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RELX weak as UBS reiterates ‘sell’, cites news European research funders seeking to introduce Open Access system

The Swiss bank’s analysts pointed out that, on 4 September, with the support of the European Commission and European Research Council, 11 national research funders, announced a plan to try and make immediate Open Access to research a reality
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The UBS analysts estimate that the organisations involved represent 5-10% of global research funding

RELX PLC (LON:RELX) was a FTSE 100 faller on Thursday as UBS reiterated a ‘sell’ rating on the Anglo-Dutch professional publishing group, citing news that European research funders are seeking to introduce an Open Access system.

In a note to clients, the Swiss bank’s analysts pointed out that, on 4 September, with the support of the European Commission and European Research Council, 11 national research funders, announced a plan to try and make immediate Open Access to research a reality.

READ: RELX’s first-half results ease concerns over German and Swedish universities dispute

The analysts said the plan essentially means that by 2020, any research funded by these organisations can only be published in full open access journals which do not require a sUBScription.

The analysts estimate that the organisations involved represent 5-10% of global research funding.

Negative for Elsevier

They pointed out the coalition’s plan is negative for RELX’s Elsevier business as it would divert research from hybrid and closed journals into full open access journals.

The analysts pointed out that if fewer articles are published in subscription journals they believe this will reduce the pricing power of Elsevier when it negotiates renewals.

They also think that it will reduce the pool of open access revenues available to publishers as author processing fees are typically lower for full open access journals than hybrid journals.

Thirdly, the analysts added, given Elsevier is underweight in full open access publishing, a shift of articles into this medium will lead to lower Elsevier market share.

Implementation a challenge

The analysts did note, however, that implementation of the Open Access plan may be a challenge as it contradicts a principle that until now has been held universally – the freedom of researchers to select the venue for publication.

They also pointed out that full open access journals typically have lower impact, factors which creates a disincentive for researchers to use them.

The funding of author processing charges to hybrid journals has enabled more open access publishing without restricting that freedom but has clearly come at a price some funding bodies are no longer willing to pay.

However, if non-Europeans can continue to publish in the journals of their choice, but Europeans are restricted, then this could generate conflict.

UBS repeated a 1,550p price target on RELX shares, which were down 1.4% to 1,611p in early afternoon trading.

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