Findings based on two-sided market framework
ATLANTA (February 19, 2005) – Rising subscription costs in the 1990s forced university libraries into a "serials crisis" as they cancelled many academic journals, spawning a movement toward Open Access journals, where authors pay a fee to submit or publish a paper that is available at no cost online. In 2000, the average price of a subscription to a scholarly journal was shown to have more than tripled over the previous 14 years, reflecting the publishing industry's growing consolidation and therefore, less competition. Dr. Mark McCabe, assistant professor in the School of Economics at the Georgia Institute of Technology, studies the economic viability of a new approach to academic publishing called Open Access.
On February 19 at the 2005 American Association for the Advancement of Science (AAAS) Annual Meeting, McCabe will present "The Economics of Open Access Publishing: A Strategic Perspective," during a session entitled, "Changing Scientific Publishing: Open Access and Implications for Working Scientists."
McCabe will present findings from his ongoing research on scientific communication with co-author Christopher M. Snyder of George Washington University. Their research compares the traditional business model of scholarly journals in which the "Reader Pays" for a (possibly electronic) subscription with the newer "Author Pays" or "Open Access" publishing model.
Many of the findings and lessons from the seemingly narrow domain of journal publishing apply to other two-sided markets, such as telephone networks and credit card payment systems. For journals, authors who benefit from greater impact and increased citations from appearing in more prestigious journals compose one side of the market. The other side of the market is made up of the readers, who benefit from the journals' content and prefer journals with more articles.
McCabe explores the conditions under which either model is "best" for profits, and/or society. McCabe and Snyder have developed a formal economic framework to study these questions and continue to build on this framework to add more realism in order to better examine the issues of which business model -- "Reader Pays" or "Open Access" -- is "best."
Major findings include:
McCabe and Snyder use a formal economic framework to sort out the complicated question of what business model is "best." The basis for this framework is the journal-mediated dynamic between readers and authors, referred to in economics literature as a 'two-sided' market. On one side of the market, authors benefit from greater impact and citations and thus prefer a journal that has more readers. On the other side of the market, readers benefit from content and thus prefer journals with more articles.
Determining the optimal balance between these two sets of players -- whether from the perspective of the publisher or society -- involves measuring the benefits that each side obtains from greater or lesser participation by the other side, calculating the costs of adding (or subtracting) authors and readers, and then identifying the set of prices, i.e., the author fee and subscription price, that maximizes profits or net societal benefits.
McCabe and Snyder's economic framework indicates that optimal prices will differ depending on the degree of competition in the market for journals. At one extreme, a monopoly journal seeking maximum profit will raise prices for both authors and readers, even with minimal distribution costs. Even with low distribution costs of electronic publishing, Open Access will not result in this scenario. So, journals with lower market power are more likely to adopt Open Access.
At the other extreme, with perfect competition between equal quality journals, Open Access appears efficient when distribution costs are minimal, and author and reader benefits are roughly equal. Under these conditions, Open Access maximizes the total net benefits for authors and readers and for society as a whole. However, if readers obtain disproportionate benefits from reading additional articles, it can be efficient to have positive reader fees in order to subsidize authors' submissions.
McCabe and Snyder have extended their economic framework to allow for articles and journals to vary in quality, which makes their model of journals more realistic. In this work they find that editorial quality may affect the profitability of adopting Open Access. However, given some level of editorial quality, they conclude that Open Access journals are no more likely than traditional journals to boost revenue by accepting "too many" articles.
Source: Eurekalert & othersLast reviewed: By John M. Grohol, Psy.D. on 21 Feb 2009
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