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The Economics of Open Access

Librarians have supported the open access movement for a variety of reasons, some of them more rational than others.  The emotional motivators come from the frustration of feeling economically powerless in the face of ever escalating subscription and licensing prices and the feeling that "the publishers" are mercenary bastards who have a dual mission of gouging library budgets and attempting to prevent people from ever getting to scientific content.

I understand the frustration, and even share much of it, but it seems to me irrelevant in making decisions about what needs to be done to provide more equitable access to the results of scientific research.

At the annual meeting of the MLA Southern Chapter in Augusta last weekend, Eli Neiburger and Michael Porter spoke as if the OA movement represented an assault on the dominance of the big bad commercial publishers.  Eli & Michael come from a public library background and can perhaps be forgiven their naivete about the world of STM publishers and academic libraries, but many of my academic library colleagues seem to share that view.  But all of the evidence is that the big publishers have simply adapted OA publishing models and are as strong and dominant as ever.  Certainly the state of library budgets hasn't improved any in the last decade.

The good thing is that there is more and more content freely available from a wider variety of publishers all the time.  This is a very good thing (the rational reason to promote OA), but it has nothing to do with challenging the dominance of the commercial publishers and their ability to set the terms.

He's not a librarian, but George Monbiot's overwrought piece in the Guardian awhile back does represent the passionate views of the small coterie of OA advocates who seem to drive the discussion.  In Monbiot's telling, the publishers are "parasitic overlords" and we must "liberate the research."  Stirring words.  Silly man.

Monbiot quotes from a 2005 report from an analyst at Deutsche Bank AG who says, "We believe the publisher adds relatively little value to the publishing process."  I guess if an anonymous analyst for a German bank says it, then it must be true!

What I find so interesting about this viewpoint, however, is that it seems so contradictory to how OA publishers are viewed by the library community.  As David Crotty reports in an excellent post in the Scholarly Kitchen, PLoS achieved a 20% margin in 2010, and if the trends continue, could conceiveably surpass Elsevier's margin for 2011.  Springer claims "double-digit" profits from BioMed Central.  What are those librarians who've been gnashing their teeth for years over the predatory, irresponsible, evil pricing policies of the commercial publishers to make of this?

If publishers add no value, as the anonymous Deutsche Bank analyst proclaims, isn't PLoS just as immoral as Elsevier?  Shouldn't we be just as outraged?

I'm just looking for some intellectual rigor and consistency.  So let me posit this:

  • If you believe that publishers add no value, then you can't support PLoS any more than you support Elsevier.
  • If you believe that commercial publishers are the bane, then you should be as opposed to BioMed Central as you are to Elsevier.
  • If you believe that "excess profits" (somewhat of an odd concept, since profits are excessive only when they're not your own) are the problem, then you need to recognize that OA is not the solution and be as wary of the successful gold & hybrid publishers as you are of the others.
  • If you believe that the most important thing is more and more access, then you should applaud the experiments of the commercial publishers every bit as much as you applaud the others.
  • If you are Steven Harnad, then everything I've said here is irrelevant and you have to point out that the only thing we should be talking about is author self-archiving.

My point is that these issues are complex and intertwined.  I believe that it's a good thing that we are groping our way toward a scholarly communication system in which an ever increasing amount of quality scholarly literature is freely available.  But it remains expensive, and the commercial publishers have contributed as much as the non-commercial folks.

To read Monbiot and his ilk when feeling oppressed and frustrated is tremendously satisfying.  It's just not the least bit helpful.

 

 

Comments

Your biggest fan

It is unfortunately so seldom that I read a post about open access that makes me laugh out loud (that's LOL to you younguns'). Thanks for a good guffaw on a Friday night. It goes well with the Jameson.

Jan Velterop

On the theme of intellectual rigour and consistency:

- If you believe that excess profits ought to be curbed, shouldn't you applaud the competition inherent in the author-side payment model of OA publishing? (The author has choice; the reader can rarely use cost as a criterion for his decision what to read)

- If you believe in open access, shouldn't you conclude that libraries aren't at all relevant for author-side paid OA? (The 'collection' element of libraries – not the information expertise element)

- Is this loss of power not the real subject of librarians' anxiety and gripes?

Anon

Fantastic post

Eric F. Van de Velde

Great post. I think we're coming into an era of a more realistic assessment of OA, scholarly publishing, and the role of libraries. Particularly the latter have not yet come to terms with the fundamental shift. As Jan Velterop mentions in his comment, the collection element of libraries is disappearing, particularly for author-paid OA, but I believe even in reader-paid conventional publishing. (http://scitechsociety.blogspot.com/2011/08/libraries-paper-tigers-in-digital-world.html)

T Scott

David Rosenthal writes:

"PLoS achieved a 20% margin in 2010, and if the trends continue, could conceiveably surpass Elsevier's margin for 2011."

