Wednesday, April 16, 2014

Would Elsevier's Universal Access in the US raise Elsevier profits to 98.6%

Brian Matthews at Ubiquitous Librarian has calculated that it would cost the U.S. about $91 billion to purchase Elsevier Universal Access for everyone in the U.S. By my calculations, this move would have little to no impact on Elsevier costs, therefore increasing Elsevier's global STM revenue 25-fold and increasing their profit margin from 39% to 98.6%. Following are my calculations. 

Elsevier's Universal Access is their corporate alternative to open access - the vision where open access is not necessary, because everyone on the planet is covered by an Elsevier subscription. Brian Matthews at Ubiquitous Librarian estimates that a U.S. national subscription to Elsevier Universal Access for the U.S. would cost $91 billion U.S. That's 25 times Elsevier's global STM revenues of approximately $3.7 billion U.S. (based on $2.2 million UK pounds converted at today's rate as quoted by Bank of Canada). That $3.7 billion U.S. already accounts for a 39% profit margin. Universal Access for everyone in the U.S. would likely have little to no impact on Elsevier's costs (those who really need the journals already subscribe, and any slight increase in usage costs is likely to be more than offset by a decrease in technical support and sales costs). If Matthew's calculations are correct, this would mean that Elsevier profits would increase from $1.3 billion U.S. (based on 826 million GBP) would increase to approximately $89.7 billion U.S., a profit rate of 98.6%.

My post calculating the Elsevier 39% profit margin and highlighting key Elsevier financial data is available here: