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Version of 28 April 2005
Prepared for an invited presentation in a session on 'The Impact of Open Access on Publishers, Librarians and Academics', at the Fiesole Collection Retreat Series, no. 7, Melbourne, 29 April 2005
© Xamax Consultancy Pty Ltd, 2005
Available under an AEShareNet 
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Also available under a Creative
Commons 
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This document is at http://www.anu.edu.au/people/Roger.Clarke/EC/JP-CP.html
The slide-set is at http://www.anu.edu.au/people/Roger.Clarke/EC/JP-CP.ppt
A model is developed of the costs incurred in operating a refereed journal. Published information and estimates are used to apply the model to a computation of the total costs and per-article costs of various forms of journal-publishing, with particular attention paid to the various forms of open access. Insight is provided into why for-profit publishing is considerably more expensive than equivalent activities undertaken by unincorporated mutuals and not-for-profit associations. Conclusions are drawn concerning the current debates among conventional, commercial approaches and the various open alternatives.
The Internet and its associated technologies have unleashed substantial change in many aspects of life, and of business. Electronic publishing has created new possibilities, and in the process called into question many long-established practices. Of particular significance for refereed journals has been the movement commonly referred to as 'open access'.
To develop an understanding of the impacts of open access and the directions of development in journal publishing, a variety of aspects need to be considered, from a variety of perspectives. This paper addresses one particular aspect: the cost-profiles of journal-publishers.
It presents a model of journal-publishing that is sufficiently detailed to enable the cost-profiles of various categories of journal-publisher to be assessed. Among other things, this enables yardsticks to be developed for per-article cost, for both print-publishing and e-publishing. The costs are considered largely in isolation from the sources of revenue used to cover those costs.
The paper commences by clarifying the term 'open access'. It then considers the differences among journal-publishers. The costs involved in journal-publishing are presented, in structured form. The cost-profiles of several mainstream approaches to journal-publishing are examined, and assessed against available evidence. Inferences are drawn.
Much has been written about what 'open access' means. This section reflects Budapest (2002), Suber (2002), Bethesda (2003), Berlin (2003), Suber (2004a, 2004b, 2004c, slides 2-4, 2004d) and Morris (2005, pp. 122-123), and proposes a framework that accommodates the varied interpretations of the term.
"Open access to scientific journal articles means online access without charge to readers or libraries" (Suber 2002). But, more generally, it implies that there are only very limited obstacles to be overcome in order to gain access to the content. The kinds of non-financial 'permission barriers' that open access seeks to avoid are:
The implicit assumption is made, however, that people have local infrastructure, including an appropriate device, appropriate software installed on it, and an Internet connection. In relation to copyright, the term 'open access' implies that the consumer is free to make such reproductions as are necessary to enable access in a form convenient to that consumer.
There is a variety of ways in which this state of affairs might come about. They include:
A discussion of business models to support journal-publishing is in a companion paper, Clarke (2005). The present paper, however, focusses primarily on the cost aspects.
Some commentators would regard any significant compromise to the pure form of open access as being unacceptable. For others, however, there are various forms of qualified open access. Examples include:
At the other extremity, some commentators prefer extended open access. In particular, the definition adopted in Berlin (2003) would require that there be no barrier to "distribute" and "transmit" the work. That implies that the copyright-owner must grant to anyone a licence to re-publish the work. Further, it would require that there be no barrier to "distribute derivative works". That implies that the copyright-owner must grant to anyone a licence to adapt the work. Neither of these is necessary for 'access' as that term is commonly understood.
Both the qualified and the extended interpretations of 'open access' deflect attention away from the key issue: the ability of people generally to get access to information about the outcomes of research work. This paper accordingly avoids them, and adopts the core notion of 'free and unrestricted access' to content without 'price barriers' or 'permission barriers' (Budapest 2002, Suber 2004a).
