UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 399-i

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

SCIENCE AND TECHNOLOGY COMMITTEE

 

SCIENTIFIC PUBLICATIONS

 

Monday 1 March 2004

MR ROBERT CAMPBELL, DR RICHARD CHARKIN and DR JOHN JARVIS

MR CRISPIN DAVIES and MR ARIE JONGEJAN

Evidence heard in Public Questions 1 - 93

 

USE OF THE TRANSCRIPT

1.

This is an uncorrected and unpublished transcript of evidence taken in public and reported to the House

2.

The transcript is not yet an approved formal record of these proceedings. Any public use of, or reference to the contents should make clear that neither Members nor witnesses have had the opportunity to correct the record. If in doubt as to the propriety of using the transcript, please contact the Clerk to the Committee.

3.

Members who receive this for the purpose of correcting questions addressed by them to witnesses are asked to send corrections to the Committee Assistant.

4.

Prospective witnesses may receive this in preparation for any written or oral evidence they may in due course give to the Committee.

 

Oral Evidence

Taken before the Science and Technology Committee

on Monday 1 March 2004

Members present

Dr Ian Gibson, in the Chair

Paul Farrelly

Dr Evan Harris

Dr Brian Iddon

Mr Robert Key

Mr Tony McWalter

Geraldine Smith

Bob Spink

Dr Desmond Turner

________________

Examination of Witnesses

Witnesses: Mr Robert Campbell, President, Blackwell Publishing, Dr Richard Charkin, Nature Publishing Group, Macmillan Limited, and Dr John Jarvis, Senior Vice President, Europe, Managing Director, Wiley Europe Limited, examined.

Q1 Chairman: Thank you, John, Robert and Richard, for coming to help us in our first session, which is on scientific publications. You will know that we have visited the British Library to breathe the city air and see what work is done and what the plans are, so we come from a little knowledge of the situation. We are looking forward to kicking off today with you guys. How you answer the questions is up to you.

Mr Campbell: We have agreed that I will act as the co-ordinator of the three of us.

Q2 Chairman: We will address all our questions to you but if others want to come in, please catch my eye. Do you grant access free of charge to digital content six months after the initial publication date?

Mr Campbell: We do for one journal and for several journals we do it for 12 months. We are watching that and will obviously report to the societies for whom we publish; and on the basis of whether that has any serious impact on subscribers, they may well want to widen that policy.

Q3 Chairman: Are you saying you have a differential policy for -----

Mr Campbell: Yes.

Q4 Chairman: Why is that?

Mr Campbell: We publish for about 550 societies, and they decide on the policy of individual journals. My two colleagues should speak on their own behalf because they are different companies with fewer society journals.

Dr Charkin: By and large we do not make material available after six months free of charge. Rather like Bob said, on one of our journals, which is a society-owned one, we go along with their wishes.

Dr Jarvis: We do not. One of the issues we have - and we are actively looking into this - is that we make quite a lot of sales of back-issue information, which would impact on our business model, so we are actively looking at how we can do that. We are not sure whether it is six months or a year.

Q5 Chairman: What has made you start looking at that again? You obviously had made a hard and fast decision; what is creating the climate now to change?

Dr Jarvis: I think the whole open access movement has made us realise that there is a real requirement, and a desire for people to have open access in certain circumstances. That is something that we have to address as a business.

Chairman: Have you considered implementing a pay-to-purchase rather an pay-for-access policy?

Mr Campbell: Yes, and we have put that model to several societies for whom we publish; and their publications committees are considering it. At this stage none of them have decided to take it any further. We submitted an application for the JISC programme where they have a three-year programme funding some open access experiments. We were unsuccessful with that. We are certainly looking at the model, and we have several proposals out with societies, trying to cost the impact of -----

Q6 Chairman: Does this model have an impact on publishers and institutions, in your view?

Mr Campbell: We could talk about that for the next hour.

Q7 Chairman: No, you have not got an hour; you have got one minute.

Mr Campbell: As we said in our submission, we think it will have an impact. We think there is a danger that an author-paid model could lead to lower standards. It is also not popular amongst authors, less well-funded institutes or from other countries, where even a ten-dollar charge to an author would seem excessive.

Q8 Chairman: What effects would open access models have in costing terms, compared to existing publishing models?

Dr Charkin: There are many answers because there are many journals for many disciplines, and the impact will be different depending upon which discipline or which journal you are talking about. In our letter to you, speaking on behalf of Nature Publishing Group, in the case of Nature itself, the British international journal, in order to replace our revenues you would have to charge the author somewhere between 10,000 and 30,000 because the costs of editorial design and support are so high. The reason for the big disparity is how much advertising ----

Q9 Chairman: Are you saying it is per article?

Dr Charkin: Per article; it is a huge price and would, I believe, be completely unsustainable because I think people would not pay that. In that particular model it is a very serious and different answer to the one that one would get for a more specialised journal.

Q10 Chairman: Do you think that would make a big dent in higher education funding, if you take all the top-up fee money away?

Mr Campbell: We think it would be more expensive for Britain, certainly, because it is a net exporter of knowledge.

Q11 Chairman: Is there a demand for open access publishing?

Dr Charkin: We are just running a survey through all the authors to Nature to find out. We ran an open access debate about a year ago within Nature and there really was not overwhelming support. Clearly, there is some sort of a groundswell, but it certainly was not overwhelming, and early indications from procedures at the National Academy of Sciences in America and such like have not really supported the contention that it is huge.

Q12 Chairman: Where is the groundswell coming from, in your opinion?

Dr Charkin: It is a number of very distinguished scientists - there is no question of that. It is typically from the molecular biology end of the science spectrum rather than anywhere else.

Q13 Chairman: Is this the Harold Varmus thing in the States?

Dr Charkin: Yes.

Q14 Chairman: We hope to be seeing Harold later on.

Dr Charkin: It is a specialist area that is very well funded, and I think that is a distinction from many of the other parts of the scientific spectrum.

Q15 Chairman: How would it affect your business, do you think?

Dr Jarvis: Just to answer your previous question, we have been looking and considering open access models. One of our concerns is, from those who have done quite a bit of research in open access, is that there is a great range in what it would cost, and we are trying to pin down what that figure is. We are also concerned at how many people will be able to afford that, because although one can see a model with these disciplines which are extremely well funded, there are certain geographic areas and disciplines where it would be extremely hard for people to pay these kinds of things. We had considered it was for certain niche journals, which are quite difficult in commercial terms to sustain in a subscription way. That is something where we are trying to see if an open access model would work, where there is a limited number of people who want a journal in a particular area which is not sustainable by readership.

Q16 Chairman: Can you give me a breakdown of the 10-30K per article and write to me?

Dr Charkin: Absolutely, we would be very happy to. Very crudely, 30 million of sales: we get income of 30 million and we publish 1,000 papers a year. That is your 30 million.

