The Economics of Open Access Journal Publishing

From: Barry Mahon <barry.mahon_at_IOL.IE>
Date: Mon, 3 Nov 2003 13:34:38 -0000

In the most recent issue of SPARC Open Access Newsletter, issue #67
November 2, 2003,

Peter Suber concludes that the significance of a recent report on the STM
journal market by Banque Nationale de Paris and a commentary on Elsevier
by Citigroup Smith Barney "is that two major financial firms have looked
at the business model for OA journals and concluded that it is viable"

Peter is inhibited by copyright (and presumably restrictions on re-use
which normally accompany such client reports by banks and brokers)
to providing extracts from the report. I hope I am not compounding any
potential felony bu quoting them again....

One extract:

    " Under open-access, we believe the cost of publishing STM articles
    could be lowered for universities and research institutions. This
    belief is based on the critical assumption that submission costs
    per article would be less than the subscription revenues per article
    implied by the current model"

and another:

    "We believe there is a 50% risk of a change in the model ten years
    from now"

In my opinion, I don't think these remarks would necessarily indicate
viability. As I said they are only extracts and perhaps BNP and Citigroup
come down more emphatically in other parts of their reports. I think
that the 'critical assumption' is indeed that, critical, and will
require significant change in habits and policy in universities and
research institutions.

Whilst obviously not denying the potential quality of the work I did
make the point already that these 'recommendations' are normally driven
by short term considerations. I prefer the opinion of the recent report
by the UK Wellcome Trust
who, referring to recent purchases in the STM sector by venture capital
funds says:

"Why would private equity firms be interested in scientific
publishing? The answers lie as much in the economic cycle as in the
particular features of STM publishing. The scientific, technical and
medical information publishing industry enjoys sustainable growth
throughout the economic cycle. It is less prone to fluctuations than
many other sectors. Publishing is currently a hot area for private
equity firms as the industry is stable and still offers plenty of scope
for pan-European consolidations. Private equity firms were attracted to
the KAP (Kluwer Academic Publishers) deal because of the possibility for
consolidation in the sector, currently dominated by Reed-Elsevier with
a 30 per cent market share, but otherwise made up of small players. The
size of Reed- Elsevier makes it difficult [for them] to get regulatory
approval for further purchases in the sector"

Barry Mahon
Received on Mon Nov 03 2003 - 13:34:38 GMT

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