The market for medical journals is anticompetitive, says expert

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The market for medical journals is anticompetitive, says expert

Richard Smith BMJ

The market for scientific and medical journals is suffering from "true market failure," says Mark McCabe, an economist who worked for the US Department of Justice’s antitrust division for seven years.

The result, said McCabe, who is now an assistant professor at the Georgia Institute of Technology, is that prices for journals have risen around 200% in the past 10 years, but the number of journals has fallen by only 5-10% (Information Today www.infotoday.com/it/dec02/poynder.htm). Libraries have met the increases by cutting other parts of their budgets, including the purchase of books.

McCabe was assigned by the Department of Justice to look at the merger between Wolters Kluwer and Reed Elsevier in 1998. Traditional economic models suggested that the merger was not troublesome, but McCabe was struck by the vociferous protests from scientists and librarians. The answer, he concludes, is to understand that libraries purchase not individual titles but portfolios, collections of journals. Then it becomes clear that the market is anticompetitive.

Britain’s Competition Commission looked at the 2001 takeover of Harcourt by Reed Elsevier and concluded that it should not be blocked, although one member of the three person inquiry did conclude that the proposed merger might be expected to operate against the public interest.

The problem, says McCabe, is going to get worse as publishers sell not individual titles but bundles of electronic journals. Reed Elsevier’s bundle, Science Direct, includes over 1700 journals. If a publisher managed to reach more than 50% of the market then it would have "super market power."

"Effectively," says McCabe, "the publisher could say, ‘Either spend all of the budget . . . on my 60% . . or you can go and spend your entire . . . budget on the 40% of stuff out there that is not in my budget.’" The shift to digital bundles is likely to "precipitate the exit of smaller publishers."

"Billions of dollars," says McCabe, "are spent on these journals, most of which is going into shareholders’ pockets . . . This is a bad thing for society [which funds most of the research published in the journals.]"

"Antitrust enforcement alone is not going to fix the market," says McCabe. Instead, organisations like the National Science Foundation ought to invest some of their funds in a new journal initiative. "Unlike most markets the non-profit sector does a better job than commercial publishers in almost all dimensions of performance."

The Public Library of Science, which has been campaigning to produce scientific research free on the web, has just announced that it will publish two peer reviewed online journals on biology and medicine (4 January, p 11).

A spokesman for Reed Elsevier said: "We are aware of Professor McCabe’s opinion on the STM [science, technology and medicine] market, but do not share it. We believe that the current business models are adequate and working in the interests of end users. We are actively engaged in the discussion of future business models throughout the industry with many partners at many levels, particularly with various library customers. Elsevier’s acquisition of Harcourt was intensively investigated by both the DOJ Antitrust Division and the UK Competition Commission and was cleared without any regulatory conditions being imposed."

Competing interests: RS is chief executive of the BMJ Publishing Group, which is a small to medium sized publisher that profits from the current market but is threatened by the large publishers. He submitted evidence to the Competition Commission against the takeover of Harcourt by Reed Elsevier.

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Open Access: Thinking Beyond: Scaria Vinod; bmj.com, 25 Jan 2003 [Full text]

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The market for medical journals is anticompetitive, says expert

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