Q17 Mr McWalter: Professor Adrian Sutton said - just to illustrate the groundswell of opinion: "Academics provide their scientific papers for publishers free of charge. They review other scientific papers for those publishers free of charge, and they pay exorbitant prices for hard copy and/or electronic access to their own work in published volumes. What other business receives the goods that it sells to its customers from those same customers, the quality-control mechanisms provided by its customers, and a tremendous fee from those same customers?" Does that not seem to be a reasonable complaint, and should we not be doing something about it?

Mr Campbell: In a way, that has been the forerunner of the open access movement. There was a "take back copyright" movement in the States among senior academics. That has been around for a while. The answer is that the journal publishing system has evolved, and we think it works very well. It is delivering more effectively than ever before; the downloads for most of us have doubled from what they were a year ago. It is very successful and academics like to use it. There is this argument that you have outline, but -----

Q18 Mr McWalter: Is there a gripe?

Mr Campbell: Is it, if they find another system to publish their journals - or perhaps open access is another system? It has been around for a long time. You should remember that a lot of people are members of societies, and societies benefit hugely from the journal publishing system. They can refuse to referee if they do not want to do it, but on the whole they like to referee, to be involved in subjects and see what is happening and have some input. There is no shortage of people wanting any journals, and there is no shortage of authors. As Richard said, one of the problems with a high-quality journal is that you have to process so many articles that eventually have to be rejected. When you have a journal rejecting nine out of ten articles, particularly in some subjects like ecology, you cannot afford the open access type model or the author-pays model because you would land up with such huge costs to the individual author that it does not work. So we are left with a system where subscribers pay and we run the system.

Q19 Geraldine Smith: Your general policy on access to journals: who do you think should pay and who should have free or nearly free access? Do you have any form of means-testing?

Mr Campbell: That is a good question because what has happened is that the publishing industry has effectively, with the support of the societies it publishes for, given free access to poorer countries. There are various schemes, which you will see in the submissions - HINARI, AGOR for example, which deliver journals without charge to poorer countries; and that scheme is being enhanced and is lifting up to another level of slightly better-off countries.

Dr Jarvis: One of the things that intrigues me is that there is some evidence that some of the support for open access is coming from outside the research community. There are some very high-profile stories of members of the public who want to read this kind of information. Without being pejorative or elitist, I think that is an issue that we should think about very, very carefully, because there are very few members of the public, and very few people in this room, who would want to read some of this scientific information, and in fact draw wrong conclusions from it. As scientific publishers of this very high-level, sometimes esoteric, information, what we do as publishers when we have information that is of use to a broader audience, we make sure we use all the channels by contacting the press and whoever to make that happen. Having said that, I think the mechanisms are in place for anybody in this room to go into their public library, and for nothing, through inter-library loan, get access to any article they want. They can go to a machine now and press a button and see it on their screen. It is a little bit of a myth that a whole tranche of our society is excluded from seeing this information. I will say again; let us be careful because this rather enticing statement that everybody should be able to see everything could lead to chaos. Speak to people in the medical profession, and they will say the last thing they want are people who may have illnesses reading this information, marching into surgeries and asking things. We need to be careful with this very, very high-level information.

Q20 Geraldine Smith: That is not what Dr Virginia Barbour is saying, the molecular medicine editor at the Lancet. She feels that patients should be able to access papers about their medical conditions. What are you doing to ensure that patients who are not scientists have access to quality medical journals that could help them have a better understanding of their own illnesses?

Dr Jarvis: As I say, I think the mechanisms really are in place. Members of the general public could go and get access at no cost to an article. They might not get it immediately on their desktop screen at home, but again I would take issue with that view. This is something that sounds like a very good idea, but there is a lot of information in the world which most of us need help with and to be talked through. You could get yourself in a terrible mess if you go and read this kind of information, which is pretty archaic, much of it.

Dr Charkin: The unprocessed data of scientific research papers is very tough for a lay person. We run a website which takes the news and filters it and puts into a form, and journalists get open to access to that, so can therefore transmit it; and the original paper could be got through inter-library loan; so we are doing things.

Q21 Geraldine Smith: How are you protecting and encouraging pay-per-view access to articles?

Mr Campbell: The amount that we sell directly from our site on a pay-per basis is increasing at a very high rate, almost doubling. I think it is the same for other publishers. That is effectively paying by the glass rather than the bottle. It is part of being able to deliver journals on line and you have greater flexibility. A lot of those people buying on a pay-per-view base seem to be outside the academic community, and quite often buying in the evening. There is quite an interesting pattern, if you analyse those people. The system into our literature is free; there is Medline and now increasingly Google, so there is huge support for users there to get into the literature and find the article you want.

The Committee suspended from 4.51 pm to 4.57 pm for a division in the House.

Q22 Geraldine Smith: How do you ensure that users in the developing world have access to journals, if they cannot afford the subscriptions?

Mr Campbell: We work through an organisation called HINARI, which was developed by the publishing industry working with the WHO; and that ensures that most poorer countries can get free access to medical and biological journals. It also helps with the infrastructure because there is not much point in giving free access if they do not have the kit to access it. It is more about organising the infrastructure to help them get access to journals. For agricultural and related biology sciences there is a programme called AGORA, which the publishers have developed with help from Rockerfella and the FAO in Rome. That is also going very well. There is a third organisation called INAS, which is doing something quite interesting because not only are they helping publishers get journals to the developing world at little or no cost, but they are helping train local people to do their own publishing and develop their own on-line systems, so they are building up their own publishing systems in poorer countries. There is a huge amount of activity. I think it is mentioned in some of the submissions.

Q23 Geraldine Smith: Is pay-per-view more expensive per article?

Mr Campbell: I think so. My colleagues would have to answer that. There is another pricing model where the library might take some journals on a subscription price, and then the rest of the publisher's list on a reduced pay-per-view access, so you would have access to the whole publisher's list, paying full price for the heavily used journals and the rest at a very low price - related to the big deal, which is in your question.

Q24 Geraldine Smith: According to Wiley, approximately 10 per cent of potential users are unable to gain access to its publications. Can you tell me who they are and why this is?

Dr Jarvis: These are people who do not belong to one of the consortia who have one of the licences to our journals. They do have a whole range of options when they are turned back, but that is the number. Obviously, we think we are making deep inroads into improving access, which our submission showed and other submissions showed; but there is always work to be done. I would not argue with you that we need to keep on improving access, but that 10 per cent is the current number. It has reduced over time.

Q25 Geraldine Smith: Can you tell me how you are trying to improve access?

Dr Jarvis: We offer coupons to our people who have access to our material, for people who are not part of that consortium; or they could have pay-per-view individual access by paying directly at the time of access.

Q26 Dr Iddon: Can you explain the difference between the cost of producing an article and the cost that someone has to pay for reading that article, on average? What fills the gap apart from profit?

