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Two recent newspaper editorials (by Monbiot and Guttenplan) made angry arguments against the “ruthless capitalists” behind scholarly publishing, charging that profit margins were far too high. Both articles suggested that open access (OA), particularly gold OA, was the solution to this problem.

Do these arguments hold up when the majority of OA journals are owned by those same ruthless capitalists and when some OA journals are proving to be extremely profitable?

The last few weeks of lively debate about OA in the Scholarly Kitchen have been informative, but have also involved a variety of mixed messages from all sides. There are assumptions being made that aren’t necessarily true, and arguments joined together that may in reality be at cross purposes.

The most glaring example stems from the outrage over profits generated by commercial publishing houses. The editorials cited above are typical examples, where this cause has been interwoven with the desire for increased access to the literature. I’m not sure the two are inextricably joined and in many ways, the arguments strive for contradictory goals.

The costs of dissemination of research results is, without a doubt, a factor behind the OA movement. It’s certainly understandable that these costs have been linked to the profit levels of journal publishers, and the more vocal advocates for access often also share anti-corporate agendas. But the economic reality of the author-pays business model does not seem to line up well with a drive to reduce publisher profits. OA via the author-pays model does nothing to change the quantitative nature of these costs — it only seeks to move the financial burden from the readers to the author.

The much heralded Public Library of Science had around a 20% profit margin in 2010. PLoS ONE published 6,800 papers at $1350 per paper, which adds up to revenue of around $9 million. In 2011, the journal is predicted to publish around 12,000 papers, bringing in an astounding $16 million.

Doing the math for 2011, if everything else remains equal, PLoS would have a higher profit margin than Elsevier. That’s difficult to reconcile in an argument that pits OA as the cure for excessive profiteering.

Nature Communications was widely mocked for launching with an author fee of $5,000, yet the journal has seen a 40% OA uptake rate. Clearly OA is not proving to be tremendously price sensitive. Springer reports “double digit” profit margins for BioMed Central publications. Should this be celebrated, or is Springer acting as a “parasitic overlord”?

There’s a troublingly common assumption that OA must mean PLoS ONE (or even PLoS), when the reality is that OA is in use in a huge variety of ways by a vast number of publishers. And it’s important to realize that in some ways, the big commercial publishers have a leg up on the not-for-profit competition as far as making OA work.

Scale is an important factor in author-pays OA publishing models. In relying on this method as the primary revenue source, there are two obvious ways to improve the financial bottom line: increasing the number of articles accepted (one form of scale) and reducing editorial and publishing costs.

To do the latter, a smaller publishing house must reduce the level of services offered, things like eliminating copyediting. But the bigger publishing houses benefit so much from economies of scale that they can achieve savings merely by being big. If you’re publishing 1,500 journals, each journal shares a smaller portion of the total overhead than if you’re publishing 10 journals. Your costs for materials and services are always lower when you’re buying in bulk.

This favors the big publishers, and a drive to OA may only strengthen the “parasitic overlords” while eliminating the smaller not-for-profits (John Wilbanks addresses this worry, though I’m less convinced than he is that such a concentration would be easy to “shake out” over time, as entrenched monopolies are difficult to dislodge).

The desire to lower the profit margins taken in by publishing houses may in fact be in direct conflict with the growth of OA. The gold rush by publishers to create their own highly profitable version of PLoS ONE should be informative here.

As one of our commenters recently asked, what would have happened “if a big commercial publisher had pioneered the high-volume, low-bar, author-pays mega-journal”?  If PLoS ONE was instead Big Company ONE, would it have succeeded and been as adored as it is now by OA advocates, or would it have been seen as a “cynical exploitation of the publish-or-perish climate in academia?” Would publishing traditionalists see it as an exciting new market to serve rather than the end of quality?

OA in and of itself is not the solution for those seeking to attack commercial publishing houses and profit margins, as so far it seems to be enhancing both. Perhaps a better avenue is to instead work on supporting not-for-profit publishers, particularly those who return any excess funds to the research community.

This quest is a difficult one because it asks researchers to put the anti-commercial goal above their own self-interest. Asking a postdoc who is about to hit the overcrowded job market to give up the prestige of a Nature paper in order to “stick it to the man” is going to be a tough sell.

Factor in also that a large number of the journals published by the big commercial houses are owned by research societies and the lion’s share of the profits generated fund their activities. That’s perhaps another subtle point missed in all the anger: the notion of the academic community “taking back publishing” is, for a huge amount of the journal landscape, moot. For society journals, publishing never left the academic community. An end to commercial publishing profits also means an end to the main funding mechanism for many academic societies.

