Re: OA economics & libraries

[Joseph Esposito <espositoj@gmail.com>]

David,

It is highly improbable that the study suggesting that Gold OA 
would cost less than conventional publishing is correct; or if it 
proves to be correct, then it will be for reasons that are not 
anticipated in the study.  The problem with studies like this 
(this is not the only one, and this applies to many kinds of 
modelling) is that in order to make certain extrapolations, you 
have to hold a number of figures as constants, when in fact they 
are variable.  An analogy:  you are driving a car on a large 
highway.  You wish to go faster than the other cars and you are 
confident that you can change lanes repeatedly to pass the 
others.  So you assume all the other cars will stay in their 
lanes while you zigzag in and out.  And you succeed:  you go 
faster than the others.  The catch (which could be fatal) is if 
one of the other drivers decides to change lanes.  Then your 
extrapolations get you into serious trouble.  To assume that 
scholarly communications would look pretty much the way it does 
today EXCEPT for the change in the payment model is naive.  You 
can change one gene and change the entire organism.

This is not the only naive bit of modelling to be found.  Large 
commercial firms do this all the time.  Remember when CD ROM was 
going to become a billion-dollar business?  A computer 
spreadsheet can be a deadly enemy in the hands of arrogant 
management.

I don't know how the discussion of flexibility crept into this 
discussion.  From your example, it would appear that the only way 
a company can be flexible is to go OA.  That's plain silly. 
Companies are more or less flexible depending on the business 
opportunities before them.  They are flexible in pursuing a 
higher return on capital, inflexible otherwise.  They stick to 
mature models too long; they usually innovate too late.  All 
their "flexibility" (call it management, which is the proper 
term) goes into optimizing the return on capital.  That's what 
they are about.  They should not be romanticized, and they should 
not be demonized.  Every day the managers are making the same 
kind of decisions that we all do with the money we have placed in 
our retirement funds.  I don't know anyone who is flexible about 
pursuing a lower return on savings.

Gold OA is under strain right now.  Partly this is because of the 
entry into this business of the likes of Wiley and Sage (neither 
of which you mention), but it is also because of competition from 
other not-for-profits, which are going to drive prices down. 
Gold OA will look increasingly like PLOS One (lighter editorial 
review), and then degrade over time as pressure on costs becomes 
stiffer.  This does not mean that traditional publishing will 
emerge triumphant.  It simply means that over time, all economic 
activity will adjust itself to accommodate changes in the 
environment.

I happen to agree with you that no 30% company will chase a 20% 
opportunity.  I see we have all read Clayton Christensen. 
Another question, which Christensen can't help us with, is what 
happens when a 1% company finds itself operating a -10% business. 
If you are Springer or Wiley, the decision is easy.  If you are 
the Wellcome Trust, I don't know what will happen.

Joe Esposito

On Tue, Oct 25, 2011 at 5:25 PM, David Prosser 
<david.prosser@rluk.ac.uk> wrote:

> A couple of points in reply to Sandy's first paragraph.
>
> The first is on costs. A detailed piece of economic modelling 
> (see below for link) showed that Gold OA would be cheaper for 
> the UK (as a publication-heavy country) if the average price 
> for publication was less than about 2000 pounds. Interestingly, 
> 2000 pounds is significantly higher than the fee charged by 
> most successful OA publishers and journals (BMC, Hindawi, PLoS, 
> New Journal of Physics, etc) and about the level of the most 
> unsuccessful OA publishers (mainly hybrid options from larger 
> publishers - and here I use 'successful' as meaning attracting 
> authors and revenues to the publisher). So certainly at this 
> stage and based on the modelling done it would look as if a 
> move to OA would save money - at least for the UK.
>
> The second is on publisher flexibility. I do not recognise the 
> picture of flexible, rapidly reactive large commercial 
> publishers rushing to embrace Gold OA. Let's take Elsevier. 
> They have a hybrid model with very low take-up (they tell us)
> - I assume partly because it is priced to defend revenues, not 
> attracted authors. They have a tiny number of actual open 
> access journals. There is no gold rush there. Of the large 
> publishers only Springer (a private equity company) appears 
> to have embraced OA, having purchased BMC and now using that 
> experience as a spring-board to launch a number of new OA 
> titles. And perhaps Nature as one of the smaller companies 
> (although it is part of a much larger group).
>
> Where Sandy sees commercial publishers as being quick on their 
> feet, I see feet dragging. And why is that? Well, if you were 
> sitting on a diamond mine providing over 30% profits what would 
> your reaction be to somebody who came and said 'Have I got a 
> deal for you - get rid of your diamond mine and take up this 
> great gold mine. I can give you, say, 20% profits'? Any chief 
> executive who took that proposition to their shareholders would 
> be quickly looking for a new job!
>
> David