Dr Jarvis: Some of the evidence seems to be from what we have seen that there is not much of a gap as you move from a demand model to a supply model. If you look at some of the open access organisations, some are commercial and others are not. The kind of prices they are suggesting would be required per submission from an author. If you multiply up the 1.2 million to 1.4 million articles published each year, it comes to about the same 3 billion to 3.5 billion per year. You are simply shifting from the demand end to the supply end, and some of the submissions showed that one of the concerns there is that the net producers of articles like Britain, which has spent about 87 million at the moment, will probably spend 150 million because they produce more articles; and the major industry readers of information, like the pharmaceutical industry, would be in a much better position since they do not produce very much in terms of new research articles. Of course, they purchase a lot for their industry. So companies that do not produce very much material but read a lot - I will not mention countries, but this would be wonderful news for them. It would be wonderful news for the chemical industry and for the pharmaceutical industry, and bad news for major research institutes like Oxford and Cambridge, Harvard and Yale, and for countries like Britain.

Q27 Dr Iddon: Are you saying that the cost mechanisms, particularly the sales price of journals, is more or less constant year in, year out, apart from your overheads like inflation and printing costs and all that? Can you tell me why in the last five years the retail price index has gone up 11 per cent and the average cost of a journal has gone up a massive 58 per cent?

Mr Campbell: That is the masthead price, the subscription price; but in fact many libraries now get their journals through negotiated deals, so there is another statistic which is more important because it is about - the question in your document to us - access. In Britain, for example, on average, the British University had access to just under 4,000 journals in 1993. Last year they had on average access to just under 6,500 journals. What happens is that they are paying less per journal than they were ten years ago and they are getting far more journals; so you should not be misled by the price. There are an awful lot of deals, and Britain has led some of that through HEFCE with the national electronic site licence initiative, and it has pioneered new pricing models.

Q28 Dr Iddon: Anybody who is an academic, or has been like some of us on this Committee, knows that we have been faced with long lists of journals from the departmental liaison office with the main university library, and every year - year in and year out for a decade now - I was asked to tick journals that we could do without in relation to other journals which were very necessary for me as a scientist.

Mr Campbell: I do not think that is the reality. If you look at the -----

Dr Iddon: I have not asked the question yet, with respect.

Chairman: He is anticipating the answer.

Q29 Dr Iddon: How come the publishing industry blames the lack of finance for the libraries being put in that situation when I have just quoted those rising costs?

Mr Campbell: Personally, I would not blame the library budget at all. What has happened is that publishers are delivering more journals. If you read page 5 of the Wellcome report, which was a pro open access report, you will see there is data there showing that libraries are able to access far more journals than ten years ago, which is what I have been saying. The reality is that they are getting more journals. The inefficiency in the system is basically the library overhead. If you read the papers by Andrew Odlyzko, he analyses the total cost of the system. The problem at the moment is that people are focusing on this headline price, the subscription price. If you look at the whole system, two-thirds of the cost of journals is the library, not the publisher; and as Odlyzko said, if you have free journals, within ten years you would have a library-funding crisis because the biggest cost is overheads. The way you get round that is to work together. You can develop national key performance indicators. You can look at where the costs are in the system and work a lot of those out. Going on-line entirely is the biggest single factor that can enable us to save costs and get more journals to more people. It is a very efficient system. If you read Lord May's paper, Scientific Wealth of Nations, Britain scores very well against, for example, the United States. He gives us a score of 90 citations per million pounds spent on R&D, while in North America the score is about 60. The system works very well.

Q30 Dr Iddon: I am old enough to remember when there were very few commercially produced journals around, and when scientists and people in humanities published in the journals of their learned societies. The facts that we have collected shows and the evidence shows that not-for-profit journals - and a lot of those are published by learned societies - are more highly cite than your journals are; but they are a damn sight cheaper. How can you justify it?

Dr Jarvis: One of the things that intrigues me is that the idea of authors paying a fee to be published was exactly what many societies did before commercial publishing sprang up. One way of subventing one's costs and holding down the subscription price is to charge some kind of a pay charge or a fee. The fact that commercial journals started in a free market was not something where one could ask how it happened. It happened because there was a service provided which scientists - and you were obviously one - actually voted with their papers and persuaded their libraries to purchase these journals. The 58 per cent versus the RPI is an interesting statistic, but, again, publishers do not write these papers, and there is a tremendous increase in the amount of R&D spend, and subsequently the research articles published at the end of it. Publishers of all shapes, colours and sizes, are there to try to get that information to the market. Measuring a niche market like STM Journal Publishing and its pricing structure against a broad basket of consumer goods is not particularly helpful.

Q31 Dr Iddon: The point I was driving at in my question, with respect, was this: why is there such a big difference in the costs of purchasing a learned society's journal, even discounting the profit; there is a huge difference in cost between a learned society journal and any journal from a commercial producer?

Dr Jarvis: They have member fees, which obviously subvent their costs. They do not, with respect to them, produce very many surpluses of profits in which to build the kind of infrastructure which commercial publishers have had to build. It has been the commercial publishers over the past five years who have been very delighted and excited to do it, but the enormous costs that many commercial publishers have put into transitioning a business from 1997, a total print business through the mail to a highly efficient digital business, is something that we could all be proud of. I cannot think of any other industry that has transitioned itself in the Internet as STM Journals have.

Q32 Dr Iddon: You do publish prestigious journals - I accept that - but what appears to be happening is this. When I look at my tick list as an academic, and I have to cross journals out that are of a lower priority order than the more prestigious journals, the more prestigious journals appear to be increasing their price almost deliberately so that you are forced to cross them off the list, and forced into bundling exercises in order to buy the ones that you really cannot do without. This seems to be a trend in the commercial publishing business that we have noticed.

Mr Campbell: Could I read out a statement and ask you if you agree with this? "Librarians are suffering because of the increasing volume of publications and rapidly rising prices. Of special concern is the much larger number of periodicals that are available that members of faculty consider essential to the successful conduct of their work." Would you agree with that statement?

Q33 Chairman: Who wrote that, first of all - before he agrees to anything?

Mr Campbell: It is in a report of the Association of American Universities dated 1927. This is not new. You said you had been around for a long time.

Q34 Dr Iddon: I have to tell you, Mr Campbell, that I am asking the questions and you are answering them.

Mr Campbell: Sorry. Thank you for reminding me!

Q35 Dr Iddon: Coming back to my first question, because I do not think I got an answer, and perhaps I can phrase it more straightforwardly, what is the cost to you of publishing an article, and what is the price you charge for that article?

Mr Campbell: For Blackwell? We divided the number of articles we published last year into the revenue, largely from the subscriptions from libraries and from other sources, and we published 115,000 articles and then we divided the revenue, and it worked out at 1,250 per article. That was the cost of the total system, paying the publisher's price for journals. We are trying to get to a level of profitability where we make about 15 per cent profit on our turnover. Out of the 1,250 there is 15 per cent profit - and we are struggling towards that - and the rest is cost. That does include fees to societies and royalties to editors. There is quite a lot of money going back to the university system.

