This is a research report, based on a grant from the American Society of Civil Engineers to explore the potential for adverse economic impact on journals from imposed public access embargoes. Basically I am describing a model that has yet to be built, sneaking up on the equations as it were.

I began by examining two years of detailed download data for over thirty ASCE journals. I found a surprising pattern, similar to that recently reported by Phil Davis, namely that most downloads occur well over 12 months from the date of publication. To see a small example of this pattern, ASCE has a webpage that displays the top twenty downloaded articles for the last twelve months, on a running basis. As of this writing well over half of these articles were downloaded more than 12 months after publication.

The question then becomes how to relate this download pattern to subscription revenue in the case where a journal’s content becomes free after an imposed embargo period? This question is explored below, especially with reference to the emerging US public access program.

The US Government is moving to impose an embargo period on all journal articles which are based on federal funding. The initial guidance issued to the federal funding agencies suggests a 12 month embargo period, after which a free, publicly available version of the article will be required. Other funding agency and institutional policies have called for a 6 month embargo period instead.

Presented below is a preliminary analysis of the potential adverse economic impact of a 12 month embargo period. The starting point is that a great many of the downloads of journal articles occur more than 12 months after publication. Making these articles freely available has the potential to reduce the value of journals to a similar degree. Thus revenue losses of 50% or more are possible. Several factors that might affect the magnitude of this devaluation are then discussed. The approach is that of describing an economic model that can be used to explore the various issues, as well as defining the relevant empirical questions.

But the basic point is that embargoes devalue journals. In economic terms embargoes create a free rider problem. A free rider is someone who gets the benefits of economic activity without paying their fair share.

A simple model for estimating loss of revenue due to embargo induced devaluation looks like this:

The simple model: Devaluation revenue equals present revenue times the ratio of affected post embargo downloads to total downloads.

Note that affected post embargo downloads only includes that fraction of articles that would be subject to embargoed release, for example, those based on US funding. In our worst case scenario we assume that all articles outside the embargo period are subject to the embargo and will be made freely available.

This simple model is based on several assumptions, including the following:

1. Downloads accurately reflect total usage.

2. The value of usage does not change over time.

3. Almost all of the value of a journal is in its use.

Each of these assumptions can be questioned and many of the specific debates are related to them. Thus such debates can often be characterized by alternative models, which in turn raise specific empirical questions. This is discussed below. Moreover, other assumptions may appear in the course of discussion, raising new questions. The point of models like this is not to make predictions, but rather to clarify the issues, uncertainties and possibilities. But these possibilities must be taken seriously by those proposing to impose mandated embargoes.

This simple model can be modified and made more complex in order to incorporate the various factors we discuss below, as well as other factors. For example if near term downloads are thought to be more valuable than longer term downloads there are various weighting schemes that might be incorporated, perhaps along the lines of the various depreciation formulas. The decline in value of articles over time might even be nonlinear, logarithmic for example. Of course these modifications would need to be justified. As noted below, articles might get more valuable with time, not less.

Also our analysis is based solely on downloads, not total usage. In this regard downloads are what is called a proxy for total usage. A proxy is a rough measure or indicator. Downloads are probably a good measure of serious usage because they take effort, far more than simple page views, and they suggest that the article is considered to be important. Moreover, once downloaded an article may be read by more than one user, such as a project team or a research group. Thus downloads may actually underestimate usage.

Based on the simple formula a given journal might see revenue losses of 50% or more under a 12 month embargo. Note that this is not a prediction, merely a plausible scenario based on available data and a very simple model. But these are scenarios that should be taken seriously. The over 50% loss scenario is based on the assumption that all major funders follow the US lead and impose a 12 month embargo. A lower loss scenario assumes that only the US imposes an embargo, which seems unlikely. Even if only 20% of the articles are affected and only 50% of the downloads occur after 12 months, this might lead to a 10% revenue loss, which is still a significant loss These are serious potential adverse economic impacts.