For those more interested in improving access, does it really matter if in providing that access, the publisher makes a substantial profit? If the publishing process offers broad access and comes at a sustainable and affordable rate, aren’t you better off with a situation where there are incentives offered for driving progress? Or does the identity of the supplier of that progress matter more than the progress itself?

Robin Hood is a fun mantle to don, and it certainly makes for a compelling newspaper editorial. The reality of the situation is more complex though, and we do a disservice to progress by looking to create heroes and villains rather than striving for a deep understanding of the economics of publishing. Knee-jerk assumptions, particularly ideas that OA is a magical cure for for all perceptions of corporate misbehavior or thinking that there’s only one possible way for OA to be an integral part of the publishing landscape should be questioned, if not entirely abandoned.

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David Crotty

David Crotty

David Crotty is a Senior Consultant at Clarke & Esposito, a boutique management consulting firm focused on strategic issues related to professional and academic publishing and information services. Previously, David was the Editorial Director, Journals Policy for Oxford University Press. He oversaw journal policy across OUP’s journals program, drove technological innovation, and served as an information officer. David acquired and managed a suite of research society-owned journals with OUP, and before that was the Executive Editor for Cold Spring Harbor Laboratory Press, where he created and edited new science books and journals, along with serving as a journal Editor-in-Chief. He has served on the Board of Directors for the STM Association, the Society for Scholarly Publishing and CHOR, Inc., as well as The AAP-PSP Executive Council. David received his PhD in Genetics from Columbia University and did developmental neuroscience research at Caltech before moving from the bench to publishing.


26 Thoughts on "Separating The Threads: What Is the Link Between Access and Profitability?"

Great post, David. One small additional point: the reason the author-pays OA model doesn’t appear to be price sensitive is that it’s mostly about science, and those papers aren’t really author-pays, they’re funder-pays-on-behalf-of-author. People seem to forget that this doesn’t work for humanities and many social science authors, who don’t have the grant funding that can cover publication costs, and for whom the kinds of prices the science journals are charging authors are a real barrier. Whereas a relatively small publisher in STM can make OA work — the best example is Hindawi, a press I greatly admire — societies in the humanties and social sciences, and most university presses, are going to have a very hard time making author-pays OA work.

Thanks Bill. I think that’s another assumption that bogs down a lot of the arguments, either that everyone is a scientist, or that everything works the same as science. More nuance, more shades of grey…

I agree with your argument that the big publishing houses have an economy of scale that would lead to undercutting competition or providing additional value and services at comparable cost. This is the classical economics argument.

People are also willing to spend additional money on non-tangible items, such as free trade coffee, in spite of the fact that the quality of the coffee may be identical to free-market coffee. We can call this non-tangible value “ethos.”

I’ve noticed that non-profits and societies do not market their “ethos” very well, and are more likely to compete over more classical notions of products and services. Considering that most scholars do not pay for publication out of their own pockets–an thus may be largely price insensitive–it seems like pushing “ethos” may work for those who cannot compete with the big companies.

Would marketing a journal like it were any other consumable product work? Let me try to pitch a few:

Ye Olde University Press — Preserving the traditions of scholarship for over 500 years.

The Journal of Sustainable Publishing — Where 10% of our profits go to supporting authors in developing countries.

The Society for Excellent Moral Behavior — Run by scientists for the benefit of humankind

I love the idea, but I think that given the extraordinary pressures on today’s researchers, “ethos” concerns are going to be left in the dust by career advancement concerns, and you’ll see people flocking to whatever journal offers the best hope for that. Also, I think most researchers don’t really pay any attention to the publisher behind a journal and think more in terms of the journal brand itself.

Would selling “ethos” to librarians work any differently? As we’ve seen in the press, conferences and literature, general operating structure of publishers seems to matter a great deal to librarians. While it may not be a driving point in purchasing or cancelling some service, that “ethos” comes in handy when the decision could go either way. I’ve seen this first hand.

Great and very balanced analysis of the situation. Thank you for this contribution!

It seems to me that one of the major goal of OA is to make scientific results accessible to the general public as opposed to just scientists. For those institutions who cannot afford all pay-walls, their scientists can always request papers from corresponding authors.

Maybe selective OA could be an option for pay-wall publishers and I am pretty sure I have seen examples of this even by the BIG publishers. A study that generates a lot of interest in the general public should be recommended for OA. This would create a hybrid system in a way and it may answer to some of the criticism at least. In addition, it would also mean not “lowering the bar” which would probably be better for science in the end.