Dr Charkin: For Nature Publishing Group it is more or less the same numbers for what we call academic journals, but do not forget the 10,000-30,000 figure for Nature, which is a very different model.

Q36 Paul Farrelly: Picking up on Brian Iddon's point, and the effect whereby one publisher increasing the price of a journal puts the competition out of business potentially, is that it does not fit easily with standard economic models. That said, in your industry would you generally across certain sectors say there is a definite price leader?

Chairman: Or is it that you get what you can get?

Mr Campbell: Yes.

Dr Charkin: That was not the question, was it? Is someone pricing higher than everybody else?

Q37 Paul Farrelly: Is there a price leader you would respond to? You have a relatively small market share overall.

Mr Campbell: I do not think so. We set our prices with editorial boards and societies, so our prices largely are dictated by a group of academics. We show them budgets and they decide what the price should be next year. If you lost the support of your academics that are editing your journal for you, you would have no journal; therefore, this is a very close association with the academic community. We are not sitting in a bunch of businesses that can pick our prices out of the air.

Dr Jarvis: Certainly not for us, I can add. We have sometimes seen after the event that we have probably been a price leader ourselves in a particular year. It depends what new journals one is pricing, how many journals one is adding to the portfolio, how many more papers you are publishing, and all the things which influence price. We have sometimes been in the top three or the top five. There is not anybody that I would see as the price leader.

Dr Charkin: I think there is a significant new pressure, which is the library list service, which now instantaneously transmits around librarians if anyone is seen to be out of line; so it is not just the academics but the librarians that we have to be very aware of - and indeed their budgets.

Q38 Paul Farrelly: I am trying to get a perspective on the complaints from some quarters that the margins in your industry are excessive - 35 per cent in some cases and 29 per cent Wiley. Taking twenty years ago, before a lot of the larger mergers took place and before digitisation came in industry-wide, how were margins in those days compared with these days?

Mr Campbell: Probably higher. Certainly, then you had very successful book publishing; so publishers like McGraw Hill was, I guess, price leader in our field, STM - book publishing in particular. They were very profitable. We have seen the demise of - book publishing is quite hard work and margins are quite low on book publishing. In addition, journals hit the peak in circulation in about 1986; that is when most journals reached the highest circulation in terms of subscribers. Since then, there has been a small decline, as we have heard, and some journals have been cancelled. More recently, because of the development of new pricing models of consortia, a number of people that take journals - the circulation has gone up usually. Therefore, to have a session like this would have been quite relevant ten years ago when things were looking pretty bad - before digitisation, before on-line, early to mid 90s we were seeing lower circulations of traditional print-on-paper subscribers. Since then, publishing has flourished. We are now supplying thousands of libraries, and it is very exciting to see the data. We are increasing downloads every year. I honestly think this was an old problem ten years ago, but not any more.

Q39 Paul Farrelly: You are saying that margins if anything are lower these days.

Mr Campbell: No, but I cannot speak for any other publishers. Some publishers are doing better today than they were ten years ago, and some are doing worse. It goes up and down in cycles. I guess that when a publisher starts doing badly for a while, it can get sucked up.

Q40 Paul Farrelly: Concentration tends to increase margins, increase profitability. Some people would say that digitisation reduces the barriers, but if you have a substantial library as an independent, then face the basic costs of migrating on to that platform without financial strength, digitisation can clearly be a concentrator. Would you say that mergers and digitisation overall operated to increase margins for the business or not?

Dr Jarvis: Decrease so far, certainly from our own experience. We have had to invest from those margins over the past five years. There is no shortage of aggregators, of services, people who have built independent servers; so there are the servers which run from the major publishing houses, but there is no shortage of places for the smallest publisher to mount his or her journals on. Obviously, there may be a difference in functionality, but again that is a market freedom, market force. There will be some services which scientists will use and find the functionality enormously helpful; other services will invest their money in different functions, which will not be as accepted. At the end of the day, I do not think any publisher, however small, is omitted from participating in a digital future.

Dr Charkin: I think there are clearly some scale advantages of being big, but I believe that those advantages are trivial compared with the added success profit from doing a better job. A better job is typically to have a better-designed application - better websites in particular - which attracts people in. That is what matters.

Q41 Bob Spink: We heard about your very high level of profits, which most manufacturers could only dream about, and we know of course that the content of the papers that you publish is often produced at the public expense and very rarely at your expense. Can you tell us how much of your profit margin is actually being invested in new digital technologies? Can you each give the percentage?

Dr Charkin: The percentage of what?

Q42 Bob Spink: A percentage of your turnover that is re-invested in development of new technologies - or whatever the figures are; just give me the figures.

Mr Campbell: Things come up, you see ----

Q43 Bob Spink: No, I just want the figures.

Mr Campbell: I would guess for next year it is going to be a lot for us because you go in cycles and you have to reinvest in a new system. It will be some millions of pounds next year, so a percentage of -----

Dr Charkin: It is 30 per cent for us.

Mr Campbell: We certainly have not invested as much as 30 per cent in new technologies for this year. My colleague is working something out to give you.

Dr Jarvis: On our STM business, I would think it is something like 10-15 per cent. I really cannot be more accurate than that. Of course, STM journal publishing is only one arm of our business, so it would be a smaller percentage of the overall profit.

Q44 Dr Iddon: When an author submits a paper to you, it is quite normal to send a number of free reprints. I used to get 50 paper re-prints. We have some evidence that commercial journals are now beginning to charge authors for copies of their own work. Somebody from Brighton University has written to the Committee complaining that he was charged 250 for a PDF file of his own paper. Is that a growing trend?

Mr Campbell: No, it is quite the reverse. Our company policy is that authors get a PDF free, which they can then use to disseminate their own article; and so it is an added service to our authors. The answer to the previous question is 25 per cent - my colleague has just given me the figure from the accounts.

Q45 Dr Turner: A lot of journals are increasingly being sold as bundles. Would it surprise you to know that there has been a certain amount of criticism of this practice in that publishers are cutting tough deals with libraries, which, if they want to take the leading journal at a reasonable rate, have to take a whole lot of other subsidiary journals with it, which they may or may not want very much. Not only that, but these contracts go for a long time; they have penalty clauses and so on. Do you think these criticisms are justified?

Mr Campbell: It was a new pricing model which was pioneered in Britain and subsidised by the state initially to get it started from HEFCE, as I mentioned earlier, and now known as the Big Deal. In our view it is a transitional model and we are moving to different sorts of pricing models and working through the Big Deal as part of that evolutionary process. It is working well; it is enabling us to get to a lot more libraries at the moment, but I do not think it is the answer and I expect we will evolve through that to more accurate pricing models based on this.

Q46 Dr Turner: Are you looking to something which will give libraries a bit more flexibility?

Mr Campbell: Yes, and based on size of the institution, usage, the value to those institutions of the particular type of model.

Dr Charkin: Absolutely. Flexibility, I am sure, is going to come and we are on the way.

Q47 Mr Key: What are you doing to preserve digital archives, and once libraries have paid for electronic publication are they guaranteed access for ever?