A further distraction arises because some authors conflate open access with the ePrints / self-archival movement. This involves the pre-publication of an unrefereed paper as an ePrint, to enable colleagues to gain access to it (Harnad 2002-). A refereed article, on the other hand, has been through a review process, and is generally a considerable further development of the first version that was released as an ePrint. It is almost unknown for an article that has been through a process of accreditation through review and approval to be published solely, or even primarily, by the author. That has been, and at this stage remains, the role of the refereed journal. In due course, journals may indeed be deconstructed and 'go virtual' (Smith 1999); but that would underline their quality assurance role, rather than undermining it.
This paper adopts the view that discussions about open access need to focus on accredited works, and especially articles published through refereed journals, not preprints.
There is considerable diversity among organisations that perform the function of journal publishing. Dimensions of difference include the following:
Hovav & Gray (2001) identified the diversity of approach adopted by e-journals. Even within the 'open access' movement, as many as nine variants have been identified (Willinksy 2003b).
The following somewhat simplified taxonomy is used in this paper:
Description | Term Used |
| An informal association of a modest number of people with a common interest | Unincorporated Mutual |
| A formally constituted not-for-profit association of individuals, usually within a particular discipline, profession and/or geographical region | Not-For-Profit Association |
| A for-profit corporation, or a profit-oriented business unit of a not-for-profit association | For-Profit Publisher |
Considerable effort is involved in publishing a journal. Large number of submissions have to be handled. Each accepted article requires careful processing. Periodic tasks are performed relating to each Issue. There are ongoing activities relating to marketing, archive management and governance. These all depend upon infrastructure. And the journal came into being as a result of establishment processes. All of these require resources, and investments are generally expected to deliver financial returns.
This section presents a model of the costs involved in publishing journals. For each category of costs, a brief discussion is provided. The approach adopted pays only limited attention to theories of economics (e.g. McCabe & Snyder 2004, 2005). Instead, it relies on the pragmatics of cost-accounting.
The model reflects prior analyses in Odlyzko (1997), Bot et al. (1998), Rowland(2002), Willinsky (2003a), Suber (2004c), King (2004), Hawley (2004) and Morris (2005). It only partly reflects the very substantial differences that exist in the communication, accreditation, debate and consensus styles of different disciplines (Valauskas 1997).
The model expressly excludes the activities of the author. In relation to research, writing and re-writing, this is appropriate because this paper's focus is on publishing. Ignoring the author's efforts is less justifiable to the extent that they perform publishing-related tasks, such as reference-checking, formatting of tables and illustrations, and formatting of text in accordance with the journal's norms and template. The model also expressly excludes consumers' costs in accessing the journal, and the costs of intermediaries such as libraries and research assistants.
In the tables below, the following terms are used:
The first segment of costs relates to the formation of the undertaking.
1
| Conception and articulation of the journal's name, scope, philosophy and modus operandi | This may be undertaken by senior academics, or require time from paid executives |
| 2 | Preliminary negotiations within the intellectual community | This is likely to be undertaken by senior academics |
| 3 | Preliminary negotiations with potential providers of operational resources | This is likely to be undertaken by senior academics |
| 4 | Preliminary negotiations with potential providers of infrastructure | This may be as above, or require time from paid executives |
| 5 | Acquisition of investment and working capital | This may be undertaken by senior academics, or require time from paid executives |
| 6 | Appointment of Board, Editor and Editorial Committee(s) | This is likely to be undertaken by senior academics |
| 7 | Accumulation of Referees List | This is likely to be undertaken by senior academics |
| 8 | Acquisition of infrastructure | This may be undertaken by senior academics, or require time from paid
executives. Web-sites may be run using gratis, open source tools (ranging from simple to highly sophisticated) or commercial tools involving expensive licence fees. Willinsky (2003a) reports that the capital cost of the Open Journal System was about $60,000 |
| 9 | Acquisition of operational resources | This may be undertaken by senior academics, or require time from paid executives |
| 10 | Acquisition of intellectual property (logos, trademarks, copyrights, licences) | This may be undertaken by senior academics, or require time from paid executives |
| 11 | Preparation of formal components of the printed journal and web-site | This is likely to be undertaken by senior academics, but may require time from paid staff |
| 12 | Preparation of web-site | This may be undertaken by junior academics or students, or require time from paid staff |
| 13 | Announcement to the community | This is likely to be undertaken by senior academics, but may require time from paid executives, and perhaps paid advertisements |
| 14 | Issue of initial calls for papers | This is likely to be undertaken by the Editorial Committee |
This section draws together the various aspects of a journal's cost-profile that relate to its ongoing operations. Some costs are associated with the submissions that arrive. Other costs arise in relation to the articles that are accepted for publication. Yet others are associated with the discrete Issues that the journal publishes. Further operating costs, referred to in this paper as 'generic', are independent of each of those groups of activities.
