The cost, value and price of scientific publication

October 14, 2021

We have a tendency to be sloppy about language in everyday usage, so that words like “cost”, “value” and “price” are used more or less interchangeably. But economists will tell you that the words have distinct meanings, and picking them apart is crucial to understand economic transaction. Suppose I am a carpenter and I make chairs:

  • The cost of the chair is what it costs me to make it: raw materials, overheads, my own time, etc.
  • The value of the chair is what it’s worth to you: how much it adds to your lifestyle.
  • The price of the chair is how much you actually pay me for it.

In a functioning market, the value is more than the cost. Say it costs me £60 to make the chair, and it’s worth £100 to you. Then there is a £40 range in which the price could fall and we would both come out of the deal ahead. If you buy the chair for £75, then I have made £15 more than what it cost me to make, so I am happy; and you got it for £25 less than it was worth to you, so you’re happy, too.

(If the value is less than the cost, then there is no happy outcome. The best I can do is dump the product on the market at below cost, in the hope of making back at least some of my outlay.)

So far, so good.

Now let’s think about scientific publications.

There is a growing consensus that the cost of converting a scientific manuscript into a published paper — peer-reviewed, typeset, made machine-readable, references extracted, archived, indexed, sustainably hosted — is on the order of $500-$1000.

The value of a published paper to the world is incredibly hard to estimate, but let’s for now just say that it’s high. (We’ll see evidence of this in a moment.)

The price of a published paper is easier to calculate. According to the 2018 edition of the STM Report (which seems to be the most recent one available), “The annual revenues generated from English-language STM journal publishing are estimated at about $10 billion in 2017 […] collectively publishing over 3 million articles a year” (p5). So, bundling together subscription revenues, APCs, offsets deals and what have you, the average revenue accruing from a paper is $10,000,000,000/3,000,000 = $10,000/3 = $3,333.

(Given that these prices are paid, we can be confident that the value is at least as much, i.e. somewhere north of $3,333 — which is why I was happy earlier to characterise the value as “high”.)

Why is it possible for the price of a paper to be 3–7 times as high as its cost? One part of the answer is that the value is higher still. Were it not so, no-one would be paying. But that can’t be the whole reason.

Tune in next time to find out the exciting reason why the price of scholarly publishing is so much higher than the cost!

4 Responses to “The cost, value and price of scientific publication”

  1. Mickey Mortimer Says:

    Interesting concept that could probably be approached a few ways. From my perspective, the system is broken because the publishers have increased the price FAR FAR outside any individuals’ reasonable limit for what they can pay given how many papers you need to own to be relevant in any area of research. A price of $40 per paper (or $353 a year to subscribe to the journal, for e.g. Cretaceous Research) is so high that nobody actually pays that unless they’re quite rich, which most paleontologists at least are not.

    So what happens when you’ve priced a product your audience values out of the range they can afford? Black markets, in this case SciHub and all the alternative means that have and will exist. Which is ironic because I’m sure plenty of people would pay a reasonable price (e.g. 10 cents per page), especially if part went toward the authors, but publishers don’t seem to care.

    And that’s because instead publishers have helped to create the current system where university libraries are the buyers because only they have the millions of dollars to match the price the publishers want. But I think here we’ve been seeing some friction lately as universities lose funding, publishers drive up their prices, and maybe most importantly because the value to libraries is increasingly indirect. They are not the end users who value the information after all. With almost nobody photocopying or checking out physical copies of recent journals, and with open access, ResearchGate, arXiv and SciHub, how many millions of dollars is it worth to be the place where faculty and students can go directly to the publishers’ website and download a pdf?

  2. Mike Taylor Says:

    I think you’re right, Mickey — fundamentally, the role of libraries as “the place where you go to access subscription resources” is eroding. And while we all love libraries, it has to be a good thing that that particular role is going away. It’s 2021, there should not a special physical place where you need to go to have access to publications.

    I think there was a window when scholarly publishers had the option of moving to an “iTunes model” of charging a dollar per paper; ten years ago, maybe everyone would have gone for it, grumbled a bit but got into the habit of paying, and the OA movement might have been defanged. But we’re long past that point now.

  3. Toby Green Says:

    I’m looking forward to the next instalment to see how the value points of the following actors are woven into the story: author(s) and their institution(s), author’s funder(s).

  4. […] Last time, we looked at the difference between cost, value and price, and applied those concepts to simple markets like the one for chairs, and the complex market that is scholarly publication. We finished with the observation that the price our community pays for the publication of a paper (about $3,333 on average) is about 3–7 times as much as its costs to publish ($500-$1000)? […]

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