This is a seriously misleading assertion. The 20% number treats foundation grants as income. In 2010 PLoS had expenses of $12.2M and operating income excluding grants of $13M, for an operating margin of 6%. In addition they got $2.1M in grants. They presumably applied for these grants in 2009, when their operating margin was -10%. Had they been running a 20% operating margin, they would not have got the grants.
[Source:
http://www.plos.org/media/downloads/2011/2010_PLoS_Progress_Update_lo.pdf page 11].

Stevan Harnad

YOU SAID IT...

"everything... said here is irrelevant and... the only thing we should be talking about is [mandating] author self-archiving." ;>)

T Scott

The notion of true competition in OA publishing is very intriguing, particularly now that we have several entrants into the PLoS One space. Brand will still be important, but if there are several of these outlets which are perceived to be of roughly equal value, then surely price will start to be a factor.

I've argued for some time that the notion of "collection" is increasingly anachronistic for what librarians are actually doing, regardless of whether we're talking about OA or toll-access. If OA is hastening this, however, and is a source of librarian anxiety, then wouldn't it make more sense for librarians to be opposed to OA rather than such enthusiastic champions?

And for more on David's comment about calculating the PLoS margin take a look at the comment thread to the Scholarly Kitchen post I reference above. Whether it is reasonable or not to include the grants in determining the revenue base is not something that I feel quite qualified to have an opinion on. The more important point, it seems to me, is that PLoS (and BMC) seem to have clearly demonstrated how an author-side OA publishing operation can be profitable. That being the case, we can expect more and more (successful) experimentation on the part of the commercial houses. Whether this will result in a reduction of the margins and a reduction in subscription prices remains to be seen.

Marcus

Great post Scott--no doubt the economic argument for OA is weak, as we may not end up saving any money at all. Access is the thing, not reducing budgets.

But I do wonder if there are any ways to capture the subsidiary costs of the subscription license model--namely, ILL costs and expenses for maintaining proxy servers to regulate access. If everything were open these costs would come close to vanishing, but they usually are not factored into the discussion.

T Scott

ILL is expensive, so to the degree that OA reduces the need for it, that's a savings. But I'm of the opinion that we'll need some manner of resource sharing for quite some time to come, so it's hard to quantify what that might actually come to. I don't think proxy server maintenance comes to a lot in real dollars, but you're right that there are presumably savings in the overall system that we don't always pay attention to. From the publishers' standpoint, I would think there might be significant savings from not having to deal with access controls or subscription & licensing departments -- but I don't know what share of a publishers costs those items represent.

Marcus

Indeed there are hidden costs for all parties that aren't accounted for. We have an economics problem in which there is no easy way to know how to allocate payment for a fully open access world--hard for publishers and libraries to evolve in this case. Maybe game theory, financial modeling of different potential scenarios would help. The goal is maximum access, not driving publishers out of business. And we should we all be thinking beyond the PDF anyway.

Bibliotheks Polizei

“If you believe that publishers add no value, then you can't support PLoS any more than you support Elsevier.”

That is rather silly argument based on a poorly thought out equivocation. If I don’t believe in war as a solution then I can’t support the US in WW2 any more than Germany?

“If you believe that commercial publishers are the bane, then you should be as opposed to BioMed Central as you are to Elsevier.”

The good ole fallacy of composition good one…well the opposition in general is to the increases prices which are attributes of companies. It is very lazy to assume that if there is a problem some companies then you have a problem with all companies.

“If you believe that "excess profits" (somewhat of an odd concept, since profits are excessive only when they're not your own) are the problem, then you need to recognize that OA is not the solution and be as wary of the successful gold & hybrid publishers as you are of the others.”

I wasn’t aware of that definition of "excess profits" and I thank you for that. You didn’t explain why OA isn’t a solution, but I’ll concede one should be paranoid in business dealing.

“If you believe that the most important thing is more and more access, then you should applaud the experiments of the commercial publishers every bit as much as you applaud the others.”

Snake oil salesmen used to have jugglers and strongmen next to their wagon of wares. The idea was get a sense of how great the Snake oil was by the performance of the acts, just what does efforts really mean?

If you are into Space exploration, would you care about the V2…you might give some consideration to who is doing what be for you admire them.

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