Mr Campbell: Yes. One of the problems is that publishers such as the three of us here are developing systems quite fast and are able to create legacy, which is a huge investment. Why I was stalling a bit on the percentage of technology was that I was trying to work out how much we are spending on so-called legacy this year, which is digitising backgrounds to create the backgrounds you were talking about. It is likely that the better funded publishers will be setting up their own archive or legacy and they will be able to update the technology and it is charged for by the subscription price to libraries, and libraries have a permanent access to that material that they subscribe to. The concern over, let us say, an open access or the PAYS model is that if you need to shift your technology, as happens regularly, who pays? Does the new crop of authors of that year pay for the huge investment in changing your background to suit modern technology? Alongside that most large publishers are working with the library community on library solutions as well and the British Library is active in that and Harvard and California and the Royal Dutch Library. There are a number of libraries who have signed agreements with publishers to create archives outside the publishing house as well. We have not got there yet but quite a robust system has evolved. I would claim it is a point in favour of the submission model, and there is a system called JStore and others that we work with as well.

Q48 Dr Turner: What is that?

Mr Campbell: It is a North American service where they digitise backgrounds of journals and sell that service to libraries and libraries have access to the backgrounds of journals. It is particularly strong in economics and ecology.

Q49 Paul Farrelly: I want to address very briefly copyright. We only have a short time so let me put it in the starkest terms. What would be the effect on your business and the industry if your requirements to obtain copyright were outlawed as an onerous term and there were restrictions placed on inducements to assigning copyright? Also, because we do not operate in isolation, what would be the effect on publishing in the UK and indeed in Europe if it was adopted Europe-wide?

Dr Jarvis: I think this is one of the most important questions and it is a philosophical question almost because if you think about copyright and the copyright system and how it works, the only alternative is patronage and that is a system which we used to have by royal families or the church or governments. Since the former two would not be in this any more it is basically government. What we all have to think about very carefully indeed, therefore, and in this industry there are certain aspects of open access which are important and which we are looking at, is that immediately anybody funds an author to publish there is an inherent pressure, and history proves this, that ultimately the person who pays can in the most benign way begin to put an influence on what gets published, what the message is, what we see, read and hear. That sounds a bit grandiose but I genuinely believe that is something which all of us in this room and outside of this room have to think very carefully about. A copyright system, which is the unimpeachable right of an author to publish their work wherever they want for no cost, is something which we would throw away at our peril. It may sit alongside an open access system. As I said earlier, there may be some niche publications where it is valuable to offer authors the chance to publish their work in an open access way by paying for it but if that ever replaces that inalienable right of an author to publish their work where they want without any patronage from whatever source I feel strongly about that. Copyright is something which is essential to us, it is the author's work, it is their intellectual capital. Once they start to be coerced into putting it here, putting it there, I think we unpick something which took us a long time to build.

Q50 Paul Farrelly: Anything to add?

Dr Charkin: I support that. There is also a risk. Copyright is in an interesting legal phase at the moment because there are various changes in electronic delivery and such like, but it is very hard to start slicing up copyright and saying that scientific papers are one sort of copyright and literary novels are another sort of copyright. What has been fundamentally strong about copyright is that it does not differentiate. It is the author's work, it is his or her right. Starting thinking about changing rules for one sub-sector is rather dangerous apart from anything else.

Q51 Dr Harris: I want to come back to one of Dr Iddon's questions because he asked all of you, how do you explain an average journal price increase of 58 per cent, "average" being the key word there, in the past five years compared to an increase of 11 per cent in the RPI, and the 58 per cent, he said, came from the Consortium of University Research Libraries. Mr Campbell, your answer was, "Ah, because there are more journals now". I am not a great mathematician but I understood that the question, including an average price assumed, allowed for the increase in the number of journals, so can you clarify whether you think that figure is wrong and it is a fraudulent figure, or whether your journals have not gone up by that much and it is some other nasty publisher out there who is making very big profits?

Mr Campbell: There are relatively few new journals now. The year when the most journals were launched was something like 1968. Since then there have been fewer journals launched each year, so this is a myth, that there are more titles being launched, there are more papers being published, so the big successful journals attract more copy and, even though they might have higher rejection rates, a lot of them are growing in size every year. If you, for example, look at the cost per article from our list, it has gone up by 2.8 per cent. The actual cost to subscribers per article from last year to this year has gone up 2.8 per cent, so it is more or less in line with inflation.

Q52 Dr Harris: Is that across the range or is that just Blackwell?

Mr Campbell: That is Blackwell.

Dr Charkin: Ours would not be significantly different. The thing we measure is the cost per access of our various papers and that has come down significantly.

Q53 Dr Harris: Does that include the back catalogue?

Mr Campbell: That comes down hugely. If you include the archive the cost per article which you could access on line drops.

Q54 Dr Harris: If the libraries tell us that the price per article has gone up, and you are saying you are only around inflation, then some players in the market have increased the price per article. I cannot believe there can be this dispute over figures but I remember seeing a presentation, and we will check this, where the price per article generally had gone up higher than that.

Mr Campbell: Our figures are in the open. Our price per article for two and three was 1.77 and this year it is 1.82. If you bought the whole list at full subscription price, which does not happen -----

Q55 Dr Harris: Just to change the subject, everyone worries about publication bias, that negative results are not published. Do you think publishers have a role in solving this major worry by providing a system maybe on open access that enables all those negative studies to be logged in some way, or do you think that is an issue not for publishers but for the pharmaceutical industry and so on?

Mr Campbell: The pharmaceutical industry would not publish negative results.

Chairman: Because they get a lot!

Q56 Dr Harris: Some people feel that research on human beings is not ethical unless it is going to be published, assuming it is fit for publication in terms of peer review. That is what I am getting at. Is it right that we should experiment on people and then not publish the results?

Mr Campbell: No; I think that is a fair point. With most medical journals you have to accept that if a negative result came through there would be, I guess, less chance that the referees would recommend its publication. We do sometimes publish negative results but I would think fewer get through refereeing than other papers.

Q57 Dr Harris: That is my question. What are we going to do about it?

Mr Campbell: People have tried publishing journals on negative results and they have been complete failures because nobody wants to subscribe to them.

Dr Jarvis: We could publish more but there is a cost to it all. One could do it by open access or by subscription model but the more papers you publish there will be an increased cost. It does cost. As somebody said earlier, you take this stuff from scientists and you do not do anything to it. That is not true. We do not take manuscripts from authors and give them back to them and charge them for that. There is a great deal of cost and work put into that first. We have had more papers submitted to us and we have published more papers, which has partly contributed to the 58 per cent. There is a lot of R&D out there and a lot of output from it and unfortunately library budgets have not kept pace with that. That is something which we have banged on about for a long time. We do not write these papers. These papers are out there and if publishers like ourselves do not publish them other publishers do. There are new entrant publishers coming in all the time with new ideas, new journals, niche journals, people spinning off journals. There is a lot of publishing out there, not driven by us.