This segment relates to submissions of various kinds, including papers, notes, and letters. These may arrive by the score, in most cases by the hundred, but in some cases by the thousand. Papers typically involve internal correspondence within the Editorial Committee, correspondence with the author, and re-submission. Considerable effort and time are invested in what is conventionally referred to using the quaint expression 'peer review'. The correspondence generated among referees and the editorial team may be between 10 and 50 items per submission.
1
| Receipt, acknowledgement and management | Editor, Editorial Committee and Referees, possibly supported by junior academics or students, or using the time of paid staff |
| 2 | Conduct and management of the assessment process | Editor, Editorial Committee and Referees, generally gratis, but possibly with an honorarium for the Editor, and possibly allowances, free advertising or similar partial recompense |
This segment of the cost-profile relates to those articles that survive the refereeing process and are accepted for publication. There may be dozens, scores, or in some cases hundreds of accepted articles. For some journals this may be a considerable proportion of all submissions (e.g. 50%), but for many it is a small percentage (as low as 10%, reported by Nature 2004).
1 | Production-editing | Possibly the Editor or a member of the Editorial Committee, but more likely a junior academic or student, or using the time of paid staff. It may include work undertaken by the author |
| 2 | Cataloguing | Preparation, review and formatting of metadata, and entry into appropriate catalogue(s), by a junior academic or student, or using the time of paid staff. It may include work undertaken by the author |
This segment of costs relates to the periodic cycle of Issues. By this is meant a discrete set of refereed articles and perhaps other submissions, released at a particular point in time. An Issue of a printed journal typically contains 4-15 articles. The frequency is most typically monthly or quarterly, but may be weekly, bi-monthly, annually, linked to an event such as a conference, or irregular.
In the electronic context, the economic incentive to bundle accepted papers into an 'issue' is much less marked, and for some journals the analysis undertaken in this paper may need to treat each article as a separate 'issue'. In addition, markedly different patterns of production and distribution costs arise, depending on whether issues are published in hard-copy, electronic form, or both.
1 | Editorial | Effort by the Editor |
| 2 | Production-editing | Possibly the Editor or a member of the Editorial Committee, but more likely a junior academic or student, or using the time of paid staff |
| 3 | Production | For hard-copy issues, printing is likely to be either performed by
paid staff, or outsourced. For soft-copy issues, uploading and release of the transmittable format (e.g. HTML or PDF), may be undertaken by the Editor or a member of the Editorial Committee, but more likely by a junior academic or student, or using the time of paid staff |
| 4 | Protection | For soft-copy issues, protections such as password- and/or cryptography-based locking mechanisms or watermarks may be imposed. Activities like this are likely to be either performed by paid staff, or outsourced, or possibly performed by special-purpose software |
| 5 | Distribution | For hard-copy issues, distribution is likely to be either performed
by paid staff, or outsourced. For soft-copy issues, generation of the issue home-page and issue of an announcement to the subscription-list may be undertaken by the Editor or a member of the Editorial Committee, but more likely by a junior academic or student, or using the time of paid staff |
This segment of cost-items brings together those that are not directly related to any of submissions, accepted articles or issues.
