For several months now, we have been listening to customers to get a practical understanding of how the current economic crisis is affecting academic and government institutions. There are several dynamics in play, including decreases in tax revenue which have an impact on appropriations for higher education; a decline in students’ ability to pay for tuition; a shrinking of endowments; as well as an increasing number of vendors and agents that are under financial strain. One thing for certain is that these are unique and challenging times for both our customers and Elsevier.

The currency dilemma

One of the most visible impacts of the crisis is currency devaluation. For years, customers have told us that they must strive for predictability in expenditures year on year. The current economy has not been cooperating with that request. To give but one example of the volatility of currency fluctuation, the Korean Won decreased 17% in value compared to USD from Oct. 28th to Oct. 30th 2008 – less than a month later was worth 3% more than it had been on Oct. 28th. These fluctuations are obviously beyond both the institutions’ and our control; but for the past ten years, Elsevier has worked to provide some consistency by setting prices in three major currencies (Dollar, Euro, and Yen) where a majority of our customers are vested, while implementing moderate and consistent price changes per currency.

The economic crisis is a unique experience for each region, country, and institution

The more I talk to customers in detail, the more it becomes apparent the global economic crisis is not a universal experience. That is to say, each institution is subject to a unique set of circumstances and opportunities, based on the local economy, the government’s response, and institutional policies. Customers have shared with me a wide variety of strategies they are employing to get through the situation. Some universities are leveraging long-term financial planning to overcome short-term financial constraints. Many librarians around the world are working on arguments to demonstrate the value of the library and make the case for strategic investment in information. Several institutions have told me that they will now use federal stimulus to help to soften impact and enable long-term strategic choices. Most countries around the world have enacted an economic stimulus program. One of the most prominent is in the United States: the American Reinvestment and Recovery Act includes $21.5Bn in additional federal Research and Development funding over the next 2 years; of which 70% will go to universities to do research . When we talk to our customers, we see that different approaches are required for different situations in order to ensure continued support for research productivity through the library.

Research Innovation as recovery strategy

Countries are investing in research and innovation to revitalize their economies. Universities follow established principles in forming strategies and making decisions related to short and long-term budget planning. A common principle is to advance and maintain the University’s quality, competitiveness, and momentum through prudent investments in its education, research and public mission. In a difficult economy making the right strategic choices for universities becomes even more essential. What do we need to attract the best faculty? How can we increase funding from other sources? How do we stay competitive? Unfortunately, the contribution from access to content (scholarly communication) is relatively undervalued in the strategic planning of competitive research institutions.

Collaborative potential

For customers looking to collaborate, Elsevier can offer assistance to demonstrate the importance of scholarly communication and the added-value of e-resources to a university’s productivity and ability to attract funding. Our research demonstrates that an increase in the use of e-Journals strongly correlates with an increase in published articles per researcher. Independent research has recently reinforced similar findings. In April 2009, a   study was released by the Research Information Network, RIN, which confirms a strong correlation between e-journal usage, research output and funding. To quote the paper: “Doubling in downloads, from 1 to 2 million, is statistically associated with dramatic - but not necessarily causal - increases in research productivity”. But demonstrated in their modelling, the effect becomes even stronger as downloads increase further.

Elsevier working to do its part

Governments are investing in innovation because value is derived from innovation. Cost-efficient innovation is also at the core at Elsevier’s strategy to overcome the global economic crisis. Elsevier must run a highly efficient organization to receive over 500,000 manuscripts per year; process them via 200,000 referees, resulting in 1 million referee reports per year. 40-90% of articles submitted to our journals are rejected. We have 7000 external editors and 70,000 editorial board members. Our employees engage with 6.5 million authors and editors per year, producing more than 250,000 new articles annually. We publish 20 million researchers from 6,000+ institutions in over 180 countries; resulting in more than half a billion downloads per year from over 1800 journals publishing 9 million articles – that is 25% of the world’s annual scientific output. And we do this by continually improving efficiency; in both operational and commercial terms. And this year, we have taken even more internal measures to cut our own costs and further increase efficiencies. For example, Elsevier has frozen the salaries of its senior management and is scrutinizing all hiring. While ensuring that customers continue to receive the highest quality service, Elsevier has put restrictions on non-customer-facing travel.

The situation today: What will Elsevier do to help customers through the economic crisis?

The current economic downturn clearly affects the science and health communities that Elsevier serves. We believe in working with our customers to weather the crisis and continue access to information resources that are essential to research and education and to advancing science, health and economic growth. But as I mentioned earlier, the economic crisis has not impacted every institution in the same way, which means there is no single solution. This is why on two fronts Elsevier will continue to do the following:

1. Moderate its price changes in 2010: some journals will decrease in cost and others will increase. Each institution will see a different overall impact, depending on its particular mix of titles and contracted spend commitments.

2. This coming year, Elsevier will work with institutions individually to find solutions for academic customers whose budgets are suffering from the current economic crisis.

Longer term, Elsevier is continuing to evolve its business models to better reflect the value of the individual journal.

Also see:

How We Price Journals Today

Reconsidering Journal Pricing In An Electronic Environment

Value of Research Information

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