Weasel's Manual of Apologies for Misbehaving Monopolists
"Marge, dont discourage the boy. Weaseling out of things is important to learn. Its what separates us from the animals...except the weasel." Homer Simpson
How is that again?Geography Professor, Nick Blomley, wrote an editorial called "Is this Journal Worth US$1118?" in Geoforum, an Elsevier journal. Blomley presented data comparing prices and citations for a number of geography journals. Blomley's article inspired an Elsevier spokesperson,
Chris Pringle, to write a rejoinder titled "Price and Value: A Publisher's Perspective", an essay that will appeal to connoisseurs of Weaselsprache the world over. Mr. Pringle explains that "the cost per download has declined fivefold between 1999 and 2005". You have to give the man credit for finding something that grew more than five times as fast as Elsevier prices over this period. Article downloads will do it. The days when we used to walk over to the library to read journals are not so far behind us.
Of course we are still left wondering why it is that Elsevier journals cost about four times as much per article as non-profit journals,
(whose downloads must also be growing about five times as fast as Elsevier prices. ) Mr. Pringle has an answer for that one too. "Some journals rely solely on a limited number of subscriptions whereas others benefit from additional revenue sources as well as subsidies and tax breaks." I suppose that he means that Elsevier journals have fewer subscribers than the cheaper non-profit journals. (What do you suppose could be the reason for that? Reminds me of Lizzie Borden pleading for leniency on the grounds that she was an orphan.) As to subsidies: most professional societies do not subsidize their journals, but collect a substantial surplus from journal operations which they use to sponsor societal activities. Nevertheless they manage to make do with prices that are about a fourth of Elsevier prices.
Maybe its the tax breaks, eh?
If Don Rumsfeld is looking for an apologist these days, he might do worse than to contact Mr. Pringle.
Have you reduced your rate of increase of wife-beating?The British Office of Fair Trade looked into the recent acquisition of Academic Press by Elsevier. They concluded that "there is evidence to suggest that the market for (academic journals) may not be working well" and that prices of many commercial journals "appear high" but also decided that "for now it may not be appropriate for the OFT to intervene in the market." Here is a report on their investigation and here is a newspaper story from the Financial Times, which borrows my ``Fable of the Anarchists' Annual Meeting'' to explain how academic publishers can enjoy monopoly profits at the expense of the academic community.
The OFT report is for the most part competently done and informative, but one might wish that they had been a bit more forthright. The report contains at least one memorable piece of weasel talk that deserves a place in the archive. Seemingly with a straight face, they cite the following explanation from Elsevier for why we needn't worry any more about Elsevier's pricing.
7.2 Reed Elsevier argues that several factors are now acting to constrain pricing
levels. High levels of cancellation can adversely affect a journal’s circulation,
sales profitability and ultimately reputation and the consequent ability to attract
manuscripts. Reflecting increased levels of cancellation, and more general
concerns about pricing increases expressed by the academic community, Reed
Elsevier has, since 1999, committed to maintaining single digit price increases
(7.5 per cent for 2000, 6.7 per cent for 2001 and 6.5 per cent for 2002) in its
invoicing currencies. These price increases still compound to more than 22 per
cent, compared with an expected increase in the US Consumer Price Index of
only eight per cent. Nevertheless, the Report accepts that a point may have
been reached where it is in the interests of publishers, as well as customers, for
the level of price increases to be reduced.
It is embarrassing to see that the authors of the report, who are able economists, should make the mistake of confusing acceleration with increase. The prices per page of Elsevier's journals in economics, which are currently about six times as high as the prices of non-profit journals continue to increase at 6 or 7 per cent per year. Are we really supposed to be grateful that they are not accelerating?
Reducing the rate of increase of prices from stupendous to outrageous is not going to help with the problem. The solution for overly high prices is to reduce prices from outrageous to reasonable. To accomplish this, Elsevier needs some triple-digit decreases in prices.
Weasel's Guide to Demand and Supply
In a speech to the Second ICSU-UNESCO International Conference on Electronic Publishing in Science, Derk Haank, the CEO of Elsevier Science offers a new take on supply and demand theory.
According to Mr. Haank:
"Because the main problem from the past, in my opinion, is not the high price of a single journal subscription. That is a symptom but not the basic problem.
The basic problem is - and it is also the reason why these single items were so high - that fewer and fewer people took a subscription to the journal leaving the remaining customers to fund the whole bill of the system."
If I understand his reasoning, Mr. Haank wants us to believe that universities forced Elsevier to increase their prices by reducing their number of subscriptions. I doubt that you have to be a trained economist to suspect that causality ran in exactly the other direction. Might it possibly be that Elsevier's price increases forced libraries to cancel subscriptions rather than the other way around?
The prices of the ten most-cited commercial economics journals measured in constant dollars have risen by an average of over 10 per cent per year between 1985 and 2002. For the same time period, the real prices of the ten most-cited nonprofit economics journals have increased by 4 per cent per year. In 1985, the price per page of price per page of these commercial journals was about three times the price per page of nonprofit journals. In 2002, it is about six times as high.
During this period, commercial publishers discovered that the elasticity of demand for journals was less than unity. This means that each time that they increased their prices by 10 per cent, the number of subscribers fell by less than 10 percent. So
publishers' revenue (and libraries' costs) rose despite the fact that their number of subscriptions declined. And so Mr. Haank wants us to believe that the basic problem is that some libraries dropped their subscriptions to commercial journals as prices quintupled. Extra Credit Question: What do you think would have happened to Elsevier's prices if legislatures and university administrators had responded to journal price increases by increasing library budgets enough so that libraries could retain all of the subscriptions they had in 1985?
Weasel's Guide to Creative Accounting
Faxon is a large subscription management company that handles academic journal subscriptions. Every year it publishes a prediction of the next year's academic journal prices and an explanation of why they have increased so much. Here are their
explanations for the years 2001, 2002, and 2003 respectively. Each of these years, they need to explain a 10% price increase. They attribute about 2.5% to "general price inflation". Where does the other 7.5% come from? You will be amused to read the explanation. You don't have to be a CPA to find the fallacies here. In fact, Michael Rosenzweig, editor of Evolutionary Ecology Research presented an incisive and entertaining dissection of the illogic in the 2001 edition. As you will see, this didn't stop Faxon from bumbling on with almost the same rationalizations for 2002 and 2003.