What do you think?

Many, if not most scholarly publishers offer a “hybrid” option for journals, where the author can choose to pay a fee and have the article immediately freely available. But I get a sense you’re talking about something different here, something more editorially driven.

In my experience for the journals where I’ve worked, we’ve tried to go with a “freemium” strategy by making a certain percentage of journal articles freely available, regardless of author fees. If any article receives substantial media coverage or is featured in a press release, it is made freely available to all. We also encourage editors to choose featured articles in each issue, one or two articles that are of broad interest or that are particularly important to a field. These articles are also made freely available.

Generally, this increased readership of those articles and had no negative effect on subscriptions. I don’t have the data to know whether citations were affected, but that’s a tough question as you can’t tell whether making them free had an effect or if the citation rate of those articles was particularly high because they were good and important articles (the reason why they were featured).

“For those institutions who cannot afford all pay-walls, their scientists can always request papers from corresponding authors.”

Yes, but. . .I’m at one of those small institutions (a natural history museum) with a limited journal subscription base (we have JSTOR, and I have personal subscriptions to a few society journals), and I can definitely say that the “ask corresponding authors” strategy only works some of the time. Sometimes they don’t reply. Sometimes they don’t have access to the PDF themselves (this actually happens more often than you think!). Sometimes the corresponding author has left academia or died.

I would be quite happy to buy PDFs regularly (if only for the speed and convenience), but the price tag for most is simply unaffordable. And this is where my main beef with non-OA journals lies; it’s not that they charge for their product (it costs money to produce and host journals, after all), but that they charge so darned much. I’ve once asked an officer from my professional society why our society journal was charging $41 for a single PDF of a one page taxonomic note, and was simply told “because that’s the industry standard”. I suspect the industry standard is set here by industry (biomed companies, engineering firms, etc.) that can afford these costs as part of a general R&D budget. Oddly, subscription fees for similarly sized journals in different fields are very different, so why not PDFs too? I’ve never gotten a straight answer on the PDF pricing scheme (and would thus appreciate any links or info that might illuminate this).

I’ve generally found that those who are happiest with the status quo are those who are at the largest institutions, and most insulated from the costs of journal subscriptions or PDF access. $41 is quite reasonable if you’ve never had to pay it. Phil’s comment above (on price insensitivity) hits the nail on the head!

Incidentally, in response to the main blog post, the degree to which publications support professional society activities probably varies considerably between societies. I was told that the (small but very well-respected) journal for my (relatively small) scholarly society has usually operated at a loss – the journal is a service to the community, not a revenue producer.

I suspect that one factor in pay-per-view prices is that they’re deliberately high in order to make subscribing a more attractive option.

I was told that the (small but very well-respected) journal for my (relatively small) scholarly society has usually operated at a loss – the journal is a service to the community, not a revenue producer.

Sounds to me like your society journal needs a new publisher. Seriously, have them get in touch. But this perhaps reflects Bill’s comment above, that the journal market is very different in different areas.

This almost certainly reflects the field (vertebrate paleontology). I have a strong hunch that this is an area where low cost individual article downloads would help to balance the books a little better.

And you’re probably right on high PDF costs as subscription incentives.

Thanks for the interesting article David. Re “funds to the research community”, as you are no doubt aware, many big publishing houses have long-standing journal partnerships with societies and associations who benefit via significant royalties or profit share, some of which will be reinvested in science. I don’t know if PLoS do this as yet.

Yes, society funding was noted in the blog post. Society journals have become more and more concentrated at the big commercial publishing houses in recent years, likely because the big publishers can offer them better financial terms than can smaller publishers (another benefit of scale).

Beyond that, there are plenty of university presses, and publishing houses run by research institutes whose profits go to fund research and other academic activities at those institutions. I’m pretty sure PLoS just handles their own journals, but there are other fully OA publishers like BioMed Central who publish journals on behalf of societies.

Thank you David, I was actually puzzled how nobody sees Gold OA in its current form as just a different way of putting money to the same pocket (that of publishers). However, is there a way for publishers (even small ones) to run OA journals and NOT charge author fees? E.g., I found one which seems not to do this http://si-journal.org/index.php/JSI – they are supported by Czech Society for Systems Integration (CSSI). And Bioline is supported by donations, AFAIK – http://www.bioline.org.br/

I have long been one of those who do not see Gold OA publishing as any solution to the general financial pressures afflicting universities. I say “general” because what Gold OA may do is simply to shift the locus of funding for journal publication, away from library budgets to other university budgets (or outside to foundations, in some fields). Green OA, on the other hand, is potentially cost-saving, but comes with its own disadvantages (in access to less than the archival version of record). Early on, when I drafted the AAUP’s Statement on Open Access in 2007, I was tempted to think that the OA movement might succeed in pushing STM commercial publishers to a “tipping point” where many of them might feel they could not sustain the same high levels of ROI they had become accustomed to and would then leave the business. Now, after the demonstrated success of PLoS one as a model, I’m not so sure.

