Consolidation of the Publishing Industry through Mergers and Acquisitions

Subscription prices are likely to increase as a result of publisher mergers and acquisitions.

Dr. Mark J. McCabe provides this analysis of the effects of two major publisher mergers:

During the sample period (1988–1998) two significant mergers occurred: one between Pergamon (57 biomedical titles) and Elsevier (190) and the other between Lippincott (15) and Kluwer (75). To estimate the impact of these mergers on the prices of the biomedical journals being studied, a subset of data from the larger sample of medical libraries was analyzed. According to these empirical estimates, each of these mergers was associated with substantial price increases; in the case of the Elsevier deal the price increase was due solely to increased market power. For example, compared to premerger prices, the Elsevier deal resulted in an average price increase of 22% for former Pergamon titles, and an 8% increase for Elsevier titles. This asymmetry probably reflects the corresponding asymmetry in premerger journal portfolio size for the two firms. That is, Pergamon’s relatively small biomedical portfolio prevented it from realizing it could profitably set prices at the same level as Elsevier for journals in the same class. In the Lippincott/Kluwer merger, a 35% price increase in former Lippincott titles was due in part to increased market power, but also due in part to an apparent increase in the inelasticity of demand for the titles. That is, after the merger, Lippincott titles were even less likely to be cancelled.

It is not unreasonable for commercial publishers to produce revenue, but high profit margins have made it cost prohibitive for most libraries to maintain current journal subscriptions, let alone being able to acquire new journal titles.

The result is that libraries are forced to creatively juggle materials budgets and discover ways to acquire only the necessary scope of literature for a given discipline. Sources that enrich the collection usually become a luxury and often fall by the wayside, only to leave holes in the collection, thus neglecting the information needs of the community the library serves.