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Re: Wellcome Trust report

There are parts of Mr. Friend's conclusion (stated rhetorically) that are
correct, namely, that commercial publishers, like all other commercial
vendors do not pass on cost-savings to their customers unless there are
compelling marketing reasons to do so.  Who would imagine that it would be
otherwise?  Furthermore, for companies organized under certain state laws,
it could be construed by some as illegal. (A Delaware corporation exists
solely for the benefit of the shareholders, a California corporation
exists "primarily" for the benefit of the shareholders.  Lawyers, please
jump in.) Nor would many of us, in our role as teeny owners of shares of
publicly traded stock held in retirement mutual funds, want managers to
look out for their customers first, shareholders second.  But this is not
publishing we are talking about, but capitalism itself.  For people who
want to fight that battle, no comment.

When might cost-savings be passed on to customers?  Not-for-profit
publishers don't have the same economic requirements as commercial
publishers and may not choose a "price-optimization" strategy.  Or any
publisher may see more profit in greater volume at lower prices, but this
rarely applies in the academic research market, which is notoriously
inelastic (How many new universities are being built today?).  Or there is
the "loss-leader" strategy, where one product is underpriced in order to
sell other, even more profitable products (also rare in commercial
research publishing, though perhaps this underlies in part the business
rationale for the Big Deal).

The moral case for lower pricing falls on deaf ears precisely because the
ears are paid to be deaf.

Joe Esposito