1 | Marketing | Highly variable activity, from effectively nil to
substantial. This may be undertaken by senior academics assisted by junior academics or students, or require time from paid executives and paid staff |
| 2 | Customer relationship management | Highly variable activity, from minimalist records to a substantial
database, and minimalist to substantial customisation of services. It includes
the costs of collecting revenue. This may be undertaken by a junior academic or student, or may require time from paid staff |
| 3 | Archive management | Highly variable activity, ranging from leaving the articles in an
accessible location, to releasing them from subscriber-only to open access
after a period of time, to strongly protected access, including payment
facilities for per-view and short-period access. The more sophisticated facilities may (but may not) require software licences, and time from paid staff |
| 4 | Indexing | Variable activity, ranging from leaving the site open to web-crawlers
and perhaps pointing to one of them, to using a gratis local search-engine, or
a for-fee local search engine, or a sophisticated facility including
auto-generated cross-linkages among articles within the journal or a journal
collection, or across multiple collections. The more sophisticated facilities may (but may not) require software licences, and time from paid staff |
| 5 | Governance | Meetings of the Editorial Committee(s) and periodic reports to
stakeholders. These may be undertaken by senior academics, may possibly require time from paid executives, and may involve travel costs |
Costs may be incurred in sustaining the technical infrastructure and the intellectual infrastructure on which the journal's operation depends. These are distinguishable from, and additional to, the investment that was necessary to establish them in the first place. They are recurrent, over varying cycles. The convention in investment analysis is to make the simplifying assumption that an annual allowance can be set aside to cover them.
1 | Editor and Editorial Committee(s) | Occasional, ongoing activity by the Editorial Committee(s), undertaken by senior academics |
| 2 | A pool of referees | Ongoing activity by the Editor and Editorial Committee(s) |
| 3 | Communications channels | Generally arranged by senior academics, supported by junior academics or students |
| 4 | Norms for communications and formatting | Ongoing activity by the Editor and Editorial Committee(s) |
| 5 | Production facilities | For hard-copy issues, likely to require support by paid staff, or
outsourced service providers. For soft-copy issues, more likely guided by senior academics, and undertaken by junior academics or students, or using the time of paid staff | 6 | Subscription-list facilities | As for production facilities above |
| 7 | Distribution mechanisms | As for production facilities above |
This segment reflects the financial value of capital employed in the endeavour.
1 | Interest on investment capital | The assets required to run the operation may be insignificant, or may be gifts, provided by grants, or sponsored. Otherwise, the financial value tied up in them needs to be remunerated as interest payments or dividends, or treated as sponsorship |
| 2 | Interest on working capital | As for investment capital above |
The various categories of journal-publisher distinguished in an earlier section have somewhat different cost-profiles. The primary factors that affect costs appear to be as follows:
The estimates provided below and in the Appendices are based on the financial statements or budgets of a modest number of unincorporated mutual and association journals, and by interpolation and informed guesswork. They are cross-checked below against the data found in the literature of the last decade.
All costs are expressed in $US, and are loosely based on current costs in 'advanced western nations' such as the U.S.A., the U.K., The Netherlands, Canada and Australia. The differences among costs in those countries, probably +/- 10-20%, are of the same order of magnitude as the anticipated error-factors in the estimates. All labour costs are intended to include labour overheads (such as leave and superannuation) and organisational overheads (such as serviced workspace, equipment and utilities).
The estimates are for those mainstream journals whose content is predominantly straightforward text, with supporting tables, and figures that do not require enormous precision. The model does not reflect the additional costs that arise in various circumstances, such as the following:
In order to provide concrete examples, an analysis is conducted of the following instances, with the Appendices showing calculations for each instance:
These figures can be compared with data provided in the literature. The exercise is not simple however, because authors have made various assumptions, and in some cases it is not entirely clear what they are.
In Odlyzko (1995) and Odlyzko (1997), the figure of $4,000 per article was suggested for conventional publishing, and $US300-1,000 per article for electronic publishing. These are broadly consistent with the results of the analysis conducted in this paper.
