FAQ

 

What is the Information Access Alliance?

Why should libraries care about this issue?

What is “bundling” and what harm does it do?

What is "market power" and how does it affect the academic publishing marketplace?

Aren’t mergers just a fact of life in the era of giant conglomerates? What’s different about academic publishing?

If mergers create companies similar in scale to Elsevier, the industry giant, won’t they act as a counterbalance to Elsevier’s dominance?

Does the emergence of new publishing models make antitrust concerns irrelevant?

What does the IAA think antitrust intervention can accomplish?

What can libraries do to help?


What is the Information Access Alliance?

  • The Information Access Alliance (IAA) is an initiative of leading U.S. national library organizations to address market problems in scholarly and legal publishing.

  • Chief among the problems that IAA is concerned about are: high prices of science, technology, and medical (STM) journals and legal serials; and anticompetitive practices by a small group of large publishers. We believe product bundling practices and unabated industry consolidation have reduced competition in the market.

  • We support a competitive, vibrant, and diverse academic publishing marketplace in which the interests of research, academic institutions, and the public are well served. To achieve this, we believe active enforcement of antitrust laws is required of governmental authorities.

  • Our members include: the Association of Research Libraries, the American Library Association, the Association of College and Research Libraries, the American Association of Law Libraries, the Medical Library Association, the Special Library Association, and SPARC (the Scholarly Publishing and Academic Resources Coalition).

  • IAA works with legal experts and economists to advocate adoption of new, more appropriate antitrust review standards by state and federal antitrust enforcement agencies.

  • Over the years, IAA and its members have presented their position to various federal, state, foreign, and international regulatory agencies and legislators, developed supporting briefing papers (including Publisher Mergers: A Consumer-Based Approach to Antitrust Analysis) and relevant data, and co-hosted with the American Antitrust Institute a symposium on antitrust issues in academic publishing.

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Why should libraries care about this issue?

  • Bundling, mergers, and other anticompetitive practices in the STM and legal serials publishing markets lead to higher prices and reduced choice. This is a threat to the mission of libraries—to provide users with the information they need.

  • Reduced access to information will have a negative impact on the health and welfare of our society.

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What is “bundling” and what harm does it do?

  • Under the kinds of bundling arrangements IAA believes are anticompetitive, libraries enter long-term, often confidential agreements with large publishers for an electronic subscription to many journals. Usually the bundle is sold with the requirement that a library maintain its historic “spend-level” for hard-copy subscriptions with the publisher. These arrangements have come to be known as the “Big Deal.”

  • Although there are numerous problems associated with the Big Deal, the fundamental problem is not bundling itself, but rather the inclusion of unneeded content. Content the library wants is bundled with content that is less desirable. Thus, while unit prices may be relatively lower in the bundle, the library is paying for material it does not need. In addition, libraries must agree to multi-year subscription contracts and to cancellation restrictions that prohibit substantial reductions in the numbers of titles purchased.

  • Such practices in academic publishing limit customer choice, hurt small publishers, and create barriers to market entry by new journals. They threaten not just the users of library services, but also small publishers (such as scholarly societies) who are being squeezed out of the market by bundles.

  • Because bundles are offered mainly by giant publishers of thousands of journals, they lock up substantial portions of library budgets. According to a 2006 survey of Association of Research Libraries (ARL) members, 93 percent of respondents reported they had licensed bundles from at least one of the five largest journal publishers. The majority had multiple bundle contracts.

  • When the annual price rise of a bundled subscription exceeds the subscribing library’s annual materials budget increase, sustaining the bundle claims an expanded share of the library’s spending. The library must offset the increased cost of the bundle by canceling journal subscriptions from publishers that are too small to offer a bundle. Without regulatory action, these smaller publishers may be forced to sell their journals to the publishing giants or to go out of business.

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What is "market power" and how does it affect the academic publishing marketplace?

  • Market power is a term economists use to describe the extent to which a firm (known as a “price maker”) can raise prices without losing its customers to competitors. Market power is limited by antitrust regulations in many countries, including the US. Monopoly is one form of market power.