On the question of ethos, David, take a look at the attacks on your company, OUP, for its involvement in the GSU suit. OUP and CUP are being treated just like every other “greedy” commercial publisher, even though they are non-profit and any surpluses they realize redound to the overall benefit of their parent universities. There is a lesson to be learned here….

“Public Library of Science had around a 20% profit margin in 2010.”

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 page11].

You’re correct that grants accounted for the lion’s share of PLoS’ surplus in 2010. However, grants count as revenue. Not-for-profits can accept grants, and they are reported as income. The IRS considers grants as revenue for not-for-profits (see the PLoS tax return for 2010 — it’s actually listed as the first source of revenue). A number of not-for-profits offset expenses with grants, either from charities or from corporations (think PBS or NPR, for example). These monies still count as revenue. And when it’s applied for doesn’t matter — it’s when it comes in.

Your observation about how grant-making bodies might feel about making grants to PLoS now is certainly worth contemplating, as are many other implications of this change from the underdog to just another publisher.

I don’t understand why this is “misleading”. Revenue is revenue. If it goes in the company’s bank account, it counts toward profit margin. Garnering donations has been the business model that has allowed PLoS to exist long enough to reach sustainability. To suddenly pretend that source of revenue doesn’t somehow “count” seems dishonest to me. Should we randomly omit revenue from institutional memberships or ad sales as well?

And it’s certainly a lot less misleading than the article it was compared to, where Monbiot railed against Elsevier’s journal program’s profits, yet only showed figures for the company as a whole, including profits from all other non-journal activities.

Given PLoS’ limited level of transparency, it’s difficult to parse out the specifics of their finances. 7 of the 8 journals are reported to lose money, so PLoS ONE is making enough profit to cover all of their losses and then some, so its margin must exceed the overall margin for the company, donations aside. And remember that all of PLoS’ profits are plowed back into further business ventures, whereas the bulk of the profits from a university press or a society-owned journal are returned to the academic community.

Between 2008 and 2010, author fee revenue for PLoS increased from $5.4 million to just shy of $12 million.Total expenses for PLoS went from $8 million to $12 million during the same period. Comparing the rate of growth in revenues and attributing both the growth in expenses and the growth in revenues to PLoS ONE (not an unreasonable assumption after looking at when things spiked on both sides of the revenue/expense line), PLoS ONE is probably generating a surplus of 25-28% itself.

You used the observation that PLoS had “a 20% profit margin” to support the claim that “Doing the math for 2011, if everything else remains equal, PLoS would have a higher profit margin than Elsevier.”. Now you admit that “grants accounted for the lion’s share of PLoS’ surplus in 2010”. Thus you are implicitly projecting that grants would continue to account for the lion’s share of PLoS’ surplus in the future.

This is misleading, because your argument is that PLoS is extracting a greater proportion of surplus from the academic community than Elsevier. Even if your assumption that grants grow is correct, they would be extracting that surplus from the grant-givers.

The assumption that grants will continue is unrealistic and misleading. As I pointed out, given the lead time on grant proposals, PLoS probably applied for the grants in 2009 when they were losing money and were thus a suitable recipient. Grant givers typically provide start-up funding but expect the recipients to evolve to sustainability, as PLoS is doing. A future model in which PLoS runs on its current 6% margin excluding grants would be sustainable, but would certainly be a threat to other publisher’s current margins.

If one removes the grant funding from PLoS’ projected 2011 earnings (and I did add the caveat “all other things remaining equal” because it’s impossible for me to know any shifts in costs, either positive or negative or changes in other streams of revenue) the numbers look like this:
2010 Nongrant revenues = $12,995,000
2010 PLoS published 6,800 papers, 2011 estimates are 12,000 papers. So figure 5200 additional papers.
$1,350 per paper results in an additional $7,020,000 in author fee revenue.
Total estimated revenue then is $20,015,000.
If costs remain at the same level, $12,210,000 (and yes, I do expect them to increase given the increase in papers processed), that puts profit at $7,805,000.
Dividing profit by total revenue gives a profit margin of 39%, higher than that of Elsevier’s reported 36%.
Again, PLoS’ lack of transparency makes it difficult to get much more specific than that, but even without any grant income at all, my point still stands.


