How long would it take to buy Elsevier instead of APCs or subscriptions?

August 15, 2018

Robin N. Kok asked an interesting question on Twitter:

For all the free money researchers throw at them, they might as well be shareholders. Maybe someone could model a scenario where all the APC money is spent on RELX shares instead, and see how long it takes until researchers own a majority share or RELX.

Well, Elsevier is part of the RELX group, which has a total market capitalisation of £33.5 billion. We can’t know directly how much of that value is in Elsevier, since it’s not traded independently. But according to page 124 their 2017 annual report (the most recent one available), the “Scientific, Technical and Medical” part of RELX (i.e. Elsevier) is responsible for £2,478M of the total £7,355M revenue (33.7%), and for £913M of the £2,284M profit (40.0%). On the basis that a company’s value is largely its ability to make a profit, let’s use the 40% figure, and estimate that Elsevier is worth £13.4 billion.

(Side-comment: ouch.)

According to the Wellcome Trust’s 2016/17 analysis of its open access spend, the average APC for Elsevier articles was £3,049 (average across pure-OA journals and hybrid articles).

On that basis, it would take 4,395,000 APCs to buy Elsevier. How long would that take to do? To work that out, we first need to know how many APC-funded articles they publish each year.

From page 14 of the same annual report as cited above. Elsevier published “over 430,000 articles” in a year. But most of those will have been in subscription journals. The same page says “Subscription sales generated 72% of revenue, transactional sales 26% and advertising 2%”, so assuming that transactional sales means APCs and that per-article revenue was roughly equal for subscription and open-access articles, that means 26% of their articles — a total of 111,800.

At 111,800 APCs per year, it would take a little over 39 years to accumulate the 4,395,000 APCs we’d need to buy Elsevier outright.

That’s no good — it’s too slow.

What if we also cancelled all our subscriptions, and out those funds towards the buy-out, too? That’s actually a much simpler calculation. Total Elsevier revenue was £2,478M. Discard the 2% that’s due to advertising, and £2428M was from subscriptions and APCs. If we saved that much for just five and a half years, we’d have saved enough to buy the whole company.

That’s a surprisingly short time, isn’t it?

(In practice of course it would be much faster: the share-price would drop precipitously as we cancelled all subscription and stopped paying APCs, instantly cutting revenue to one fiftieth of what it was before. But we’ll ignore that effect for our present purposes.)

 

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2 Responses to “How long would it take to buy Elsevier instead of APCs or subscriptions?”


  1. Thanks for the writeup!

    I think we can do it even faster – all we need is 51% of shares!

  2. Mike Taylor Says:

    That is an excellent point. So we could be done in less than three years.


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