Authors: Lukas linsi, Léonie de Jonge, David Cheruiyot and Niels Bieleveld

Introduction

In which sector do the highest-paid Dutch CEOs work? The banking industry? Tech industry? No, it's scientific publishers. This is what we found during our research about executive compensation practices in the Netherlands between 2017-2020. The figures come from companies' annual reports.

Highest paid Dutch CEOs

Table 1 shows the five highest paid Dutch CEOs from 2017 until 2020. While the CEO of recently departed oil giant Royal Dutch Shell tops the ranking, scientific publishers are not far behind. The second place in this ranking is occupied by the CEO of information services company Wolters Kluwer—originally a school book publishing company founded in Groningen in 1836. Coming in third is the CEO of RELX, formerly known as Reed Elsevier, which runs well-known academic services such as ScienceDirect, Scopus, SciVal, or ClinicalKey. Both of them were remunerated more than 30 million euros over these four years. This is more than three times as much as the take-home of the CEO of the largest Dutch bank, ING, over the same period, and almost ten times as much as what was earned by the CEO of ABN-AMRO. 
To put these numbers into perspective: the two CEOs’ individual pay (about EUR 7,5 million a year) could finance about 120 assistant professorships each and every year. Dividend payments in the range of EUR 200-300 million that the companies have typically handed out annually to shareholders in recent years could, theoretically, if they were reinvested in science instead of being handed out to financial investors, pay for another 3,000-5,000 researchers a year (per publisher) and generate new knowledge rather than stock market gains.

Big business

These figures are not merely a Dutch phenomenon. Executive directors of other major players in academic publishing such as Axel Springer (listed in Germany), Thomson Reuters (Canada) or John Wiley & Sons (USA) enjoy similarly lavish paychecks. Admittedly, academic publishing is only one part of the business of these companies. Axel Springer simultaneously runs a broad range of magazines, newspapers and TV stations. Thomson Reuters and Wolters Kluwer have moved into business analytics, selling data and information softwares to hospitals, lawyers and finance professionals. 
But academic publishing remains one of their core businesses. RELX reports revenues from scientific publishing of EUR 2,7 billion, which corresponds to close to half of its total operating revenues. 76 percent of these revenues are declared to originate from subscription fees that it charges university libraries and private research institutions to grant access to its portfolio of 2,650 academic journals, which together publish about half a million scientific articles a year. Inferring from RELX’s declared 18 percent global market share, a quick back-of-the-envelope calculation suggests that universities worldwide spend some EUR 10-15 billion on subscription fees alone a year. That’s big business.

Staggering business model

But this business model makes little sense from a public point of view. While scientific publishers play a key role in the dissemination of scientific knowledge, these publishers are profit-oriented organizations that follow a commercial logic. This contrasts with universities, which are largely funded by public money and facilitate the production of the knowledge that the publishers commercialize. To put it bluntly: directly or indirectly, substantial parts of the profits that scientific publishers pocket stem from public investments in higher education – a sector that is notoriously underfunded in the Netherlands and beyond. 
Yet, arguably the most remarkable aspect of this business is not the size of taxpayer money invested by governments to provide access to scientific journals. It is the fact that governments, who employ most university researchers, also pay—directly or indirectly—the research that is being published in these journals. It is, in some ways, a staggering business model: financed by taxpayer money, highly qualified scientists use publicly funded research infrastructures to work on specialized research projects, oftentimes for extended periods of time. When they are done, they provide the key insights of their findings to the academic publishers – for free. (In some cases, authors are now even charged so-called ‘Author Processing Charges’ or APCs to submit their articles, which is then used to pay for open access, thereby shifting the cost away from readers to authors.)

Eye-watering profit margins

Once scientists have submitted their work to an academic publisher, their peers volunteer to act as peer reviewers on behalf of the journals – once again without incurring any charge to the publisher. When the article has gone through the peer review process and is cleared for publication by fellow scientists, all that is left to do for the scientific publishers is, essentially, to type-set the manuscript and assign it a number in its journals system, before it can be re-sold to public institutions at a handsome profit. 
Against this backdrop, it is not surprising that scientific publishing is a highly profitable industry. Table 2 compares the 2017-19 period-average profit margins of RELX, Wolters Kluwer and John Wiley & Sons to some other well-known global corporations. Remarkably, both RELX and Wolters Kluwer enjoy eye-watering profit margins of around 20 percent, in close reach to those of Google/Alphabet and Apple (two of the world’s most profitable businesses). Margins appear somewhat lower for John Wiley & Sons, but they are still far above those of established manufacturers such as Philips and Volkswagen.

Looking at these figures, it is easy to blame publishers for their greed. Yet, one might argue that being opportunistic is the nature and purpose of any profit-oriented commercial enterprise. What is perhaps more surprising, then, is the fact that the institutional structures which have fed these staggering rent-seeking opportunities for decades—structures that we, as members of the academic community, all have been complicit in – often go unquestioned and are therefore kept in place.

Transition to open access

Besides the mind boggling profit margins discussed here, there are other reasons to question the current academic publishing system. First and foremost, universities are becoming increasingly dependent on commercial publishers, which has the potential to undermine academic freedom. Following in the footsteps of large tech companies such as Facebook, Amazon, or Google, scientific publishers have further expanded their business models towards data analytics. As part of that strategy, they have gained control over large parts of the research infrastructure of universities by acquiring companies that play crucial roles in various parts of the research cycle. RELX/Elsevier is a case in point: it owns search engines (Scopus), reference management systems (Mendeley) as well as repositories (Pure), thereby allowing it to track (i.e. record and store) valuable user data, which can subsequently be sold to commercial parties.
The outsourcing of the research infrastructure to commercial parties carries significant risks. These risks include concerns about privacy, data protection and data autonomy, as well as financial risks. Last year, for example, Juliëtte Schaafsma and Martijn van der Meer warned of the dangers of unregulated and hidden data tracking by large publishers. The transition to open access has caused major publishers to adjust their revenue model, which is now based in part on researchers' user data that can be sold to third parties or sell additional services to universities.

Perhaps more importantly, the current academic publishing system is arguably bad for science. The dominance of these publishing houses in the global academic market has sustained imbalances in global knowledge production. These publishers have created ‘high-ranked international’ journals that are a reserve of the resource-rich institutions and their researchers, mostly in Europe and North America. Less resourced universities, mostly based in the Global South, have to part with huge subscription fees to access these ‘international’ journals. Limited access to the academic community has perpetuated global inequalities in knowledge production, which has subsequently curtailed diversity in science. 

Long-term vision

While there is some debate at Dutch universities about privacy concerns with regards to Google, similar discussions about publishers remain scarce. More generally, there is little push-back from the academic community against ‘vender lock-in’ practices of scientific publishers. This needs to change. Academic publishing ultimately involves commercial companies monetizing public goods and academic futures at the expense of staff, students and ultimately taxpayers. Moreover, the implicit subsidizing of shareholder payouts and multi-million executive pay packages is irreconcilable with the principles of open science that our universities allegedly advocate. Admittedly, breaking free from this system is challenging, particularly because it would require coordinated actions from different institutions and across different disciplines and countries – but there are viable alternatives. ArXiv is a case in point. This is a free and open-access online archive for pre-prints of scientific articles in different fields, including physics, mathematics, and statistics. Similar alternatives exist also in other disciplines (e.g. SocArXiv, PsyArXiv en BioRxiv). More recently, the entire editorial board from two leading neuroscience journals resigned in protest against unsustainable APCs set by Elsevier, and went on to found their own open-access journal. Besides these discipline-specific initiatives, there are ambitious national and international plans (including Plan S) to get around the stranglehold of big publishers. While these actions show that change is possible, more systemic transformations are needed. This starts with a long-term vision that reassesses not only the future of academic publishing and the universities’ relationship with commercial publishers, but also the development of non-commercial research softwares that safeguard both data and privacy of researchers.