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Re: Wellcome Trust report

A simple question: if, as Sally says "most of the saving would be due to a
move to on-line only", why have publishers not offered libraries a 30%
discount or even a 25% discount if they dropped print? Is it because of
the difference Sally points to between cost and price - i.e. the
publisher's price is not being lowered to reflect the savings in cost by
going on-line?

Fred Friend

----- Original Message -----

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