Why electronic publishing means people will pay different
The open access movement may be the most prominent aspect
of the profound ongoing evolution of scholarly communication, but it is far
from the only one. Electronics is loosening the straitjacket of print, but only
slowly. Technologies take time to become widely adopted, and sociological change
even longer. Most journals are already available electronically, for example,
but they remain largely facsimiles of their print cousins, and pre-publication
evaluation procedures are much as before. Where change will be fastest is perhaps
in the world of online access and pricing, where the economics will drive diverse
and often controversial strategies.
Open access journals raise an endless series of
broad economic questions, with for the moment few definitive answers.
The "author pays" model, for example, comes in two flavours. In
one, authors are charged a submission fee only if their article
is published. In the other -- tuned closer to covering the costs
of rejected papers -- authors pay a fee to submit an article, no
matter whether it is subsequently published or rejected. Which is
And is it fair to shift costs of publishing from libraries
to the authors themselves? Are the authors the main beneficiaries of publications,
or their readers? Should part of the public grants used to pay for research
be used to cover the costs of publishing the findings of that research? Should
authors with large grant budgets pay more than those with smaller ones? And
is it fair to have research institutions pay for publications that will be read
extensively at non-research schools?
A series of similar questions also arise with conventional
subscription journals as they experiment with new online pricing
models. But the options for paying for open access journals are
more diverse, and therefore raise more questions.
Open access journals also pose other economic questions. One
is how their business model will be able to build sufficient capital
to invest in new journals for the years before these break even,
or to project future costs such as long-term stable archiving, when
they lack a subscriber base to fund it, as the business model often
relies on one-off author payments.
Open access journals also pose other economic questions. One
is how their business model will be able to build sufficient capital to invest
in new journals for the years before these break even, or to project future
costs such as long-term stable archiving, when they lack a subscriber base to
fund it, as the business model often relies on one-off author payments.
The open access movement itself is growing rapidly but is
still embryonic, and it's precise evolution is impossible to predict. Will the
'gold' flavour, open access journals, dominate, or the 'green' flavour, archiving
of eprints by authors and/or their institutions?
Overall, one should expect authors to increasingly embrace
open access. Papers that are freely available online appear to be cited more
frequently than those that are behind subscription firewalls.1
As more studies become available confirming this finding (and all preliminary
results obtained so far do), it would be a strong incentive for authors to either
publish in open access journals or post their eprints on openly accessible archives.
Such selfish motives will likely be more important in driving authros to open
access than altruistic ones such as reduced library costs, or making one's work
available in less-developed countries.
Open access will likely accelerate many evolutionary trends
in scholarly communication, and boost usage of online material. The easy accessibility
of open access articles should also be an important advantage in competing for
reader attention. But such changes will be gradual. Sudden, disruptive changes
are likely only when powerful 'change agents'2
intervene, for example were university presidents to drastically cut paid subscriptions.
Many of the host of economic questions raised by open access
will be discussed elsewhere in this debate. Here, I will focus on just one:
how the economics of pricing are likely to determine how much you, or your institution,
will end up paying for access to electronic journals, be they open access or
traditional subscription ones.
Electronics will lead to diverse pricing models
The key difference between electronic and print publishing
is that the former has very low marginal costs. Once the 'first copy' is prepared,
distributing it is relatively inexpensive. Just how high 'first copy' costs
are is currently a hot topic, as are the costs of archiving, and converting
material to new formats. But these costs are nonetheless largely independent
of the volume of usage.
The options for spreading costs of electronic publishing among
users are more diverse than with print, and can often seem arbitrary as a result.
A key economic concept to better understanding costs and pricing is price discrimination
theory, the practice of charging some users more than others for the same goods
or service. Price discrimination has long aroused strong opposition in commerce,
mainly because it raises concerns about fairness, and its use in electronic
publishing is no exception.
Economists are familiar with the basic rationale for price
discrimination. Consider a simple example. Suppose the publisher of a proposed
new journal has two potential libraries as subscribers, where one is willing
to pay a maximum of $700 annually and the other $1,000, whereas the publisher
needs at least $1,500 to cover costs, and perhaps make a profit.
If a publisher is obliged to charge the same price to both
libraries, it will not be able to create the journal as the above scenario makes
it impossible to obtain $1,500 in revenues annually. If the price does not exceed
$700, both libraries will subscribe, but revenues will be $1,400 at most. If
it exceeds $700, the first library will not subscribe, and the most the publisher
can get is the $1,000 from the second.
But if the publisher charges the first library $650 per year,
and the second one $950 per year, conventional economics says everyone benefits.
Each library obtains the journal for a lower price than it valued it at, and
the publisher will get enough money to pay for creating it. This argument applies
with equal force whether the publisher is commercial or non-profit.
Price discrimination in this model does not just reallocate
resources from purchasers to sellers (although it can do that), but results
in new economic activity. That is why governments often encourage differential
pricing, although they also often act to constrain it. (For a more thorough
discussion, see ref. 3.)
The academic community is already familiar with extensive
differential charging. Even before the Internet, the practice of charging libraries
more than individuals for print subscriptions was widespread. Student discounts
for society memberships and conference registrations are also common. Many publishers,
non-profit as well as commercial, also offer discounts, or free subscriptions,
to readers in less-developed countries.
Electronic publishing is driving a proliferation of such practices.
Publishers employ diverse charging schemes, depending on factors such as an
institution's position in the Carnegie
Classification, the number of faculty in a given area, or the number of
papers published by an institution's researchers. The trend is towards charging
according to the value of a publication to an institution.
This is not something specific to scholarly communication.
Many argue that it will be the most prominent and contentious feature of e-commerce4.
But it is more explicit in the case of learned journals, because publishers
are often becoming more open about explaining what they are doing and why, than
are companies in other sectors of the wider economy.
Price discrimination applies not only to the traditional subscription
model, but also open access, "author pays," models. BioMed
Central, an open access publisher, for example, states on its institutional
membership web page that fees for institutional memberships renewed in 2004
vary between $1,612 and $8,060, depending on "the graduate and postgraduate
students, researchers and faculty members in the relevant departments, i.e.
biology and medicine"5.
And in a twist to this flat-fee approach, it recently announced
that for renewals in 2005, fees will be determined by multiplying $525 'by the
number of articles published in BioMed Central journals during the previous
12 months'. In the traditional system that prevailed a few decades ago, there
was a uniform institutional price for each print subscription (apart from small
variations to cover, for example, international postage rates). Today, the search
is on for the optimal way to recover costs or, in the case of commercial publishers,
to maximize profits.
The reason price discrimination is, and will continue to be
contentious, is that it arouses strong opposition, even from people who obviously
benefit from this practice. Most opposition is based on concerns about fairness
that appears to motivate not just people, but even some monkeys. In one experiment
6, capuchin monkeys refused to engage in trades
advantageous to them if they saw other monkeys obtaining higher rewards than
they were offered. Fairness is very much in the eye of the beholder. Suspicion
about the fairness of pricing policies is also accentuated by the often opaque
practices of sellers, such as the standard confidentiality clauses in publisher
contracts, intended to hide the extent of differential pricing.
We can therefore expect an endless series of debates
and disputes, with negotiating and legal skills in great demand
among scholars, publishers, librarians, administrators and other
stakeholders. But price discrimination is one concept which will
be fundamental to understanding many of these disputes, and why
you or your institution are paying more or less, for reading or
publishing in journals, than are your neighbours.
Digital Technology Center, University of Minnesota, Minneapolis, MN 55455, USA
- Lawrence, S. Free
online availability substantially increases a paper's impact . Nature
(Web Debates), (2001).
- Odlyzko, A. M. The
slow evolution of electronic publishing, in "Electronic Publishing
'97: New Models and Opportunities," A. J. Meadows and F. Rowland, eds.,
ICCC Press, 1997, pp. 4-18.
- Varian, H. R. Differential
pricing and efficiency. First Monday 1 (2) (August 1996).
- Odlyzko, A. M. Privacy,
economics, and price discrimination on the Internet. In ICEC2003:
Fifth International Conference on Electronic Commerce. Sadeh, N. (ed.),
ACM, pp. 355-366 (2003).
Central institutional membership page (accessed on 15 March 2004).
- Brosnan, S. F. & de Waal, F. B. M.
reject unequal pay. Nature 425, 297-299 (2003).