Alternative%20Economic%20Designs%20for%20Academic%20Publishing

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Alternative Economic Designs for Academic
Publishing

• Ted Bergstrom
• University of California Santa Barbara

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Platform Competition in two-sided markets

• A platform is an intermediary that plays an
  economically non-trivial role in interaction
  between producers and consumers. (Rochet and
  Tirole, 2003)

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Examples of Platforms

• Credit cards
• Merchants and Consumers
• Game Consoles
• Game Developers and Players
• Shopping malls
• Merchants and Consumers
• Academic Journals
• Authors and Readers

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Network externalities

• Most interesting examples have economies of scale
  and network externalities to platforms.
• Platforms have some market power.

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Who do platforms collect from?

• Mainly from suppliers
• Credit cards (merchants)
• Game consoles (game designers)
• Shopping malls
• Mainly from demanders
• Academic Journals

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What decides this?

• Proposed explanation Elasticity of demand.
• Platforms load charges on side of platform that
  is least responsive to price.

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Equilibrium for credit cards

• Most merchants accept all major cards
• Most customers do not carry all cards.
• Customers have little need for more than one card
  and will use the card that is cheapest.
• Merchants will lose sales if they dont have all
  cards. Doesnt pay to use only the cheapest
  card.
• Price competition is intense on customer side,
  less so on merchant side.
• Merchant demand more inelastic. Companies load
  cost onto merchants.

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The Journal Platform

• Publishing is valuable to authors.
• Promotion, pay raises
• Estimateone citation worth 50 annual salary.
• Reading journals is valuable to researchers.
• Which side has more inelastic demand?

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Why subscriber side has more inelastic demand

• Scholars want to read all the journals in their
  area. An extra copy of a cheap journal is no
  substitute for an expensive journal. Scholar
  wants access to both.
• Scholars dont need to publish in all journals.
• With two equally good journals, publishing twice
  in the cheap one is about as good as once in
  cheap one, once in expensive one.

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Two types of Journals,Non-profit and for profit

• Both are important players.

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Costs of a Complete Economics Journal Collection
Publisher Type Percent of Cost Percent of Cites
Non-Profit 9 62
For-Profit 91 38
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Each type plays an important role

• Non-profits supply most of the citations.
• For-profits collect most of the money.

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Market sustains these price differences on
subscriber side.
Journal Title Price/Article Price/Cite
Applied Economics 26 95
American Ec onomic Review 2 1
Int Rev of Law and Economics 29 51
Journal of Law and Economics 4 3
Int Journal of Tax and Public Finance 18 37
National Tax Journal 4 4
Journal of Development Economics 27 28
Econ Dev and Cultural Change 7 4
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Prices on author side of platform

• Page charges in the sciences.
• 7 top ecology journals are all non-profit and
  have author page charges 50-150.
• Less prestigious non-profits, lower page charges.
  (median 30).
• For profits have no page charges.
• Explanation
• Non-profits seek wide distribution.
• For profits seek profit and so price on the
  inelastic side of market.

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Perverse result with for-profits

• Pricing on subscribers side of platform allows
  pricing far above average cost, plunders
  university budgets, and shuts out readers not at
  wealthy universities.
• If pricing were only on the author side, the
  more elastic demand would force pricing close to
  average cost. Some deterrant effect for
  authors, but likely to be small.

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Will technology crumble old pricing regime?

• The Big Deal from commercial publishers
• Bundling of electronic site licenses for
  publishers entire portfolio.
• Price discrimination and library by library
  negotiation
• So far they have managed to keep prices far above
  average cost.

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Non-profit open access models

• High-priced, high overhead
• PLOS in biology and medicine Author fees
  2000-3000
• Low-priced, low overhead
• Economics bulletin (zero charges)
• Runs on donated labor and university overhead
  fumes
• Theoretical economics
• 100 submission fee.
• Electronic Journal of Statistics
• No charges or outside support
• No copy-editing, papers submitted in TeX.

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Hybrids, Commercial and non-profit

• Authors of accepted papers can opt to pay an
  extra fee for paper to be made open access.
• Springer and Elsevier 3000 per article
• Am Chemical Society 1000 per article
• Am Physical Society 900-1300
• Natl Academy of Sciences 1000
• Oxford Univ Press 1500
• Cambridge Univ Press 2700
• Small uptake so far. All programs very new.

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Green open access

• Self-archiving by authors.
• Study of Economics journals (Bergstrom-Lavaty)
• Free online versions available for 90 of
  economics articles published in high impact
  journals
• For 50 of articles in lower impact econ journals
• Only 30 of political science journals.
• Expansion of posting increases price elasticity
  of demand, should ultimately lower prices
• Some worry that it may kill even low priced
  journals.
• I doubt it Heres why

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Making demand more elastic

• Subscription of commercial journals will fall
  only if demand becomes more elastic. How can
  universities accomplish this?
• Encourage (maybe mandate) self-archiving.
• Show backbone in cancelling over priced journals.
  Set firm thresholds of value per dollar and
  refuse to subscribe to things that cost more.
• Users still will have access to pay-per-view if
  they really value articles in overpriced
  journals.

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Untangling the bundles

• To employ value-based subscriptions, libraries
  need to be able to evaluate bundles and know when
  to reject bundles and subscribe only to single
  journals that are above threshold.
• Help is on the way.
• Journal prices.com
• Eigenfactor.org

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Eigenfactor.org

• Uses Google-like algorithm to calculate weighted
  citations from other journals.
• Gives an estimate of fraction of scholar accesses
  going to each journal.
• Presents estimates of value per dollar for each
  journal.
• Shows cheapest way to buy any given fraction of
  citations.
• Also evaluates journals not in the ISI database.

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Coming up with eigenvalue

• Tools for evaluating package versus buying best
  deals one by one.
• This will help libraries to bargain intelligently
  over bundle prices.

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Had enough?
OK,, Ill Quit
Ruins of Library at Ephesus
Ruins of Stanford Library