Of the six journals examined in Hovav & Gray (2001), four were e-journals whose costs were entirely defrayed by sponsorship, mostly from academics and their host-institutions. One was an e-journal publishing c. 80 articles p.a. for an annual cost of $25,000 p.a. This was apparently expended on submissions management and production-editing, for which the model in this paper uses an estimate of $22,000 p.a. The other was a Kluwer print-journal "with electronic presence", costing $200,000 p.a., rather higher than the $137,000 arising from the analysis in the present paper.
In Rowland (2002), the suggestion was made of $200 per submission for handling costs, which is in line with the $10,000 p.a. figure used in the tables in this paper.
In Willinsky (2003a), pre-production costs ("copyediting and proof-reading") were estimated at $10,000 annually for a typical quarterly journal. This paper uses a similar figure.
In King (2004), author-funded open access publishing was suggested as costing between $500 and $1,750 per article when conducted by unincorporated mutuals and associations, and $3,000-$4,000 per article for commercial publishers. King used a very similar, indicative $100,000 for investment funding "for start-up, capital requirements, future research and development, and operations". He used a fixed figure of $40 per subscriber p.a. for hard-copy production and distribution costs. The model developed in this paper uses the figure of $25 per subscriber p.a., but, unlike King, allows for sensitivity to volume.
In SQW (2004), cited in Morris (2005), estimates are provided of $1,425 to $2,750 per article, "depending on the rejection rate and editorial quality of the journal". The model developed in this paper does not treat those factors as being significant determinants of cost. Morris applied a multiplier of 1.6 for overheads and profits, to reach $2,250 to $4,375. These estimates used King's figure of $40 per subscriber p.a. for hard-copy production and distribution.
In evidence to the U.K. House of Commons, Elsevier (2004) stated that "even the highest article fees charged by Open Access publishers today ($1,500) cover only about 40%-60% of the estimated total costs to publish an article of the quality that researchers are used to today". This implies that their own estimate of the average is $2,500-$3,750 per article. This is also broadly in line with the inferences drawn from the analysis in this paper.
The BioMed Central author-pays open-access model involves costs to each author of a published article of $630-$1,595, depending on the journal. The variations appear to reflect, at least in part, whether the journal is only available electronically or also in hard-copy.
The pricing for the Blackwell Online Open 'pay-to-publish' model, in trial in 2005-06, is $2,500, and that for Springer Open Choice is $3,000. This approach is not in substitution for subscription-based access, but rather is an add-on to existing subscriptions-based hard-copy journals. Each journal has to elect to make the option available, and each author has to elect to use it. It is accordingly not directly comparable with any of the cost-profiles developed in this paper. An examination of the multi-journal, for-profit cost-profiles suggests that the additional costs that the publisher faces are minimal (format conversion, and possibly some enhancements to the technical infrastructure and intellectual infrastructure involved in running the web-server).
Blackwells have declared that subscription fees will be changed in due course to reflect the extent to which the option is taken up. The publisher faces the risk that not only the subscription price but also the subscription count may fall, if a substantial proportion of authors were to take up the option. It also has to take care not to base its analysis on average cost when it is incremental cost that is relevant. (Shifting one paper from conventional publishing to the open access model only reduces costs by the incremental costs associated with that one paper, not by the average cost of a paper, which includes many other costs that are insensitive to volume). Nonetheless, the figure appears to be rather high.
In short, the model appears to be broadly in line with the numbers elsewhere in the literature, but with interesting variations that warrant deeper investigation.
The cost-profiles discussed above are of necessity based on many assumptions. With that important qualification, some tentative inferences can be drawn from the data:
The model appears to be broadly in line with the various estimates available in the literature. It has the advantage that it is articulated, and can therefore be applied to analyse the cost-profiles of different variants of journal-publishing, and to conduct comparisons among alternative approaches. It may therefore be useful for observers of the dynamics of publishing in an era of considerable change. In addition, it may be of assistance to editorial teams, and of interest to executives in associations and for-profit publishing organisations.
