Re: universities experiment with paying OA fees

[Ahmed Hindawi <ahmed.hindawi@hindawi.com>]

Sandy:

  > Costs may be saved in one area only to reappear in another.
  > I hope those who talk about "efficiency" will know where to
  > look to identify all the new costs as well as the savings.

Please allow me to make some clarifications regarding this issue.
In my message, I spoke of market efficiencies. I didn't speak of
areas for cost savings in Gold OA in the sense of a current
subscription publisher can realize cost savings in switching
today to Gold OA. Gold OA does not mean that publishers will be
cutting right and left what they do for every journal and every
article they publish. The cost savings I speak of are not coming
because of down-sizing and doing less and less. The cost savings
are not going to be realized because publishers will not need
access controls and authentications (which is very small cost)
and not because publishers will not need print and distribution
(which is an e-only saving that has little to do with open
access) and not because publishers will not need a large
subscription sales team (they will still need to collect their
revenue).

What I was speaking of is not any particular publisher's cost,
but the community cost. The total aggregate price that the
society pays in return of publishing 2m articles or so a year.
The cost savings will come because of market competition between
publishers. Cars are much better and lower priced now than they
used to be 50 years ago, not because car manufactures are cutting
the features of cars, far from it. It is rather because they have
significant market pressure to lower their costs, to produce
betters car for less money. This is not an overnight process. A
publisher switching over today from subscription to open access
will not save much of its own cost. A whole market (or large part
of it) switching in the next few years is something entirely
different.

There are many publishers who spend an X amount of dollars per
article in their publishing operations. And other publishers who
spend several times that same amount of money per article. Gold
OA will drive the second set of publishers out of the market. It
will reward the first, more cost efficient publishers, with
larger market share. More costly publishers will have to find a
way of lowering their cost and prices or loose market share.
Either way this will lower the total cost of the system.

In other words, the cost savings I believe in will not be from
areas we can sit down today and agree that they can be removed in
an OA world (although there may be an area of two like these
indeed), but from market forces. From the pressure on publishers
to compete on and lower their cost and prices. What exactly are
they going to be doing different than what they do today: ask the
airline companies that went out of business because they could
not cut their costs as much as their competitors were able to do
(or better yet, ask their competitors who were able to do it).
Sometimes airlines had to cut some of their services (services
that customers didn't care enough about to justify the cost
associated with them) but many times they simply found better
ways of doing what they do.

Cost reduction will be very significant, I believe, if publishers
continue to offer the same level of service they offer today
(because I can imagine a future where Gold OA publishers may be
forced to offer higher or lower services than what publishers
offer today because of market demand). If publishers are spending
today X dollars per article (on average, and the average here is
across publishers), they (or some of them) will find a way of
spending only half or a third of that amount.

How is that possible? Actually, it is true that some of them
already are much more cost effective than others. Some publishers
spend only half the industry average and still produce the same
level of service and quality. The American Physical Society, for
example, spends (as much as I know) about $1900 per article which
goes down to $1500 if you exclude print and distribution. IEEE on
the other hand, spends around $4000-$5000, as far as I can tell,
per article. They both produce leading publications in their
fields. How can they both survive? They can and do in today's
inefficient market where no one cares or does anything about the
cost. (APS and IEEE don't compete in the same subject areas, and
because of their mandates cannot expand into each others areas,
but the cost discrepancies exist everywhere and there are many
publishers who don't limit themselves into one subject area.) In
an efficient market, the more cost effective publishers will get
more market share (which will lower the total cost) and will put
huge pressure on less cost effective publishers to lower their
cost (which will lower the total cost).

Do you see this large cost and price discrepancy between
publishers anywhere else in the economy? Imagine Sony with a 50"
LCD TV for $1500 and Toshiba with a comparable 50" LCD TV with
$4000? What do you think will happen if this was in fact the
case? How long will it take for Toshiba to go out of business?

In a Gold OA world where price actually matters, more efficient
publishers will have their day. They will wipe their less
efficient competitors out of the market. And it is a wonderful
thing for all of us, isn't it? It is what efficient markets bring
to the society. It is capitalism at its best. Strong competition
that results in better products and lower prices for consumers.
It works for almost everything we produce and consume. Why
wouldn't it work for scholarly publishing?

In order to have an efficient market, you have to have customers
(authors, departments, institutions, research funders) who
actually care about their cost, the price they pay per article.
There is no way around it. There must be mechanisms for resource
allocation, but I don't see this being as problematic as you do.
Resources are limited and there is no way we can go around the
fact that we need to allocate them in one way or another.
Research funds have to be and are being allocated today. These
research funds are 100 times the funds needed for scholarly
publishing (even if we assume no cost reduction in the future).

Wouldn't it be wonderful for any of us to pick the car of our
choice and not having to worry about how much it costs to produce
it? Or the LCD TV that we like no matter how costly it is to
produce? Or get any medical procedure we want or need without
having to pay for it? Or fly first class to attend any conference
of our choice at any cost without cost or price barriers? Or hire
any number of graduate students to work in our research groups?
Or get colleagues to visit and stay for a few weeks or months to
do research projects with us? No, it will not be wonderful,
because without price barriers and proper resource allocation, we
will all be very, very poor.

Best regards,

Ahmed Hindawi