Cost-cutting librarians and computer-literate professorsare bypassing academic journals—bad news for Reed Elsevier.

The Internet'sfirst victim?By John R. Hayes

IT'S H.\iw TO lALAGlNK a Sweeter busi-ness than publishing academic jour-nals. The editorial content is contrib-uted free of charge by scholars desper-ate to publish to get tenure. Schoollibraries are automatic customers—professors insist on it. A one-yearsubscription to Neuroscience, pub-lished .24 times a year, costs $3,775.The 34-times-a-year Gene costs$5,500. And Brain Research, at 114issues a year, costs $14,000.

The titles mentioned above are just3 ofthe 1,100 academic journals pub-lished by Reed Elsevier, the largestsuch publisher in the world. Based inLondon, Reed Elsevier is a joint ven-ture between Britain's Reed Interna-tional Pic. and Holland's ElsevierN.V. Neither parent company hassignificant assets other than theirholdings in Reed Elsevier.

With total revenues estimated at$5.5 billion this year. Reed Elsevieralso publishes professional directo-ries, medical publications and trademagazines. It bought the Lexis-Nexisdatabase business from the MeadCorp. for $1.5 billion in 1994, butacademic journals are far and away itsmost profitable enterprise. On reve-nues last year of $600 million. ReedElsevier's academic publishing opera-tion probably earned $225 millionbefore taxes, a pretax margin of nearly40%. Last year the rest of Reed Else-vier earned 20% pretax on revenues of$4.5 billion.

Is the party over.' It may be nearingits end. The Internet is closing in.

Two years ago Louisiana State Uni-versit)''s librar)' canceled subscrip-tions to 1,569 scholarly journals thatcost $446,000, of which $88,427went to Reed Elsevier. In return,

200Forbes • Decembe s,l

LSU's libraiy guaranteed copies of in-di\'idual articles that any professor orgraciuate student \\ anted w ithin twodays. Over the next year teachers andstudents requested 2,092 articlesfrom 936 publications not in the l.si'libran. The library was able to pro-cure these articles for just S25,000 incopyright and deli\ en' fees.

This year l.su clitninatcd the libra-r\''s intermedian- role. Now some10,000 professors and grad studentscan log on to the Internet to browsethe tables of contents of 17,000 aca-demic journals. With a click they can

order anything not available on cam-pus directly from the UnCover Co., aDcnxer-based article retrieval compa-ti\' that puts tables of contents on theInternet. UnCo\'er faxes the articlesto professors and students within 24hours. Average cost at LSU: $13 perarticle. "We're a little bit ahead ofwhere the rest of the countiy isgoing," sa\'s I.SU libraiy's AssistantDean Chuck Hamaker.

Reed Elsevicr doubts the trend willturn into a rout. The professors, itinsists, need its products. "Tenuredepends on a peer group saying that a

ABOVE:

Reed Elsevier'sAmsterdam cochair-man, HermanBruggink"The market weserve is perfectlyhappy withthe productwe deliver."

LEFT:

Reed Elsevier'sLondon cochairman,Ian Irvine"Academics arewhat they are.They areacademics, notpublishers."

[research] product is as good or betterthan anyone else's," says Reed Else-vier Cochairman Ian Irvine. "Theplace that happens is in the sciendficjournal community'."

Maybe, but last year Stevan Har-nad, a psychology professor at theUniversit}' of Southampton in En-gland and founding editor of the jour-nal Psyeoloquy, posted what he tcrtns"a subversive proposal" on the Inter-net. The proposal would underminecommercial publisbers by having aca-demics post their working manu-scripts and, later, their finished, peerreviewed articles on the Internet.That, Harnad believes, would forcepublishers to embrace the faster, lessexpensive world of electronic publish-ing. Turnaround time on an electron-ically published manuscript is aboutthree months, versus up to two years

for ink-on-paper journals.Publishers who respond slowly may

find their lock on the peer reviewprocess isn't watertight. Reviewers,unpaid like writers, arc free to workfor competitors. As electronic pub-lishing catches on among scholars,new peer review committees areforming to review manuscripts pub-lished on the Internet.

According to the 1995 Direetory ofEleetronie fournals, the number ofelectronic journals and newslettershas grown 66% in the past year, tonearly 700 titles. That includes 142peer reviewed electronic journals,among them Thefournal ofArtifieialIntellijjenee Researeh and Psyeoloquy.

Reed Elsevier itself just completeda four-year experiment distributingjournals electronically to 17 universi-ties. A handful of universities andcorporations now pay to receive anddistribute articles electronically.

Reed Elsevier sells electronic infor-mation for 110% of the price of a printsubscription. For 140%, subscriberscan get both paper and electronicversions. This kind of mariceting isunlikely to go down well with budget-squeezed librarians.

There's flexibility in the Internetthat's lacking in paper-and-ink jour-nals. Four years ago Paul Cinsparg, a40-year-old high energy' particletheorist at the Los Alamos NationalLaboratory', wrote a program allow-ing the 200 or so researchers in hisfield to post their manuscripts. Hisarchiving and distribution softwarehas expanded to include 30 otherdisciplines and subdisciplines in phys-ics, mathematics, computational lin-guistics and other fields where speedof dissemination matters.

Today 35,000 to 40,000 users pro-cess up to 70,000 electronic transac-tions on his ser\'er eveiy day. In Janu-aiy Cinsparg expects his colleagues toannounce plans for a formal electron-ic peer review process. That, he be-lieves, will eliminate the key advan-tage of the print journals in his field.

If he's right, the journal most at riskis Nuelear Physies B, a $10,775-a-yearReed Elsevier publicadon. "We'reasking our publishers, 'Why do weneed you?' " says Cinsparg. "I 'm in-terested in seeing the whole system[of commercial academic publishing]collapse." IH

Forbes • December 18, 1995 201

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