Q58 Chairman: Would the whole system not work in the same way if the publisher licensed the article copyright and did not own it?

Mr Campbell: Yes. Some publishers do not insist on full copyright assignment but in effect have an exclusive licence to publish.

Dr Charkin: We just take a licence.

Q59 Chairman: I know.

Dr Jarvis: One of the down sides of that, of course, is that if your author's work is then stolen or changed, what publishers can do because of their scale and their reach is to do something about that. Individual authors would find it very difficult if their article was used and changed.

Q60 Chairman: We are seeing Reed Elsevier next. How do your companies compare with them? Are they the giants in the land?

Mr Campbell: They are the largest in terms of market share. We would claim that we are growing faster. It is a competitive market.

Q61 Chairman: What about your policies? Do they diverge or converge with each other? Why are they so good and you are so useless at getting the market?

Mr Campbell: Chairman, that is an unfair remark.

Q62 Chairman: Nothing is unfair in this place, as you well know.

Mr Campbell: I think we are growing market share faster than they are. It is a lively market and if there is scope to take market share from Elsevier we will.

Dr Jarvis: At the end of the day authors decide where they submit their material. If Elsevier win some, we win some.

Mr Campbell: We would say that we won against them last year. Five journals were moved from Elsevier to Blackwell. The societies decided to move.

Chairman: They are big-hearted guys.

Q63 Paul Farrelly: You seem to be thoroughly relaxed about the effects of increasing concentration. From time to time there is speculation about Bolkers(?) joining Reed Elsevier. Would you be very relaxed about that or would you go kicking and screaming to the regulatory authorities and, if so, why?

Dr Jarvis: If you compare our industry to the aircraft industry, it is between all of us. It is between Elsevier, Blackwell, Macmillan. I think we come up to about 35 per cent. There is an enormous piece which is not in this room, and so I do not quite know why it is such a consolidated industry when you see people like Boeing and Airbus and those kinds of industries. That does seem a fairly tight market. I am not quite sure where this comes from. We have a very long tail to our industry.

Dr Charkin: I do not think when the last big merger between Harcourt and Reed Elsevier happened that we felt it was not in the interests of competition because it is a hugely fragmented business and we all compete in different ways. Some compete by being very author-friendly, some are more aggressive in the marketing, some add value in the technology, and we make up our own policies as we go along and we hope to do as good a job as possible.

Dr Jarvis: We compete a lot around individual journals. We want the best cardiology journal, the best physics journal. Sometimes we have and other times one of our competitors does. It does not feel like a consolidated industry when you are out there, I can assure you.

Chairman: On that note, that you do not bug each other's board meetings, can I say thank you very much for kicking us off. You are very welcome to stay for the next session.

 

Examination of Witnesses

Witnesses: Mr Crispin Davis, Chief Executive Officer, Reed Elsevier, and Mr Arie Jongejan, Chief Executive Officer, Science and Technology, Elsevier, examined.

Q64 Chairman: Welcome, Mr Davis and Mr Jongejan. Thank you very much for coming along to help us. You have been in the first session and I do not want to repeat similar questions, so under the different headings for the questions I wonder if you would like to take maybe five minutes to answer some of the issues on bundling, digitalisation, pricing policy, business models and so on? If you miss out any I am sure my hawk-eyed committee will pick up on it, so please do it your way.

Mr Davis: On pricing, we have put our prices up over the last five years by between 6.2 per cent and 7.5 per cent a year, so between six and seven and a half per cent has been the average price increase. During that period the number of new research articles we have published each year has increased by an average of three to five per cent a year. Last year it went up five per cent a year, so it is the same point as was made earlier. On top of that we have increased the number of historic articles available by some 20-30 per cent a year by adding all of our back articles on to ScienceDirect. The number of scientific researchers in this country accessing our content has increased by between 15 and 20 per cent a year over the last five years. Usage, which is measured by librarians by article downloads, has increased by between 50 and 90 per cent each year. All of those have significant costs to us to carry, obviously. Against those kinds of increases we think that the price rises of six to seven and a half per cent are justified. We also think that the institutional libraries are getting significantly better value for money year on year. They are getting more research papers, new research papers, each year. They are now getting all the archival research papers going back up to 150 years. They are getting massive improvements in functionality through the ScienceDirect platform in which we invest very heavily each year. More and more users are using our content each year. Their cost per article download, which to them is a key criterion, is falling by between 50 and 80 per cent each year. To give you an actual number on that, five years ago the cost per article download was over eight pounds. In 2003 the cost per article download averaged 1.69. We think this it will go down below a pound. On bundling, there are a lot of misunderstandings about bundling. The first is that all our customers, all librarians and institutions, are free to choose whatever they wish. We put in front of them a wide range of options. They can buy a small or a large number of articles that they want. They can buy a small or a large number of journals that they want. They can have those in print, in electronic or both print and electronic. They can buy subject collections, which are groupings. They can buy the whole lot. They can have contracts for one year, three years, five years. We have put the whole range option in front of them, which we then negotiate. We do give discounts. Obviously, if they expand beyond their core collections and take significantly more journals we will give them those at a very significant discount. There is no forcing. It is up to them to decide which they want. We do now make available to every librarian exactly what the usage was for each individual journal they took over the last 12 months or the last three years or whatever the length of the contract was, so they have total visibility and flexibility in terms of what they decide to take.

Q65 Chairman: Business models?

