According to Reed Elsevier’s 2009 Annual Report they experienced “robust financial performance in unprecedented global recession.” Greeaat, glad somebody did. The rest of us dealt with budget losses, lay offs, hiring freezes, furloughs, pay cuts or no raises. And Elsevier wonders why some librarians get so angry at their pricing models.
According to page 6 of the report “The Elsevier science and medical business (44% of adjust operating profits) had a relatively robust year. In a challenging academic budget environment, the journal business entered 2009 with good subscription renewals from 2008. In health Sciences, growing online sales in medical reference, clinical decision support and nursing and health professional education were partly held back by weak promotion markets. In the near term academic budgets will remain under pressure and wear working with our academic customers to ensure that their growing information needs and goals for greater research efficiencies are met with the confines of their tighter funding environment.”
We all realize they are a for profit company and they are in business to make a profit. I am all for making a profit. But I kind of feel a little uncomfortable and conflicted, especially when I read the post “Elsevier 2009 $ 2 billion profits could fund worldwide OA at $1,383 per article.”
For the most part I have stayed out of the whole OA debate, there are others on both sides of the issue who are way more informed than I am on the subject. But it would seem that as librarians are struggling to make ends meet with their shrinking budgets, the current method by which Elsevier (or other for profit publishers) price their resources will need to change for so that Elsevier and publishers can still remain profitable. Because if the library doesn’t have the money, they can’t buy any resources.
Quote from the Elsevier annual report: “robust financial performance in unprecedented global recession”. I encourage everyone to read the Elsevier report; a link is available from my blog at http://poeticeconomics.blogspot.com/2010/04/elsevier-2009-2-billion-profits-could.html
Wiley and Informa (Taylor & Francis, Routledge) are also boasting record profits in their latest annual reports. Don’t take my word for it, though – read the reports.
Elsevier operates on the assumption that in times of financial constraint, librarians will cancel other publishers’ products before they’ll cancel Elsevier’s. And so far, the behavior of librarians has proven this assumption correct.
You should look twice at the financial figures Morrison is using. She’s not very good at reading financial statements. The figure she’s using is “adjusted operating margin,” which is not the same as profit. It’s an index of a company’s business model, and is used like EBIT and EBITDA to allow investors (current and potential) to compare companies without dealing with how they’re separately structured, encumbered, etc.
Morrison also makes errors when accusing other publishers of profiteering off the STM market. For instance, in a separate post about Wiley, she claims their profit margin was 14% off STM, but it was really 3%. The other 11% came about because of exchange rates to a weak dollar, so Euro and pound money converted into a lot more dollars. Nobody in STM gave them that 11%. It came about because of the global currency markets.
It looks to me like Elsevier made a profit of about US$575 million, or about 9%. I’ll bet most university investment funds will do better than that 9% return in 2010. And I doubt Morrison will complain about that. After all, she works at a university that lost ~US$500 million off its endowment in 2009.
And that’s something to appreciate about public companies — they do share their wealth.