Why the price of scholarly publishing is so much higher than the cost

October 18, 2021

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)?

How is this possible? One part of the answer is that the value of a published paper to the commnity is higher still: were it not so, no-one would be paying. But that can’t be the whole reason.

In an efficient market, competing providers of a good will each try to undercut each other until the prices they charge approach the cost. If, for example, Elsevier and Springer-Nature were competing in a healthy free market, they would each be charging prices around one third of what they are charging now, for fear of being outcompeted by their lower-priced competitor. (Half of those price-cuts would be absorbed just by decreasing the huge profit margins; the rest would have to come from streamlining business processes, in particular things like the costs of maintaining paywalls and the means of passing through them.)

So why doesn’t the Invisible Hand operate on scholarly publishers? Because they are not really in competition. Subscriptions are not substitutable goods because each published article is unique. If I need to read an article in an Elsevier journal then it’s no good my buying a lower-priced Springer-Nature subscription instead: it won’t give me access to the article I need.

(This is one of the reasons why the APC-based model — despite its very real drawbacks — is better than the subscription model: because the editorial-and-publication services offered by Elsevier and Springer-Nature are substitutable. If one offers the service for $3000 and the other for $2000, I can go to the better-value provider. And if some other publisher offers it for $1000 or $500, I can go there instead.)

The last few years have seen huge and welcome strides towards establishing open access as the dominant mode of publication for scholarly works, and currently output is split more or less 50/50 between paywalled and open. We can expect OA to dominate increasingly in future years. In many respects, the battle for OA is won: we’ve not got to VE Day yet, but the D-Day Landings have been accomplished.

Yet big-publisher APCs still sit in the $3000–$5000 range instead of converging on $500-$1000. