Launched in 2003, the Public Library of Science has reached an interesting inflection point — as they put it in their 2010 Progress Update, “seven years after entering the publishing business, our annual operating revenues exceeded expenses for the first time.”

How PLoS arrived at this point bears examination, for it reveals both strengths and weaknesses of the organization and the model they’ve adopted.

Initially funded by a grant from the Gordon and Betty Moore foundation, with other entities — including Merck and Genentech — kicking in money later, PLoS’ seed funding lasted a few years, enough to launch the organization’s two main journals — PLoS Medicine and PLoS Biology. But viability remained elusive with these two publications. In 2006, PLoS launched PLoS ONE, a site that publishes manuscripts after review for “methodological soundness,” resulting in an acceptance rate 3-4 times the norm (about 70%). Judging from a table in their Progress Update, the 6,800 papers published in PLoS ONE accounted for about 80% of the papers published across all the PLoS titles that year (I could only eyeball the chart, but guessed the total at about 8,500 total). This suggests that the submission rates, acceptance rates, or both are much lower for the other journals.

PLoS ONE also contributes approximately 76% of the organization’s author fee revenue, assuming all the papers published were charged the $1,350 publication fee. Deviation from this owing to an occasional fee waiver would shift this estimate only slightly, I believe.

A fascinating fact is that while PLoS doesn’t print, it’s direct publishing expenses exceed its operational expenses by upwards of $1.2 million. Perhaps this is a demonstration of the hard truth that online publishing is more expensive than print publishing. I think that’s likely only part of the answer. My hunch is that, given the large number of experiments and initiatives PLoS is engaged in, it is a sign of an organization investing in online development beyond publication  — projects like PLoS Hubs, PLoS Currents, and Article-Level Metrics. Much of this may be within their not-for-profit remit, but I wonder what the expenses involved with creating the various ranking, post-publication review, and commenting features have been, and if these expenses will abate in the future.

It’s also worth noting that in 2010, PLoS increased its grants by more than $1.5 million. Without that infusion of cash, they still would have been in the black, but only by $800,000 rather than the $2.8 million stated. It’s also worth contemplating why this influx of grant money occurred — are there new initiatives cooking at PLoS? New ideas that attracted new grants?

Why this is an interesting inflection point for the organization ties in with another change PLoS is going through, with Harold Varmus stepping down as chairman of the board and Gary Ward taking his place. Every not-for-profit in the black has to begin to wrestle with the question, “What is this money for?” Ward will now be facing this head-on.

Now that PLoS has a sustainable model, it will be interesting to see how the organization uses these funds, what growth initiatives they undertake, how the new leadership chooses between mission and margin, and how funding agencies view their support in light of breakeven.

Allowing for grant support in PLoS’ total returns, you calculate a return for PLoS in 2010 of 21.8%. Now we have another interesting conundrum — here are returns high enough to get your attention, at least on a percentage basis. And, unlike most for-profit publishers, which share revenues with numerous not-for-profit organizations with missions relating to public health, scientific research, or humanitarian purposes, these returns stay within PLoS.

This reminds me of when the Boston Red Sox finally won the World Series. Gone was the curse. Gone was the rallying cry. Suddenly, the Red Sox were just another baseball team having to compete, the aura of mystery and novelty gone.

It will be interesting to see what happens now that the underdog is an underdog no more.