather unusual form of monopoly. It is not a particularly concentrated market: even the biggest player, Elsevier, points out that it publishes only 17 per cent of all articles. Nor do publishers control the means of distribution (ie, the internet), like water companies might control pipes. Authors have plenty of options if they want to publish elsewhere. It’s true that no one is forcing you to pay $5,000 to publish in Cell Reports.

But academics are trapped inside a giant prisoner’s dilemma: no one wants to be the first to publish in a cheaper journal that won’t look as good on their CV (especially if you’re not actually spending your own money). The exceptions are instructive: Tim Gowers, the Cambridge mathematician, boycotted Elsevier in 2012 – but with a Fields Medal, he probably doesn’t worry too much about his impact factor.

Of course, the even deeper problem here is a reliance on impact factors and journal titles as a proxy for academic quality. But until that fiendishly difficult problem is solved, absent of government regulation, the now completely routine annual loss of hundreds of millions of pounds to publishers’ shareholders is here to stay. 

Some solutions have already been put forward for the likes of Google and Facebook. The academic Jonathan Taplin suggests regulating them like a public utility, potentially controlling prices and forcing them to spend a fixed proportion of profits on freely available research and development.

Still, if frustrated researchers do begin to implore politicians on the left to help them break the power of big bad publishers, I wonder how sympathetic a hearing they will receive. Academics must bear some of the responsibility for publishing’s many dysfunctions. McDonnell or Warren might well ask: how have such clever people ended up in such a mess?

*I originally reported that Wiley's profit margin was 74 per cent; however, having been contacted by another journalist who has been over their accounts before, a much better way of calculating profits gives a margin instead of 29.6 per cent. Still high, but not quite higher-than-Facebook high. 

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Reader's comments (8)

The problem would be easily solved if everyone just stopped publishing in Elsevier journals. You can sign the initiative started by the great mathematician, Tim Gowers, here: The survival of companies like Elsevier is just one of the many corrupting effects of obsession with metrics.
The 4 largest academic publishers together make up less than 50% of the market. I don't know of many economists that would recommend nationalizing a thriving, competitive industry.
It's not a competitive industry in any meaningful sense of the word. Having said that, don't nationalise, just takes steps to deflate the profiteering of Elsevier et al (most of whose revenues comes from tax payers) by taking sensible steps to encourage open access publishing by academics. Step One would be to put Professor Sir Timothy Gowers, if he would be willing, in charge of a change programme to accelerate the move to real (ie non APC) based Open Access.
It does seem that the behavioral dynamics of the publishing market support the status quo. However, this does not diminish the viability of Open Access:
Nationalize? an then push this too in the mire of never-ending bureaucracy and paperwork? No, the right way is to compete. Governments and consortia should start their own Open Access journals, set it up the same way, and compete in the market. Only strong competition kills any market behemoth. Nationalizing will bring in political influences and agenda into play, and science has had just enough of it already.
Why is this outrage towards specific journals and publishers when the impact factor is created by Clarivate and made powerful by the institutions that professors work at and thus simultaneously, the authors of these papers?
A thought provoking and emotion eliciting read ... Raises several valid and current as well as long-standing burning issues. Several speculations on this one and not listed in any order. Perhaps a one-size-fits-all approach is not the best solution, and nationalization might introduce the monster called red tape as well as lead to excessive political interference and both don't sound too appealing. Pushing for a greater connect between research and policy is one thing and nationalizing is another. The people in the system are as culpable as the system itself - which is probably how such clever people (quote) ended up here today. True that unless we stop saying that publishing in a high impact journal is the only thing that will count as progress in a researcher's career, we might just be logging an endless run on the hamster wheel and dealing with that prisoner's dilemma the post talks about. The fact that we are talking openly about these things and questioning what we got is a big stride in itself. A change management plan and a sort of blueprint for the way ahead sound great but it may need to accomodate a lot of customizations along the way. Getting publishers to justify their profits and the taxpayers' investments through "give back to the community" avenues (such as demonstration of impact, use of alternative formats like lay summaries for video abstracts to reach out to laypeople, adopting some form of open access if not embracing it completely, author engagement, etc.) Could work as a great way to transfer the pressure back to publishers. And given how open access is finding it way into every debate about scholarly publishing, we seem to be headed towards a wider acceptance and implementation of "open" and this includes policymaking, research data, research publications...essentially aspects that put pressure on publishers to some extent. But it might be a while until we get rid of all our problems. Opinion pieces like these are a fantastic outlet for channeling thoughts opinions and ideas about things that matter!
Nationalise? it does not really make any difference and it will not necessary affect the<a href=""> status quo</a> of how publishing and marketing is done.