Factors that might reduce or increase the adverse economic impact include the following. Note that we need proposed equations for each, with empirical support, not just arm waving conjectures.

A. Time sensitivity of information

As alluded to above, it might be argued that early downloads are somehow more valuable than later downloads, thus reducing the devaluation due to making later downloads free. In disciplines where information is highly time sensitive, perhaps patentable biotechnology for example, this might be true. But it is hard to see this as a major factor in general science and engineering, where information needs tend to occur as a result of project conditions, which can happen at any time. Indeed it is this feature which may explain the repeated downloading of articles many years after publication. Downloads are need driven. Thus it is possible that older articles are actually more valuable, not less. This is an empirical question.

B. Discount rate

The discount rate reflects the fact that a given return on an investment is more valuable the sooner it occurs. If subscriptions are regarded as investments then there might be an argument that later downloads are not as valuable as near term downloads, at the time of the investment decision. However, given that discount rates are usually figured at 10% or less per year, sometimes much less, this factor will have little impact on the issue of the economic impact of embargo times of two years or less. Nor is it obvious that subscriptions are regarded as investments.

C. Early loaders, late loaders and waiters

We have been looking at downloads as though the pattern were fixed.  That is, where there are downloads either before the embargo period or after it begins. This ignores the fact that usage is done by users. Let us call these people early loaders and late loaders. What is missing is a third group which we call waiters. These are people who are prepared to wait for some time, such as several months, to download for free. The impact of waiters is to shift downloads from before the embargo begins to afterward. Waiters increase the devaluation effect of the embargo. This effect is likely to be greater the shorter the embargo period.

Note that libraries respond to demand and embargoes should reduce demand from late loaders and waiters. But an important question here is to what degree early loaders and late loaders are the same people. To the extent that they are the same the embargo might not reduce demand for library subscriptions. This is an empirical question.

D. Bundling

It has been argued that bundling of large numbers of journals from different disciplines, for sale to libraries, somehow protects vulnerable journals from cancellation due to imposed embargoes. Many journals do not participate in this kind of bundling activity. Nor is this argument convincing because it suggests that libraries do not act economically.

E. The PubMed Central precedent argument

It has been argued that PubMed Central (PMC) has enforced a 12 month embargo period from which no cancellations have resulted. This PMC argument is unproven and probably not credible. Journal prices have gone up significantly over this time, as has the number of journals on the market. Reportedly library budgets have not kept pace, a factor which is driving the open access movement. So there must have been many cancellations. We just do not know the role embargoes have played. This is an empirical question.

F. The vagueness of articles being based on US Federal funding

It is far from clear what constitutes an article’s being based on federal funding and so falling under the embargo. For example, suppose the research used some computer time on a federal supercomputer, or a grad student involved was on a federal scholarship. Do these cases count? There is even the possibility that researchers will create some minor federal involvement just to gain public access via the embargo. Doing so might greatly increase the adverse impact of the embargo.

G. Different journals may have different download over time profiles

It appears that different journals vary significantly in their relative percentage of post embargo downloads. Thus different journals might experience different levels of adverse economic impact.

Uncertainty versus risk

The fact that there are significant uncertainties in estimating the adverse economic impact of embargo based devaluation does not reduce the risk that this impact is large. While the factors listed above in some cases suggest that the adverse economic impact of imposed embargoes may be less than our simple model suggests, these arguments are merely conjectures at this point. Conjecture does not reduce risk.

Basic economics says that if you reduce the value of your product while keeping the price the same you will lose sales. Making articles freely available after an embargo period reduces the value of a subscription. Conjectures that this reduction is small are not a sound basis for public policy.

The US government should not experiment with an industry where the risk of significant adverse economic impact is unknown but potentially large. This is certainly the case with 12 month embargoes for many disciplines, including civil engineering. It is even more so the case for a 6 month embargo, which is potentially catastrophic. Note too that the US action may well become a global precedent. The US needs to take this possibility seriously in its risk impact assessment, so we have included it as an upper bound on our estimates.