RE: Calculating the Cost per Article in the Current Subscription Model

["David Goodman" <David.Goodman@liu.edu>]

I'd like to mention some factors I find helpful in interpreting this data,
as also noted by Heather and by Sally.

1. Phil, as I interpret footnote 4, "figures include overhead and
profit"--please correct me if I'm not seing this right, but the
publisher's cost including overhead and profit is the price the publisher
charges=20 the library. As librarians, you and I think of that as _the_
cost, because it's our cost. (subject to my note 3)

It is however _not_ the cost to the publisher.  The cost to the publisher
does not include profit; he can price his product to attain whatever level
of profit he thinks is appropriate and possible. The cost for the
publisher to produce a journal , including overhead, might be $1000, and
if he prices it at $2000 then the library's cost is $2000, and the
publisher makes a very good profit. . With the same $1000 cost to the
publisher, he might price it at $1000 and break even, which may be all a
particular non-profit publisher wants.

2. Even considering the cost to the publisher, it represents his current
costs, and the price as based on that cost. It does not represent what he
might be able to sell it at if he produces more efficiently, produces more
cheaply, has lower overhead, or - even -- gets more subscriptions!  If any
of these happens, he often chooses to produce larger journals, but might
choose higher profits, or lower prices.

3. I think some but not all of the library serials budget figures include
some acquisitions costs, such as fees for subscription agents and postage.
These will not be major components, but they do represent additional costs
to the libraries. There is also library overhead, which is I think never
included in these figures--not even the salaries of the serials staff.

4. The 50% you use for the percent due to scholarly journals, does this
also include indexing and=20 abstracting services?  I think libraries do
this differently, and it may be a major component.

5. The data is changing--figures from price lists, library statistics,
annual reports, and so on are generally out of date when published, but we
cannot hope for better.  Experience helps in knowing how to adjust them.

Concluding, your data about shift to a producer-paid model assumes equal
values for all of these factors under both models.  I agree that it is the
right way to think about it.. It is not prudent to plan on the assumption
libraries could force publishers to lower overhead or decrease profits.
Even if we could, that fwould apply to either model.  As almost all of us
recognize, the rationale for a change to OA journals is not to reduce the
cost, but to improve the access. It's the economic effect of that change
on individual universities that your spreadsheet shows, and it will
obviously be necessary to compensate for the change in some manner.

Yours,

Dr. David Goodman
dgoodman@liu.edu