Just wait til they get around to takedown notices on prior art.
There is an important distinction to be made here, as there is ambiguity when you talk about "authors posting PDFs of their papers". This can mean a PDF of the paper as it was published in the journal (on paper or electronically), including the work one by the journal's editorial and publishing staff to format it nicely, to use their preferred fonts, columnation, etcetera - or it can mean a PDF of the manuscript the authors submitted for publication (the final version for typesetting, I'm not trying to claim the journal has copyright over changes the authors made in response to peer review or editor's comments).
The journal has a very reasonable claim to the version they've paid to format and branded with the hallmarks of publication in their journal and likely with their logo; they have (or should have) no claim to the manuscript version. Critically, if the linked article even mentions this distinction, I failed to notice it. This means that I don't even know which version of the manuscript Elsevier is demanding be taken down in this instance - but, generally speaking, it is my impression that journal publishers don't interfere when people post their manuscripts online, as opposed to posting electronic reprints of the version the publishers formatted.
The actual entity that's protesting here is "Academia.edu" - their place in the ecosystem is rather unclear and I would say tenuous. If you look at Elselvier's copyright blurb, as an author with them you are allowed to email a PDF of the finished paper to anyone who asks you for one, and you can do what you like with the manuscript that you submit to them before peer review - what you're asked not to do is to put the full text that's undergone peer review, has likely been improved by copy editing, and by incorporating referee comments received during peer review, and by being typeset - into a third party website (such as Academia.edu).
Elselvier and publishers like them do add some finite, measurable, non-zero value to a paper - they filter out some errors via peer review, by rejecting nonsense, and they improve other papers that are reviewed, corrected and resubmitted. They also typeset the manuscript. This takes a bit of time for the editor involved and it's not unreasonable that they should get a few hundred dollars for their time.
Academia.edu is jumping in after the work of reviewing the paper has been performed - then it's only the cost of indexing and hosting the PDF - which is truly negligible. Why should Academia.edu be allowed to host papers, when they have not been involved in reviewing or improving the text? Reading the linked post, the take-down notice is being served on the third party, Academia.edu, not the author.
The author of the paper does have the rights to distribute the paper to anyone who asks for a copy via email, and the RCUK is moving academics in the UK towards a scheme where papers that are not open access cannot be used to secure government funding from April 2013. Elsevier will have to adapt to that or it will be left behind. There's fairly strict rules, such as the paper must be guaranteed to be available for 10 years from the publication date, with the expiry clock reset after each access to the URL.
What we will need is the equivalent of a public right-of-way someone to download each link once every 10 years, in the same way that public footpaths are kept open by committed ramblers walking across the public rights of way every 7 years or so.
I used to work in this field (academic journals), and assuming Elsevier is like every other publisher, then the journal holds the copyright for the article once it's published, unless the work was done on the government's dime. Authors are typically given a form called "Transfer of Copyright" that explains this and which they have to sign. This isn't some evil, Big Brother censoring--they're just enforcing the agreement the authors entered into, and as others have pointed out, there's a non-trivial amount of work that goes into producing those journals.
Granted, Elsevier has engaged in plenty of other shady behavior--especially in terms of subscriptions--but this isn't one of them. The question of whether there's a different/better way to do this is one worth having, but at least in terms of how the current model works, there's nothing nefarious going on here.
As WarrenTerra notes, it's very unclear as to whether the postings being discussed here were the final, journal-typeset versions (usually not allowed per terms, but often posted), post-peer-review revised but author-typeset or revised manuscript versions (usually not allowed per terms, but very widely posted and hard to notice), or pre-peer-review manuscripts (usually allowed per terms, but dangerous in terms of scientific accuracy and consistency). Elsevier only allows the last of those to be posted, except, oddly, for allowing revised versions only on arXiv.
It's very possible that this is over a clear breach of terms. However, Elsevier also has a restriction on posting anything for "commercial purposes" or in "systematic" ways or ways that "substitute for journal-provided services." Their definition of commercial purposes explicitly includes advertising on websites, and extends even to companies letting customers or clients have copies of journal articles: they give an example of a pharmaceutical company providing a paper to a physician.
The "systematic" / "organized" / "substitute" restriction, also, is extremely vague, and appears as though it could cover almost any site trying to provide organized or convenient access to preprints or any other copies of papers. It's possible that Elsevier is going after academia.edu as a whole using this restriction. That would be quite a bit more unsettling than simply going after the posting of a final version of a paper, as it would confirm the impression I get from their terms that the point is to make posting seemingly allowed but incredibly inconvenient.
It's more than that. Information wants to be free. This rigid selection process and tight-fisted control on who can read the papers are an anachronism. Now, we have new models for peer review and information dispersal, and these bad old publishers would license the varnish on your creaky old chair, if they could, to make money off keeping people in the dark. They no more facilitate science than a toilet facilitates water flow through the sewage system.
The antipathy against Elsevier is more to do with the fact that it's strategy is to deliberately publish rubbish articles that have been identified as likely intellectual dead ends, and then charge for access. How many times is the typical article cited in an Elsevier journal? Twice or less, ie. it's subject matter is irrelevant. If you're buying an article from Elsevier, you know you're wasting your money, and that the taxpayer money that funded the researcher was probably a waste of time too, because the article will be insignificant, but probably not fraudulent.
entirely substantially on the long tail of academic publishing, because in many fields (biology excepted) no-one will send a manuscript to Elsevier as a first choice. Elsevier are the sloppy seconds of the academic publishing world, and everyone knows it. Rejected manuscripts filter their way to Elsevier after a couple of bounces from respectable journals. A publication in Elsevier is just above the cut-off of unprintable.
Effectively you need a government to sponsor the copy-editing work as a one-off expense, each time an article is published, and to provide a small hosting subsidy. The government should also pay rewards for cited articles. e.g. if your journal publishes a paper that gains 10 citations, the government should reward that with say a $500 bonus the next year - if it publishes a paper with 100 citations, a $5000 bonus, etc. That would incentivise the editors to select worthwhile material for publication.
I'm sorry, you're wrong. Or, more precisely, your story is incomplete, and you're wrong to use the word "entirely". I agree that Elsevier publishes any number of thoroughly dispensable journals such as you describe - but they do publish some top-ranked journals. They purchased Cell Press, which puts out a number of the very best journals, journals that consist entirely of papers worth reading even by people whose own work doesn't directly connect to the subject of the paper, journals that are important enough to defuse a lot of the boycott threats against Elsevier - because very few principal investigators, and far fewer first authors, are so very secure in their careers that they can afford to pass up a shot at publication in Cell or in Neuron if they have a story that might make it into those pages.
Elsevier, perfecting the art of the end run on their own stupidity, alienating the very authors their livelyhood depends on. What could possibly go wrong? ... Profit!
Just to be clear, when you say "the government's dime," you mean "the U.S. government's dime." If an article is written by a U.S. Government employee in the course of their employment, it constitutes a "Work of the United States Government," and is not eligible for copyright under title 17, U.S.code. If it is the product of a U.S. government grant, the government will reserve some rights, and make signing copyright assignments with publishers that do not respect those rights a violation of the terms of the grants. Just as authors are free not to agree to the terms Elsevier (or other publishers) impose with their copyright assignments, those publishers are free to decline to publish articles that are not covered by copyright or where the rights assigned are limited because the work was the result of a government grant. But of course with much research being the result of government funding, they have tried to buy enough congressmen to prevent the government from imposing conditions (like open access after an embargo) on those works. Which strikes me as very similar to a child insisting that they'll accept free ice cream ONLY if it has sprinkles on top.
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