The Complexities and Economics of Open Access

Our budgets are shrinking. Libraries are cutting things they once never dreamed of cutting.  The sacred library cows are being sacrificed.  As this is happening there is much vitriol directed at the for profit publishers, the Elseviers, LWWs, and Springers of the publishing world.  After all, they are making a huge profit at the expense of the libraries.  All they care about is money not about the common good of providing access to medical knowledge.

Therefore it was interesting to read T. Scott Plutchak’s post “The Economics of Open Access,” where he states open access publishers are achieving just as high of profit margin as some of the for profits. “PLoS achieved a 20% margin in 2010, and if the trends continue, could conceivably surpass Elsevier’s margin for 2011.  Springer claims “double-digit” profits from BioMed Central.”  So it is OK for PLoS to have that profit margin, but not Elsevier?  Librarians don’t fool yourself, that money comes from somewhere.  Is it really better that the author has to pay $1000-$2000 to publish the article instead of the library paying for the journal?  Well it isn’t in our budget so who cares if it is out somebody else’s budget, right?  But as Scott says, “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?”

Scott lists several points questioning various issues on the OA debate.

  • 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.

We librarians scream and yell about the inequities of the for profit publishers but as Scott points OA is not the panacea that many think it is.  I guess it is OK to make a huge profit if you aren’t a “for profit” company.  I have a news flash, non-profits aren’t exactly trying to break even, they are trying to make as big of a profit as “for profit” companies.  Non-profit is just a tax designation, non-profits still make profits (some more than others). As Forbes says “When we hear ‘nonprofit,’ most of us imagine an organization filled with the ultimate do-gooders: those angelic advocates who are willing to sacrifice their own financial gain to serve a noble cause.”  Yet many of wealthiest non-profit companies make more than many for profit companies and the CEO’s, professors, and winning coaches of these non-profits are called the non-profit millionaires.  Take a look at the compensation of the wealthiest non-profits from Forbes.

I am not saying that the pricing for journals and other library resources aren’t out of whack with that of our budgets, they are.  But to put it into a good (non-profit) vs. evil (for profit) scenario doesn’t solve the problem.  If we believe David Crotty’s post in the Scholarly Kitchen (where Scott got his PLoS 20% profit information), the “good guys” are making just as much profit as the “bad guys.”  They both are for profit.

6 thoughts on “The Complexities and Economics of Open Access”

  1. A number of years ago I became aware of a society publisher (which I’m not going to name, because I might be misremembering the specific details) that had, in its bylaws, the goal of achieving a 9% margin (revenue over expenses every year). That gave the publishing arm a clear target. Surpluses up to that point where used for student scholarships, expenses for the annual meeting, technology upgrades etc. — and they adjusted their subscription prices so that they wouldn’t exceed that target. Not-for-profit organizations have the option to do that, for-profit outfits don’t. Now that PLoS has clearly demonstrated that they have a viable business model it’ll be interesting to see how they address that issue.

    And, incidentally, it’s worth going to the comment thread of the Scholarly Kitchen post that I reference in my post to see the debate about what PLoS’s margin should really be considered to be.

  2. One other point worth making — while the three big STM publishers appear to have margins in the 20% to 35% range (depending on how they’re calculated) I’ve seen data that indicates that the margin overall for the STM publishing industry is more around 5%. Do the math and think about what that means for all of those other journals that we’re subscribing to. You just can’t generalize across all publishers, regardless of what their business models might be.

  3. It is definitely complicated. Kind of makes me think of the “lies, damn lies and statistics” statement from Mark Twain only substitute profit margins for statistics. It is hard to know what the real number is sometimes. Definitely interesting to see what PLoS and other OAs will do. The flexibility of a non profit to adjust their profit goals like that is nice, yet the cynical person in me says those type of non profit companies are few. But at least there are some that do that.

  4. Are we pointing to profit margins to make a point to the for profit publishers that we have to purchase journals our patrons want? My feeling is the purpose is not so much about who makes a profit margin of 20% but who holds the copyright and that information is out there for everyone to access and use as needed. As an author of a scholarly publication would you like to control your distribution or have it controlled? I support any publisher for or not for profit that allows this freedom. Secondary to the distribution I always wondered why authors have allowed for payment in prestige only and almost never make a profit on the article they signed away to be in that wonderful, peer-reviewed journal. Information is powerful and it will always make money. Why not have it availble to everyone at the same time?

  5. Emily, I think the profit margins argument is that libraries are being squeezed. We cannot purchase the journals our patrons want because they simply cost too much. The thought is if the journals were cheaper or at least did not continually raise their prices 7%, 9%,11% or more each year we would be able to keep buying them. Librarians are lamenting that journal publishers are continually raising prices as they seek to increase their profit margins. Librarians are a bit miffed that these companies are putting profits ahead of the greater good of making medical literature information easily available. There thought is that it isn’t very available if it is too expensive to buy.
    Why would an author pay or willingly sign away their article to a wonderful peer-reviewed journal? Simple Answer: Tenure and promotion. Universities, hospitals, and research institutions promote people based on the number of articles they wrote and specifically what prestigious (as indicated by impact factor) journals they published in. I have a very good friend who is on the tenure track at a well known university. He has to not only bring in x amount of money in grants to the university but also publish x amount of articles in journals and the higher the impact factor the better it is for ability to get tenure. So why bother publishing an article in a small to average journal only to retain control and copyright of your article when it means squat for promotion and tenure and you can’t republish it in another prestigious journal because they don’t want something that you have already published.
    One could argue the entire system from researching, writing, publishing and buying journals is flawed. But it is what we have so we better figure out something.

  6. I suppose I care the most about the last point: “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.” I’m looking for fair prices and justice in information access … the question of who is and who is not making large profits is a bit to the side of the issue.

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