About a decade ago, we experienced the excitement of contemplating cheaper online journals and free music. The exuberance surrounding these visions of a market-free utopia swept up many, and some dwell on the potential still. The early days of e-books held the same promise for a short time. Yet, e-goods are returning to the price levels they once were thought to have abandoned. Music is firmly back to its pre-Napster price levels — the new Coldplay album costs $9.99. E-books are headed in the same direction — the new biography of Steve Jobs is $16.99 for the Kindle version. More intensely niche, scholarly materials never flagged much throughout the tumult, and continue to gradually increase in price as the years go by despite the majority of access coming through online channels.
We all know now that providing digital information isn’t a great way to save money — variable expenses are lower but fixed expenses are far greater, with technology, technical staff, creative staff, and editorial staff all adding to the costs of creating digital products. And digital goods are becoming increasingly valuable in a digital ecosystem — the value of having a PDF was made higher by email, large hard drives, and local file systems. The value of a virtual pig in Farmville is high because the game makes you competitive, and competition has a perceived value.
Price inelasticity is the underlying reason prices have clawed their way back to higher levels. Prices for unique, narrowly appealing materials are inelastic — there’s no benefit to lower prices because doing so won’t increase sales enough to justify the lost revenues. A $0.29 article on an obscure scientific finding or refined medical procedure isn’t likely to shoot to the top of the bestseller list based on price. Substitutability in inelastic markets is low — while some claim Coldplay is just “U2 light,” the two groups really can’t be substituted — so prices are inelastic. There is only one Lady Gaga, only one Walter Isaacson book about Steve Jobs, and so forth. Scholarly materials are price inelastic, as are prices for books by famous authors, music by famous bands, and so forth. Prices find the natural equilibrium between market size and profitability, and they generally stay there. And prices tend to be higher the smaller and more affluent the market.
Open access publishing is a new model for value, but one that has an interesting twist to it — there is a commodity at its heart. That is, “getting published” is the value proposition, something that PLoS, BioMed Central, Nature Communications, BMJ Open, and others can provide. Because it’s a service that is largely undifferentiated, the commodity nature of the service dominates.
You can see it a bit in the pricing. The average price for publication is about $1,900, with $1,350 the most common amount, and the standard deviation being about $1,100 (with two standard deviations in the small sample of prices I looked at). This suggests a tight distribution around the mean.
The more publishers who provide the OA publishing service, the greater the opportunity for price competition. Differentiating on quality of content is difficult, because every author paying for the service thinks their work is very good. There is no way to charge someone more by stating that their content is marginal and therefore requires a higher fee, just as there no way to charge someone less because their content is truly very good. Instead, OA publishers have to compete on venue quality, and that gets to branding and publisher reputation. This immediately raises the question of what an OA publishing itself does for overall venue quality. Chances are, it does little to improve it, and is at best neutral. So the competition around venue quality is also a bit hamstrung.
To me, OA publishing looks much more like a commodity, cost-based market than a well-differentiated value-based market. Currently, the variability is relatively slight in the services and branding provided; hence, the general and so far rather enduring grouping around the mean as pricing goes. With mega-journals like PLoS ONE sweeping up a broad range of topics — from ecology to women’s health — the median price for OA publishing isn’t likely to rise any time soon. In fact, I believe OA prices will tend downward as competition for a large but finite set of papers increases.
Publishing for an audience allows a business to find a balance between audience size and value, and price inelasticity tends to push prices upward over time. Publishing as a commodity introduces elasticity — the lower the price, the more authors you attract, and the better your business. With that working in their favor, prices for OA publishing should start trending down as the number of outlets increase. And, with that mechanism at its heart, high-volume OA publishing seems structurally inescapable.