Not Many Things Are Actually "Monopolies"

Late last year, I wrote on the Scholarly Kitchen about how what some call "double-dipping" is actually more accurately described as "risk mitigation" or "creating a safety net." In essence, if you can charge different people or businesses two or more times for the same thing, that's smart business that helps to spread the risk you court as a business, making it more likely you'll be able to offer your valuable services longer. Everyone does it -- from OA publishers to film studios -- yet some insist that such practices are immoral or indefensible. And in this way, we become somewhat hindered competing against larger industries that have no shame about running their businesses rationally. Amazon and others just see an opportunity when we're captive to our own internal debates about propriety.

In addition to labeling multiple resale of valuable publishing activities with the pejorative and misdirecting term "double-dipping," we've seen instances of exclusive rights and market consolidation both being given the modifier of "monopoly." This hyperbole confounds our abilities to actually make rational choices. Instead, because the phrases distort reality, we are tilting at conceptual windmills. If we don't describe the world properly, we're unlikely to keep or change the right things. We court the unknown.

There are two recent examples of unhelpful ways the word "monopoly" has been thrown around.

"Monopoly copyright"

This phrase appeared recently on the Scholarly Kitchen, and was implied in another recent post on that blog, yet the phrase (or concept) doesn't make sense for a number of reasons, some legal, some historical.

The concept I think are embedded in a phrase like "monopoly copyright" can be tested initially in three ways:

  • Does copyright raise prices? If copyright exhibited a monopoly effect, we would expect copyrighted works to cost more than non-copyrighted works. This has never been shown definitively, and there is much evidence to the contrary (copyrighted music is often sold more broadly, so it is cheaper on a per-user basis than music sold otherwise [concert bootlegs, for instance]). In our market, copyright is initially held by the author. Often, this copyright is licensed to the publisher. In other cases, the copyright is transferred to the publisher. To address the implicit accusation that nefarious publishers are using copyright to exert monopoly power at the article, journal, or organizational level, you might try to show that works where the author held copyright were priced lower than when the publisher held copyright to show that there is possibly some effect on price with copyright transfer vs. copyright maintenance by the author. This would be difficult to show, especially in a market where pricing is so heavily negotiated. Also, I don't know how you'd even find non-copyrighted works in our market, sicne even CC-BY works are copyrighted by the author. Therefore, it would be very unlikely to find that copyright is causing any difference itself. What really matters is a publishers' commercial power, which is not derived exclusively or even mainly from copyright, because copyright is so commonplace and uniform that it cannot be reasonably seen as a market differentiator.
  • Does copyright take away anyone else's rights? As noted above, copyright is created for the author when a work is produced, if the work is unique. The right person has the proper rights. Nobody else has those rights. Then, the holder of the initial rights can transfer them or license them. If transferred, the rights are surrendered voluntarily. If licensed, the initial rights holder maintains their copyright and the publisher obtains some important equivalent rights. In this case, more rights are created. In short, the author's rights aren't ever abrogated, but they can choose to transfer them.
  • Does copyright create barriers to entry for other competitors? If I write an article, song, or book, I do create a barrier for entry via copyright for someone else wanting to assert authorship for the same article, song, or book, or basing their article, song, or book largely on my prior work (plagiarism). That is not a monopoly right, but an ownership and creative right realized via copyright. I don't prevent competitors from writing better books, articles, or songs, or just different books, articles, or songs. Also, unless I sign an exclusive rights agreement, I can license other distributors to sell my works. Even in the case of an exclusive agreement with a licensor, often the licensor will sublicense the works into adjacent markets. In any event, the barrier is an ownership barrier that resolves back to the author or creator. Ownership is not a monopoly (you may own your car, but you don't have a monopoly on that brand of car).

Copyright disposed of the monopolies realized in the early days of printing, which were put in place by patents and printing press owners.

What's ironic about the phrase "monopoly copyright" is that copyright flipped the script on the monopolies realized in the early days of printing via patents and printing press owners. Unlike copyrights, patents do create monopolies within markets for a time period, which is notable in that many academic institutions spend a lot of time and money securing patents because they are more lucrative given their monopoly power. In the early days of printing, "printing patents" allowed only approved printers to reproduce works, giving those printers a virtual monopoly on local printing business. Moving the ownership of intellectual property out of the patent realm and into the copyright realm -- that is, away from landed gentry and powerful people to everyday creative folk -- eliminated patent monopoly power over creative works. So, actually, "monopoly copyright" is ahistorical and nonsensical, unless you're talking about the famous board game's IP protections.

"Monopoly publishers"

The term "monopoly" or the phrase "monopoly publishers" is sometimes targeted at the largest commercial publishers in the market -- Wiley, Elsevier, SpringerNature, Taylor & Francis, McGraw-Hill, Wolters-Kluwer, Thieme, SAGE. These are definitely large publishers, and it's true that large publishers (these and some large non-profits like OUP and ACS and IEEE and BMJ) account for a majority of the market's revenues. They also have the biggest Big Deals and are more vertically integrated than other, smaller firms. Scale works in their favor. However, they are not monopolies -- there are too many of them, and they are too competitive.

On top of this, commercial publishers like Elsevier and Wiley and Taylor & Francis are a combination of proprietary titles and contract titles. The contract titles are always at risk -- they can move from one large publisher to another when a contract changes hands, and some spend long periods outside of commercial contracts altogether.

