Björn Brembs

The market power of academic publishers has been a concern for all those
academic fields where publication in scholarly journals is the norm. For
most non-economist researchers, the anti-trust aspects of academic
publishing are likely confusing and opaque.

For instance, libraries and consortia are exempted from organizing
tenders for their publication needs as each article exists only in one
journal with one publisher. This is called the single or sole source
exemption from procurement law and essentially means that academic
publishers have monopolies on each of their articles and hence each of
their journals.

At the same time, this conglomerate of monopolies is often referred to
as the
"[publishing](https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0253226)
[market](https://link.springer.com/article/10.1007/s12525-017-0250-9)",
where there is market consolidation or concentration, leading up to an
"[oligopoly](https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0127502)".

So which is it now, a market with competing providers or a conglomerate
of monopolists?

The distinction lies in the perspective taken. From the perspective of
libraries and readers (the demand side), neither publishers nor journals
can be substituted and so the publishers appear, effectively, as
monopolists. From the perspective of publishers (the supply side), they
offer content across disciplines and effectively compete for the money
available in the sector. However, as the libraries and readers do not
have any choice but strive to achieve maximal coverage of the
literature, this competition does not depend on the quality of the
products. Instead, publishers devise pricing strategies trying to obtain
the largest piece of the pie. The notorious "Big Deal" bundles, where
publishers aim to sell increasingly large journal packages, irrespective
of the use of the journals for the institution, are an example of such a
pricing strategy.

In a sports analogy, one could see a sector with demand-side
substitutability as a gymnastics competition, where gymnasts (companies)
aim to present sets that are more difficult and contain less mistakes
(high quality products) than their competitors, in order to gain points
(market share) from the judges (customers). An academic publishing
sector with only supply side competition is more like a hot dog eating
competition, where libraries and readers would be the hot dogs.

Any analogy fails at some point, so probably more fitting are statements
from experts in the field. The European Union has, of course, been very
active in this area. For instance, a crucial aspect of market regulation
is merger control. In a document from 2001, Dr. Atilano Jorge Padilla
reports to the European Commission on "[The role of supply-side
substitution in the definition of the relevant market in merger
control](https://ec.europa.eu/docsroom/documents/2658/attachments/1/translations/en/renditions/native)"
and writes:

> There is a wide consensus among competition authorities, legal experts
> and economists  
> about the need to refer to demand-side substitutability for defining
> relevant markets. The  
> same unanimity, however, does not exist in connection with supply-side
> substitutability. On  
> the contrary, there seems to be substantial controversy as to the
> relevance of supply-side  
> constraints for market definition

This is consistent with subjective experience for any customer: the lack
of choice is a defining aspect of planned economies as opposed to
market-based economies where consumers always choose among competing
products. It thus makes no sense to call a sector where there is no
supply-side substitutability a 'market'.

Since the EU common market aims to protect consumer choice, EC market
reports are an excellent source for professional analyses of the
academic publishing sector. Over a number of years now, various
documents have been produced that corroborate the lack of demand-side
substitutability and hence the characterization of the academic
publishing sector as a conglomerate of monopolies, rather than a proper
market.

Already when analyzing a [merger case before the EC in
2003](https://ec.europa.eu/competition/mergers/cases/decisions/m3197_en.pdf),
the verdict was clear:

> From a demand-side point of view, it is rare that two different
> publications be viewed as perfect substitutes. There usually are
> differences in the coverage, comprehensiveness and content provided by
> two different publications. From the point of view of functional
> interchangeability, two different publications could hardly be
> regarded as substitutable by the end-users, the readers.

or

> Consumers will rarely substitute one publication for another in
> reaction to their relative prices. In this case, a strict demand
> approach would lead to the definition of a multitude of relevant
> markets of imprecise boundaries and small dimensions.

In a document entitled "[Study on the economic and technical evolution
of the scientific publication markets \[sic\] in
Europe](https://op.europa.eu/en/publication-detail/-/publication/1058c2f8-5006-4d13-ae3f-acc6484623b9)"
the authors come to similar conclusions:

> substitution possibilities across journals are limited, so that
> publishers do have significant market power.

or

> Since researchers do not see the various publishers as good
> substitutes and need access to all good journals, consortia only
> introduce a relatively weak 'buyer-power' counterpart to the rising
> concentration in the publishing market.

Also in 2015, again on the occasion of a [planned
merger](https://ec.europa.eu/competition/mergers/cases/decisions/m7476_20150331_20310_4221794_EN.pdf),
the EC confirmed their earlier findings that

> from a demand-side point of view, it is rare that two different
> publications can be viewed as perfect substitutes, as there are
> differences in the coverage, comprehensiveness and content provided.
> Therefore, in terms of functional interchangeability, two different
> publications could hardly be regarded as substitutable by the
> end-users, the readers. On that basis, the Commission found that
> consumers will rarely substitute one publication for another following
> a change in their relative prices and concluded that a strict demand
> approach would lead to the definition of a multitude of relevant
> markets of imprecise boundaries and small dimensions.

or

> Publications in different academic subjects are indeed not
> substitutable from the readers' perspective.

Taken together, over almost 20 years now, the EU has consistently come
to the conclusion that academic publishing is not a market in the sense
that it does not provide for customer choice (i.e., demand-side
substitutability). All of these consistent documents and the fact that
publishers obviously enjoy the single/sole source exemption, serve to
fully justify the term 'monopolists' when speaking of academic
publishers.

It is therefore not surprising, if now, after so many decades of
established fact, scholarly organizations such as the German Council for
the Sciences and Humanities also come to the
[conclusion](https://www.wissenschaftsrat.de/download/2022/9477-22_en.pdf?__blob=publicationFile&v=14)
that

> academic publications are a unique, non-substitutable commodity.
> \[...\] a journal title can give a publisher a non-competitive market
> position \[...\] Functioning, competition-driven market structures do
> not exist

Inasmuch as current developments may serve to, one day, establish
demand-side substitutability, e.g., by transforming academic publishing
from a content-based to a service-based sector in the future, it is
paramount to emphasize that this must entail that the single source
exemption must be dropped and be [replaced by proper tender
processes](https://bjoern.brembs.net/2022/03/why-publication-services-must-not-be-negotiated/),
as is standard operating procedure required by law for all other,
digital or non-digital products and services where demand-side
substitutability exists.


The market power of academic publishers has been a concern for all those academic fields where publication in scholarly journals is the norm. For most non-economist researchers, the anti-trust aspects of academic publishing are likely confusing and opaque. For instance, libraries and consortia are exempted from organizing tenders for their publication needs as each article exists only in one journal with one publisher.

Messaggi di Rogue Scholar

EU: academic publishers are monopolists