The model invites focus on some important questions about publishing for profit in comparison with publishing by not-for-profit associations and unincorporated mutuals.
The first area of interest is comparisons between cost-profiles. One area of difference is hard-copy production and distribution costs. Large associations achieve relatively low per-copy costs because of the scale of their membership lists; whereas many journals published for profit have much smaller print-runs and hence higher per-copy costs. But the most significant reasons why the costs of for-profit publishers are higher appear to be as follows:
The overall impact was recently summarised as follows: "All the evidence shows that non-profit journals are on average ... less expensive ... Studies in various subject areas have consistently shown that commercial journals [levy subscription fees] 2-5 times as much as their not-for-profit equivalents" (Morris 2005). Odlyzko (1997) suggested that "while profits are often high in scholarly publishing, it is best to consider them just as an indicator of an inefficient market". The analysis conducted in this paper suggests that, while for-profit publishers may extract super-profits from their monopoly positions in particular, high-reputation journals, their higher fees are to a considerable extent a result of a higher cost-profile.
The higher costs of for-profit publishing need to be seen in the context of the benefits that it offers.
During the long era in which journals were of necessity produced in hard-copy, specialist publishing companies were repositories of expertise on pre-production, production and distribution. Diverse professional and technical skills had to be managed, and publishing companies provided that expertise as well. There were also potentially significant economies of scale and scope that large operations could convert into cost-advantages.
In the early twenty-first century, pre-production is far less forbidding than it once was. So are production and distribution. And hence so is management. Economies of scale and scope are less significant, and more closely balanced with the diseconomies that arise from having all activities forced into a mould. In the hard-copy world, for-profit publishers continue to offer some benefits, but far less than they once did.
As journals have migrated to dual-mode publishing and to purely electronic formats, the advantages originally offered by for-profit publishers have dissipated. The level of professionalism required to operate an eJournal remains significant, but it is not out of the reach of committed senior academics supported by junior academics and students. Acquisition of infrastructure, and management of infrastucture and processes, are less challenging than was previously the case.
The distinct differences that remain in for-profit publishing are:
But the primary beneficiaries of these features are the publisher and its owners. Only in the case of for-profit business units within not-for-profit associations are the owners associated with an academic community. Academic communities have little incentive to contribute to the funding of sophisticated technical features that are designed to support organistions' strategic and marketing objectives rather than community service. In short, the 'value-add' that for-profit publishers offer appears to be of little or no benefit to academic communities.
For-profit publishers have long been successful intermediaries between the authors and accreditors, on the one hand, and the consumers of refereed articles and their support services, on the other. But, since the advent of the public Internet, much has been written about the way in which it converts marketplaces to marketspaces, extends the reach of market participants, and creates the scope for disintermediation (Malone et al. 1987, Howard 2001). In the new context, are for-profit publishers still needed?
The following possible bases exist whereby for-profit publishers can sustain their role:
The cost-profile model in section 4 of this paper requires examination, criticism and enhancement. The estimates provided for each particular category of journal-publisher in section 5 and the Appendices similarly require study and improvement.
Even if the specific data is misleading, the model may provide considerable benefit to many stakeholders. To the extent that the model and the data are fairly indicative of the state of play, it would appear that open access journal-publishing is achievable through not-for-profit channels far more cheaply and efficiently than through for-profit organisations.
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This paper has benefited greatly from the assistance of a number of journal editors and association officers, and from the comments of a number of colleagues. The evaluative comments, however, are mine alone.
Roger Clarke is Principal of Xamax Consultancy Pty Ltd, Canberra. He is also a Visiting Professor in the E-Commerce Programme at the University of Hong Kong, Visiting Professor in the Baker & McKenzie Cyberspace Law & Policy Centre at the University of N.S.W., and Visiting Fellow in the Department of Computer Science at the Australian National University.
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