  • Over the past two decades, several giant “price maker” STM publishing firms have used their market power to drive up prices at nearly four times the inflation rate and well in excess of library budget growth.

  • Bundling practices are increasing the market power of the market’s giant publishers.

  • With giant publishers absorbing a growing share of libraries’ budgets, there is less money available to spend with smaller publishers. IAA is deeply concerned that the growing market power of the giant publishers will force smaller publishers—such as the thousands of scholarly societies that publish one or a few journals—out of the market.

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Aren’t mergers just a fact of life in the era of giant conglomerates? What’s different about academic publishing?

  • Mergers of academic publishing giants have not been blocked by the U.S. Department of Justice or state attorneys general because the standard they use to analyze mergers does not recognize that buying practices of libraries are different from those of other consumers.

  • The Justice Department standard does not take into account that, although journals or serials may not be substituted for one another (since each article is unique), they nevertheless compete with one another for limited library funds. Hence, the conclusion of Justice officials that there is little overlap between two publishers—and thus no reason to block a merger—does not take account of the actual situation. The need for a new standard is presented in an IAA white paper.

  • There is ample evidence that mergers of STM journal and legal serial publishers have resulted in higher prices. (Several papers on this topic have been developed by Mark McCabe, Assistant Professor of Economics at Georgia Institute of Technology.) In competitive markets where there are substantial scale economies, mergers should result in reduced prices. But such economies have not benefited buyers of STM journals or legal serials markets.

  • It is within the Justice Department’s power to adjust and refine its standard. It is also within the power of state attorneys general to intervene. While traditional analysis may be suitable for most markets, the characteristics of academic publishing markets are such that strict adherence to historical review standards are limiting the public good generated by robust access to a wide array of research writings and data.

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If mergers create companies similar in scale to Elsevier, the industry giant, won’t they act as a counterbalance to Elsevier’s dominance?

  • Since the markets for individual STM journals and legal serials are not competitive, creation of additional large STM publishers (as with the combining of Springer and Kluwer in 2004 and of Wiley and Blackwell in 2007) will not create pressure on Elsevier to lower prices or modify its licensing terms. In fact, since mergers in these markets typically result in higher prices for the affected titles, Elsevier’s best profit-maximizing response would be to raise its prices as well.

  • Like Elsevier, additional large companies can bundle their products in ways that discourage cancellations and force libraries to cancel titles from smaller publishers.

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Does the emergence of new publishing models make antitrust concerns irrelevant?

  • The IAA partner organizations have been leaders in actively exploring and promoting alternatives to current publishing models, including open access journals and open archives. Open access journals are peer-reviewed journals whose content is made freely available on the Internet upon publication for use by anyone anywhere for any purpose as long as the authors are properly acknowledged. Open archives are digital infrastructure intended to provide online access to and preservation of the intellectual assets of an institution or a discipline.

  • It is not clear how long it will take for these new models to replace the current system. Moreover, it is possible that if commercial companies were to adopt an open access model where authors rather than libraries paid, mergers could still be an issue. A very large company that owned many key open access journals in a given field could raise the fees charged to authors or their institutions.

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What does the IAA think antitrust intervention can accomplish?

  • IAA seeks reduction or elimination of the anticompetitive features of bundles that are today prevalent in the library marketplace

  • We also aim to open the market to new entrants and ensure it is possible for small publishers to sustain themselves. Today the growing market power of the giant publishers is undermining the opportunity for these players to compete in the library market.

  • We believe federal and state authorities should actively review mergers and acquisitions in the fast-consolidating academic publishing sector. When appropriate, combinations should be blocked or reversed.

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What can libraries do to help?

  • We encourage libraries to help educate their communities on the impact of bundling, mergers, and other anticompetitive behavior among STM and legal serials publishers. In particular, help researchers understand the impact of these practices on the outlook for journals published by small societies.

  • Send us any anecdotes you might have on how mergers or bundling practices have affected your ability to provide your users access to research resources.

  • Communicate your concerns to Congress, the U.S. Attorney General, and your state attorney general.

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