Mr Davis: We are, I would say, neutral on open access at the moment. We think that the present business model has served the scientific world very well. People often underestimate, I think, how well it is served. Today you have 1.2 million articles published every year. Every one of them is peer reviewed and every one of them is in a respected journal, distributed to 250 countries round the world, reaching some 12 million scientists, over 90 per cent of all the scientists available in print and on line. I think that is an end result that the industry can be proud of. Perhaps more important than that is that the penetration of scientific research has widened hugely over the last ten or 20 years. We calculate that over 90 per cent of all scientists globally now have access to our content. Ninety seven per cent is the actual number in the UK, and it will be similar in the US, that have access to our content. Productivity in terms of usage has gone up astronomically. It is roughly going up by 50-90 per cent a year. Last year there were 176 million article downloads just on ScienceDirect. I think that the present model is working well and making a real contribution. On open access our position at the moment is that we want to watch and learn and see what happens, as we have done in the past. I say we are neutral because at the moment there are some not insignificant questions being asked, not just by us. We get an awful lot of feedback from authors, from librarians, from researchers, from scientists, who also themselves access all the internet chat rooms, and the kinds of questions that are now being asked, and I do not necessarily think we have answers to them today, are as follows. The first is, will open access increase accessibility? All of us are committed to increasing accessibility of scientific content. I would argue that in the last ten years we have made a huge contribution to that, and I think 90 per cent worldwide of scientists and 97 per cent in the UK are exceptionally good numbers. Incidentally, any member of the public can access any of our content by going into a public library and asking for it. There will be a time gap but they can do that. We make ours available both in print and on line. In fact, open access would today have the result of reducing accessibility to scientific research because it is only available on the internet. In this country that would exclude some 20-25 per cent of scientists; globally it would exclude over 50 per cent of scientists. In factual fact, the business model we have today gives the widest possible access. The second question that increasingly is being asked is the inherent or potential conflict of interest if a publisher is receiving money from the author to publish that article. There is an inherent conflict there in terms of quality, objectivity, refereeing and so on. One of the real strengths of today's model is that there is no conflict there. We reject well over 50 per cent of all articles submitted. Other journals do that or even higher. If you are receiving potential payment for every article submitted there is an inherent conflict of interest that could threaten the quality of the peer review system and so on. Fourthly, people are starting to ask the question, is it actually right that the author or the authoring institutional university should pay to have the article published rather than the end user? There are quite significant implications. One is purely the affordability and the real question is whether third world institutions and authors would have the capability and the funds and whether this would inherently favour wealthier institutions or authors. It also means a very significant transfer of funds from, for example, the commercial sector. Twenty five per cent of our revenue comes from the commercial sector and this could be companies like the Ford Motor Company or Boeing or Merck Pfizer. Under the open access system they would get all the research free of charge, they would pay nothing, while the producing institutions, whether that is Imperial College or Yale or Oxford, would be the ones who paid or the authors would pay. That is a very debatable shift of funds. As I have said, it has serious implications for research institutions in this country. This country is a producer of research rather than a consumer. You have seen the numbers. We produce five per cent of the world's research and we consume three per cent of the world's research. These are the kinds of questions that are out there now on open access, and I think that over the next few years we will gradually develop the answers. Some of them may be positive, some of them may be negative, but I think that these are serious questions, important questions, that not just us but the whole scientific research world is asking, and we have got be very careful to develop the right answers.

Q66 Chairman: Thank you for that. Before I turn you over to the wolves let me ask you a question. I have it from a whistle blower that you think this inquiry we are carrying out will do very little to change policies in the publishing field and that really we are an embittered bunch of old, tired academics. Is that whistle blowing in your view correct?

Mr Davis: No.

Q67 Chairman: How would you correct that for the record?

Mr Davis: I would say that is complete rubbish and just not true at all. Right from the word go we have decided, and I think have tried, to be as co-operative and open as we possibly can be. We have submitted a very full report in answer to your questions. We invited you round to our offices. We are absolutely ready and committed to provide all the help, information and data we can on this.

Q68 Chairman: So you welcome this inquiry?

Mr Davis: Absolutely.

Q69 Chairman: Do you think it is opportune at the minute in this field of scientific publishing?

Mr Davis: The industry has been going through a period of extraordinary change over the last five to ten years, mainly due to digital technology, and it is quite an exciting time. Business models are changing, access is changing, usage is changing, productivity is changing. My answer is that, if it is an objective, inciteful inquiry, absolutely.

Q70 Chairman: I think the number of people in the audience reflects the interest.

Mr Davis: Absolutely.

Chairman: We do not get it for every inquiry, including renewable energy, I might add.

Q71 Dr Turner: One of the things which has surfaced in the national press recently has been the practice of some pharmaceutical companies to pay authors to put their names on research which they have not necessarily done. What do you have to say about possible malpractice or fraud of this nature in research publication?

Mr Davis: That absolutely would be 100 per cent against our policy and our practice. In an industry that publishes over a million articles a year you are always going to get the odd one that slips through, but generally the track record of the industry and ourselves has been, I think, unbelievably high in terms of the monitoring of quality and so on. We absolutely would not for one minute countenance what you have just described.

Mr Jongejan: That is exactly the reason why we are concerned on the open access model.

Q72 Dr Turner: Do you think that you have got possibly too big? Is it in the public interest that you command as much of the market of publication of STM titles as you do?

Mr Davis: I will give the answer in two parts, first just factually. This is an extraordinarily fragmented, diverse industry. There are over 2,000 publishers in this industry. The top six publishers have about 35 per cent of the market, so this is not a consolidated industry per se. There are new journals regularly being launched. There are, as I said, 2,000 by and large flourishing publishers of all sizes and you have got different business models - commercial, university and society. Within that we are the market leader with, depending on how you calculate it, something like 20 per cent of market share. If you ask is this helpful or not, in the last seven years we have led the industry and the scientific publishing world to on-line. I think most people would agree we have pioneered it through ScienceDirect and through the electronic platform. You can ask anyone in this research community has it been massively beneficial in terms of penetration, usage, access and so on, and the numbers I have already given you. That would not have happened if we did not have the scale to invest what turned out to be in excess of 200 million to develop the ScienceDirect on-line platform.

Q73 Dr Turner: None the less, when you were contemplating a merger with Harcourt, the Competition Commission examined this and one of their analysts came to the conclusion that the merger would be against the public interest. Can you allay his concerns?

Mr Davis: Yes. First, I ought to point out that the inquiry concluded that it would not be against the public interest and gave the go-ahead for the merger to happen. The one individual was particularly concerned on pricing, that Harcourt and Elsevier together would have excessive pricing power which we would exploit. At the time Harcourt was putting its prices up each year by eight to ten per cent. We were putting our prices up, as I said, by six to seven per cent. His concern was, "When this happens I know what is going to happen. You are going to end up putting all the journals up by eight to ten per cent". We said, "That is not the case. It will be the opposite. We will move the Harcourt pricing down to our level", and that is what has happened. Since the Harcourt acquisition we have put our prices up in the range of six to seven per cent. The other point I would add, and we can send you all the data, is that every year we analyse every price increase from every publisher on a graph. This is announced price increases. Every year for the last five years we have been in the bottom quartile or bottom tertile in terms of the level of price increases. That is factual. We can give you the data. I think therefore we have been a moderating influence on pricing in this industry over the last five years.

Q74 Bob Spink: You have given a very good account of yourself this afternoon, particularly on bundling. You provide flexibility on the packages you offer and customers have a choice of what they take. I just wondered if you could explain why and how you have managed to increase the number of articles by 200-300 per cent since 2001.

Mr Davis: We have increased the number of articles?

Mr Jongejan: Article downloads?

Q75 Bob Spink: Yes.

Mr Davis: The primary driver has been the ScienceDirect on-line platform which gives increasing functionality in lots of areas. Researchers tell us absolutely consistently that it is an enormous boost to their productivity, which is why they are using it more and more. The first reason is that existing users are using it more and more as we add more and more functionality, so there is a cross-reference capability where they can move to other publishers, there is a linkage capability to other articles. They now have access to the world-wide web through our search engine and so on. Secondly, more scientists are using it. There is a 20 per cent increase a year in the number of scientists and, lastly, the number of institutions who are taking it, so more scientists, more institutions, more functionality.