I’m the one who used the phrase “lion’s share.” I want to make sure you’re distinguishing between my responses and David’s.

I don’t understand at all your statement that “you are implicitly projecting that grants would continue to account for the lion’s share of PLoS’ surplus in the future.” The surplus in the future may come somewhat from grants, but the real growth at PLoS has been in author’s fees, driven mostly by PLoS ONE’s bulk publishing approach. As noted in an earlier comment, author fees increased $6.6 million from 2008 to 2010 while expenses increased $4 million. The $2.6 million (net) from additional author fees really provided the lion’s share of the surplus, and the real source of growth. I shouldn’t have tried to placate things with that other statement about grants providing the lion’s share. Digging into the figures a little more, it’s clear that author fees provided the real boost to PLoS revenues. That trend you can see in their tax returns from 2007 to 2010 is amazing (I think in 2007, they were more like $1.1 million, so we’re talking about an $10.9 million increase in author fees in just a few years, with PLoS ONE being the only real explanation).

David’s comment adds some important information about what might be coming next year.

I apologize for the delay in responding.

The more I look in to publisher finances, not just PLoS but also the commercial publishers, the more I agree that greater transparency is desirable. Fairly heroic assumptions are required in order to extract meaning from them. The fact that I can look at the same numbers and come to very different conclusions shows that I am making different assumptions. But this also shows that one should be cautious in making projections based on these somewhat obscure numbers. In the following I try to make as few assumptions as possible and be explicit about what they are.

In 2010 PLoS ONE published 6800 papers at $1350 each. Thus the author fee income for PLoS ONE was $9.18M. This is 76% of the total net author fee income for PLoS. I assume that PLoS is not cross-subsidizing PLoS ONE from its other journals, which means that PLoS ONE should account for 76% of PLoS expenses, or $9.28M. Thus the cost per paper of PLoS ONE is $1365. The $15 per paper loss is more than made up by PLOS ONE’s share of PLOS’ 2010 $1M other income from advertising, membership and interest, which would be $760K, or $112 per paper.

Suppose PLoS ONE publishes 12,000 papers in 2011. What would it take for PLoS ONE to achieve a 35% operating margin? Some linear combination of these three possibilities would have to take place.

1. If the author fee remained the same and other income totaled the same $760K, there would be income of $16.96M, of which costs would have to represent $11.02M, so the cost per paper would have to be $919. This would represent a decrease of 36% in per-paper costs.

2. If the per-paper cost remained the same, total costs would be $16.38M. So total income would have to be $25.2M. If the author fee remained the same, it would contribute $16.2M, leaving $9M to be supplied by other income, or $750 per paper. This would represent a 670% increase.

3. If the per-paper costs remained the same, and other income remained at $760K, the author fees would have to contribute $24.44M, or $2037 per paper, an increase of 51%.

Alternatively, if we are to treat grants as operating income, grants attributable to PLoS ONE would have to rise from $1.6M (76% of $2.1M) to $8.24M, an increase of 515%.

I find it hard to describe any of these possibilities as “the trends continue”.

I agree wholeheartedly that we’re just making stabs in the dark here given the lack of transparency and details on the numbers.

But I have a hard time accepting your central premise, that if PLoS ONE brings in 76% of author fee revenue that it must automatically generate 76% of costs. I think this is a flawed assumption. PLoS has (I believe) 9 publications. Each must have its own staff, its own office space, electricity, etc. Given that PLoS ONE is handling a larger number of papers than the others, it likely generates some higher costs, but it’s unclear if there’s a linear 1:1 relationship between the two. Note also that because of PLoS ONE’s high acceptance rate, the papers published there have to pay for a much smaller percentage of rejected papers as compared with the higher end PLoS journals, reducing the likely per-article cost.

All indications are that PLoS is a well-managed company run by smart people. If they have failed to create any economies of scale from PLoS ONE, then something is terribly, terribly wrong. If your assumption holds true, then PLoS ONE is actually losing money on each paper and the massive increase in publication volume would be a financial disaster rather than a boon.

From what I understand, PLoS ONE runs at a profit on its own, and the revenue it generates is used to subsidize the other non-profitable journals. Quoting PLoS’ own progress report from 2009:

PLoS ONE attained self-sufficiency almost immediately due to high article volume, affordable price, and cost-effective production techniques.

That to me doesn’t sound like a journal that must rely on grants to break even.

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