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Re: Wellcome Trust report

Date: Sun, 30 May 2004 13:55:35 +0200
From: "Sally Morris (ALPSP)" <chief-exec@alpsp.org>
Subject: Wellcome Trust report

Forgive me if I've sent this comment to LibLicense already!  Could you
forward if not? Thanks, Sally

The Wellcome Foundation funded a follow-up study to its previous 'Economic
Analysis of Scientific Research Publishing';  the new report, entitled
'Costs and Business Models in Scientific Research Publishing', can be
found at http://www.wellcome.ac.uk/en/1/awtpubrepcos.html.  It's an
interesting analysis and the cost figures presented are quite plausible
(though it's not clear whether figures several years old have in fact been
inflated to current-year levels in the calculations);  they are much
higher than some less realistic OA advocates have been suggesting.

However, the author confuses the savings made by dropping print with those
made by moving to open access, and thus replacing a subscription charging
system with an author charging system, and doing away with the costs of
licensing and sales.  It is actually impossible to see, from the figures
given, what the cost difference is between an online-only subscription
journal and an online-only open access journal (the author also recognises
that, in fact, many OA journals still find they need to sell print copies
to some customers, but fails to allow for the cost of maintaining print
systems in order to do so).

Even more importantly, the author falls into his own trap of confusing
costs (and direct costs at that) with prices.  Despite several comments to
the effect that an amount needs to be added to the bare cost figures to
cover (a) overheads and (b) profit or surplus - and a recognition that the
latter is essential to staying in business, whether commercial or not - he
fails to do so himself, stating that his estimate of direct costs - 175
dollars per article submitted, plus 550-675 dollars per article published
- would be appropriate author charges.  Neither does he take any account
of the percentage of authors who might be unable to pay.

I suspect that his estimates of per-article direct costs will be treated,
by Open Access enthusiasts, as a recommended charge to authors, while
clearly this would not be viable.  And even at the figures he gives,
researchers outside the particularly well-funded areas of STM (and not
even all of STM is well funded) would, I imagine, have the greatest
difficulty in obtaining such sums from research or other funding;  all the
more so once overheads and profit have been added.

A smaller but important point is that I think the assumption of the
percentage of journal revenue received from non-academic sources is far
too low - the EPS analysis of the STM market, and the recent report from
Credit Suisse/First Boston, suggest a much higher figure.  This makes a
difference when one compares a situation where costs are covered by both
academic and commercial communities, with one where all the costs move to
the academic community - the effects would, of course, be particularly
acutely felt in areas like medicine and pharmaceuticals.

The accompanying press release suggests that publishing costs could be
reduced by up 30% by a move to Open Access.  This is nonsense;  most of
the saving would be due to a move to online-only, as mentioned above.  
Indeed, reduction of publishing revenues by 30% would put many very
valuable journals out of business (see the typical society surplus levels
mentioned above).  But again, this will be - indeed, has already been -
taken as gospel by some, with potentially damaging effects.

I tackled the consultant who wrote the report about these two problems:
the fact that an adequate distinction is not made between savings made by
dropping print, and savings (and new costs) made by moving to open access;  
and the failure, despite comments in the text, to make any allowance
whatever for overheads or profit/surplus.  He conceded both points and
said that he had never intended to give that impression.

Sally Morris, Chief Executive
Association of Learned and Professional Society Publishers
South House, The Street, Clapham, Worthing, West Sussex BN13 3UU, UK

Phone:  +44 (0)1903 871686 Fax:  +44 (0)1903 871457 
E-mail:  chief-exec@alpsp.org
ALPSP Website  http://www.alpsp.org