One problem of invoking a term like "monopoly publishers" is that it can obscure addressable market dynamics by making it seem that the game is over, when in fact the game is very much still being played. A recent article in Times Higher Education discussed how mid-tier journals are being squeezed out by the larger publishers, picking AAAS and PLOS (two of the smaller non-profit portfolios around, an odd pair of examples) to illustrate how cascades, transfers, and so forth are being used to exert greater market power on the supply side. The article specifically uses the term "monopoly publishers" in its headline. What these two and other publishers are really attempting is not "monopoly" but "vertical integration," making is so that their editorial, marketing, production, and publishing systems are aligned so that when something comes in at the top end of the figurative funnel, it doesn't leave until the organization has had every opportunity to see if they can derive value from it. Cascades are attempts to bring the benefits of having second- and third-choice journals in first-choice portfolios.

The risk to the market of vertical integration down from first-choice portfolios is that second-choice journals may collapse if enough of their submissions are subsumed by more vertically integrated publishers, a concern which has led to a number of other alliances and affiliations on the sales and marketing side, the most recent of which was the Scientific Society Publishers Alliance (SSPA).

Yet, none of this is "monopoly," but rather new forms and factors of competition.

The Counterbalance of Monopsony

When the term "monopoly" is used loosely and in sometimes an alarmist manner, we might forget that there is a countervailing force in the scholarly publishing market -- the tendency for the buyer-side of the market to consolidate, which means that it hews toward monopsony, or the state where there is only one buyer. Just as there has been consolidation on the seller-side of the market through mergers and acquisitions and contract publishing, there has been consolidation on the buy-side, as well.

On the buyer-side, we have consortia, which are increasingly consolidating purchasing, sometimes around aggregated content (another source of non-monopoly but consolidated sales). We also have funders who are few in number and may someday coordinate enough to create an APC purchasing bloc that would effectively be a monopsony for OA (already, pricing pressures might be considered a virtual monopsony). And we have nation-state and regional players who are trying to curb price increases by bringing coordinated market power to the table.

The "Big Deal" is where the consolidation of seller and buyer meets.

The "Big Deal" is where the consolidation of seller and buyer meets, with the sellers wanting to bundle more titles into each sale and the buyers wanting to get more content per contract. It has been a win-win, but as a negotiated state, it's always subject to change. The tendency to see the "Big Deal" as a seller's monopoly play fails to see the role of the buyer's monopsony play, as well. Buyers have focused on "Big Deal" contracts because they can get so much in one negotiation, and over the years, they have been able to tune their organizations accordingly. This has made it harder for smaller publishers, who find that money and negotiating bandwidth are both limited now because of the mutual consolidation in the market. This is why there are sales consortia and bundles, and why aggregators are increasingly popular ways to buy and sell books and journals from smaller publishers.

Consolidation and Scale

The main message remains one observers have banged on about numerous times: scale, and the consolidation that improves scale. Sellers often consolidate to increase their scale, but buyers also consolidate to increase their scale.

It's a bit of an arm's race at heart, which means these market dynamics are mutual and bilateral, and they are likely to continue to drive behavior in the market.

There is a vicious or virtuous cycle at work. What's also worth registering is where you fall on the vicious <--> virtuous spectrum. For some, these changes have been beneficial, at least to this point -- researchers and students have more seamless access to more content on-campus, and have for going on 20 years, for example. For others, these changes have been painful or concerning -- smaller and mid-sized publishers, especially society publishers, have seen their market power diminished by these changes.

Better Language for Better Thinking

My underlying point, however, is that to make choices and decisions from here, it would be better to use accurate business and market terminology, and not heated and hyperbolic phrases. These only provoke emotions, which don't help rational decision-making.

For example, if we were to recast some of the recent discussions of "monopoly publishers" and "monopoly copyright" and the "Big Deal," we might see things more clearly. Here's an example of what someone might write using these misleading phrases:

Monopoly publishers are using monopoly copyright to create lock-in and drive out choice in the market while reaping major profits. The "Big Deal" is one form of this lock-in, as are new workflow systems approaches, all of which stream from monopoly publishers into the market unabated.

To illustrate how more modest and careful wording -- as well as acknowledging that consolidation is occurring on both sides of the transaction -- actually leads to better thinking, here's an alternative:

To deal with market changes, more publishers are vertically integrated, via cascades and tiered portfolios. Larger publishers and various buying coalitions have become heavily consolidated over the past two decades as the market has struggled to deal with the rapid growth of scientific outputs without commensurate increases in library budgets or other purchasing economics. The recent vulnerabilities of the "Big Deal" approach suggests that there is parity in some instances between buyer and seller market power, which may be a good thing as far as controlling price increases even as it forces publishers to look for other sources of revenue. Vertical integration is a mid-term strategy that ultimately drives only moderate revenue growth for companies that can pull it off. Faster growth requires moving into different lines of business with steeper growth curves and higher potential margins. Because new lines of business don't initially encounter consolidated market purchasing power and compete on unclear value propositions (for both the seller and buyer), price premiums emerge and margins can be high. These innovations may see less capable competitors drop out of the market or align themselves with larger market players to survive. Failures will also occur, as the new market is also risky. After a period of competition and consolidation, however, some of the same market forces -- consolidated selling and buying, vertical integration -- will become problematic for both sides of the equation again, leading to another round of innovation and value-seeking.

Relying on scare-quote phrases and condemning rational market players for trying to grow and find new and useful things leads to dead-ends. Maybe we can use cooler and more technically accurate terminology, which ultimately makes it easier to deal with a time of uncertainty and change, while helping us identify the real market drivers as the moving pieces are more clearly delineated and described.

But maybe not. After all, I don't claim to have a monopoly on the truth.