Abstract: A new business model for scholarly journals, open access, has gained wide attention recently. An open-access journal's articles are available over the Internet free of charge to all readers; revenue to cover publication costs comes from authors' fees. In this paper, we present a model of the journals market. Drawing upon the emerging literature on two-sided markets, we highlight the features distinguishing journals from examples economists have previously studied (telephony, credit cards, etc.). We analyze the efficiency of equilibrium author and reader fee schedules for various industry structures and for various assumptions about journals' objective functions. We ask whether open-access journals are viable in these various economic environments.
From the body of the paper:
On a superficial level, our analysis suggests there is merit to both sides of the debate. Consider the “possibility results” derived from our numerical examples. We showed it is possible for open access to emerge in equilibrium with profit maximizing journals. This was true for various journal market structures ranging from monopoly to Bertrand competition. We showed it is possible for open access to be socially efficient. On the other hand, all of the numerical examples had nonopen- access equilibria. Indeed, we provided additional examples (see footnote 14) in which open access did not emerge in any competitive equilibrium. We also provided a range of cases in which the second-best social optimum (second best in the sense journals are constrained to earn non-negative profit without external subsidy) did not involve open access.
On a deeper level, our interest is in characterizing the conditions under which open access is competitively viable and/or socially efficient....We found a profit-maximizing journal would be more likely to adopt open access in equilibrium
(a) the lower the journal’s market power, (b) the lower the marginal cost of serving a reader, and (c) the higher the distribution of author benefits....[W]hile an increase in market power reduces the likelihood a profit-maximizing journal would choose open access in equilibrium, an increase in market power increases the likelihood a non-profit journal would find open access feasible.
Comment. As you can tell from the abstract (repeated in the body of the paper), McCabe and Snyder assume that all OA journals charge author-side fees. We know, however, that the majority of OA journals charge no author-side fees at all. When I pointed this out in response to another McCabe-Snyder preprint, dated June 2006, McCabe wrote to explain that he and Snyder acknowledge other OA business models in their ongoing research. They show that author-side fees can fluctuate down to zero, depending on other variables, and that one of the key variables is the availability of institutional subsidies. But we're still waiting for the paper that will correct, rather than reinforce, the false impression that all or even most OA journals charge author-side fees.
Posted by
Peter Suber at 8/29/2006 12:08:00 PM.
The open access movement:
Putting peer-reviewed scientific and scholarly literature
on the internet. Making it available free of charge and
free of most copyright and licensing restrictions.
Removing the barriers to serious research.
I recommend the OA tracking project (OATP) as the best way to stay on top of new OA developments. You can read the OATP feed on a blog-like web page or subscribe to it by RSS, email, or Twitter. You can also help build the feed by tagging new developments you encounter.
