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Love affair with Reed begins to cool

COMPANIES UK: Love affair with Reed begins to cool

By Stephanie Kirchgaessner

Financial Times; Feb 09, 2004


Most analysts agree that Reed is fundamentally strong. But there is
growing evidence that the company's scientific publishing arm, which
contributes about 28 per cent of sales and 40 per cent of profits, is
being threatened. This is because of significant cutbacks in journal
buying by some of Reed's largest customers, and scientists' increasing
interest in cheaper alternative electronic publishing methods.


The University of California Libraries is a consortium representing ten
California university campuses - some of the largest libraries in the US.
It is also the largest buyer of Reed's scientific journals, spending about
one sixth of its yearly $60m (=A336m) budget for new materials on one
single publisher.

But the allocation of such a high percentage of the consortium's total
budget to Reed has become increasingly problematic for Beverlee French,
who was active in negotiations between the library and Reed late last
year.  "We found that Reed Elsevier accounted for 50 per cent of costs of
system-wide contracts for electronic journals, but only 25 per cent of
use. It suggests value is not aligned with cost."

Ms French said the new, five-year contract the library(UC DIGITAL LIBRARY)
agreed with Reed in December "achieved most of our goals, but still cost
too much". Under the terms of UCL's previous five-year contract, the
library paid a 6-7 per cent increase on content it was receiving every
year.  Over those five years, Ms French estimates that UCL paid $40m to
Reed. But under the terms of the new contract, UCL cancelled about 200
journals, and and prices are set to increase only 5 per cent from 2003
levels over the life of the entire contract.

Chuck Hamaker
Associate University Librarian Collections and Technical Services
Atkins Library
University of North Carolina Charlotte
Charlotte, NC 28223
phone 704 687-2825