Q76 Paul Farrelly: Mr Davis, there have recently been examples of your losing editorial boards. People have been setting their own journals up, screening the pricing policy, defecting to rival publishers. Some people might say that that is the market working, but at the same time you began your address by saying that over the last five years you have been able to put through price increases of seven, 7.5 per cent.

Mr Davis: Between six and seven and a half.

Q77 Paul Farrelly: Year on year?

Mr Davis: Yes.

Q78 Paul Farrelly: I know you have got a background in consumer goods because I remember as a City editor of The Observer reporting on your appointment. Those are price increases that you in your previous life would have given your eye teeth for. What I would like to get to the bottom of is what features of the market you are now operating in allow you to sustain price increases of this order, substantially above inflation, year on year? I am not asking you to justify them, but what features of the market allow you to sustain those price increases?

Mr Davis: The biggest single factor is usage. That is what librarians look at more than anything else and it is what they determine whether they renew, do not renew and so on. We have usage going up by an average of 75 per cent each year. In other words, the cost per article download is coming down by around 70 per cent each year. That is fantastic value for money in terms of the institution, so I would say that is the single biggest factor. The second factor is ScienceDirect. We are continuing to invest well over 100 million developing new technologies, new features of functionality, and I think those are genuinely appreciated by our end users and allow us to continue to invest but also give them value for money.

Q79 Paul Farrelly: So it is demand driven?

Mr Davis: The last factor is that we are publishing three to five per cent more research articles each year.

Mr Jongejan: From the consumer's point of view, clearly the functionality we now provide is so increased that to run a library you basically should be able to take advantage of this. You ask how can you sustain that kind of price increase in a market where the budget grows at three per cent. My response would be by increasing functionality and efficiency at the consumer end. I think every publisher and librarian agrees that what we offer now saves an enormous amount of work walking from A to B and so on.

Mr Davis: We could position it a different way and if I were in my old consumer business I might by saying that in the last five years the cost per article has come down every single year, the cost per user has come down every single year for the last five years, so there is a different way of looking at it. Our investment has gone up every year and increasingly up every year for the last five years.

Q80 Dr Iddon: You were very straightforward and told us your profit margin was 34 per cent. We know you do a lot of development work. ScienceDirect is pretty impressive. Out of that 34 per cent do you use some of those profits to fund the developments or is that after developments?

Mr Davis: The 34 per cent I will call, if you like, a gross profit margin before goodwill, amortisation, tax and so on. If you take all of those off our net reported profit margin is 17 per cent. We invest in excess of 150 million a year on new technologies, functions, ScienceDirect and so on, and that is capitalised over a five to ten year period, but essentially the 17 per cent would be before that investment.

Q81 Dr Iddon: You quoted the cost of publishing an article and it is going down to a pound, you said, in the future. Can we make sure whether that is the full archival background or whether the industry is the cost of publishing newly published journals?

Mr Davis: The cost that we are talking about is the cost per article download, that is how much a library will be paying for an article download, which is one of their key criteria. That will come down, we think, 50 per cent in the next 12 months. The cost to publish an article which has already been covered ranges from between $3,000 to $10,000 per article. That is something different. Incidentally, I would agree with those numbers.

Q82 Dr Iddon: So the cost of downloading includes all your archival costs right back into the past?

Mr Davis: Yes.

Q83 Dr Iddon: And that would go down, would it not?

Mr Davis: Yes, but the cost is the cost to the library.

Dr Iddon: I understand that.

Q84 Mr Key: Mr Davis, your company owns The Lancet. Do you think that scientific publishers have a responsibility towards society to ensure that the research they publish is authenticated and not affected by conflict of interest?

Mr Davis: We absolutely have a responsibility to ensure that what we publish is peer reviewed, accurate, reflects best practice. In the issue of The Lancet we do have a policy where people who submit their articles have to declare any conflict of interest. You can imagine that it is virtually impossible for every editor to research every single author in terms of conflict of interest, and in this one Dr Wakefield said there was no conflict of interest, and in fact three months later in written form repeated that there was no conflict of interest . In all fairness, I do not hold our editor to blame in that instance. I think it was regrettable but I do not think he or The Lancet were at fault at all. We were in our opinion badly misled.

Q85 Mr Key: Thank you for explaining that. Is there any evidence that pharmaceutical companies are paying authors to produce papers to promote their products?

Mr Davis: Not that I am aware of, certainly not with our journals.

Mr Jongejan: Again, that would be one of our biggest concerns in another model, that exactly that model starts to apply. We have very few submissions from the pharmaceutical industry.

Mr Davis: Unless an author lied to us we would know that and we would never publish an article where an author was paid by a pharmaceutical company. It would be a blatant conflict of interest.

Q86 Dr Iddon: Do they make declarations of interest when they submit a paper?

Mr Davis: They do now. In the last two years we have implemented a proactive policy where we do force every author to declare that there is no conflict of interest.

Q87 Dr Harris: Coming back to this issue of Dr Wakefield, I am conscious of the fact that it is a force for editorial freedom for proprietors, and you have given a view. Is it consistent to say that you feel you did not have full disclosure and indeed, three months later, following an allegation in the letters page, there was a specific denial, and then your editor said that the article was fatally flawed? Should that not be equivalent to a retraction rather than a correcting editorial under the code guidelines, or are you happy that that is where we are at?

Mr Davis: I am not happy that this is where we are at at all, for obvious reasons, but I think that the editor behaved in absolutely the right way. At the time of the submission of the article there was no admission of conflict of interest. Three months later there was a written letter. I think I have got it somewhere here.

Q88 Dr Harris: I have it as well, 7 May 1998

Mr Davis: It actually says, "There is no conflict of interest". Should the editor then -----

Q89 Dr Harris: I am talking about now. Now it has come to light why did this not get retracted, particularly given that the conflict of interest has been said to go to the core of one of the scientific findings of the paper, that there was a link between MMR and autism and because there is a legal case going on with four of the patients?

Mr Davis: I think the editor did immediately, when this was brought to his attention, say publicly that the research therefore was - I think the words he used were - fatally flawed.

Q90 Dr Harris: Why is that not a retraction? Why is the article not being retracted or are you happy not to have your editors retract articles that are fatally flawed?

Mr Jongejan: To my knowledge the editor is not excluding at this point that this is the end of the investigation by himself or by any other party, so I think this issue is in that sense still open.

Q91 Dr Harris: Finally, would you support an international committee on scientific evidence of the type that has been called for by Hertzheimer, Altman and Chalmers, as you will be aware?

Mr Davis: Of this particular issue? No.

Q92 Dr Harris: No, just generally, so that there is an international committee that can deal with this.

Mr Jongejan: No. I myself am in discussion with the Washington Institute of Science(?) for the avoidance of conflicts of interest, so the publishing world in general is taking this very seriously. That will also be the reason in 2001 why the rules were strengthened to cover any kind of model.

Q93 Dr Harris: You are not worried by the fact that this particular author has threatened to sue anyone who claims that he misbehaved?

Mr Jongejan: No.

Chairman: Thank you very much for coming.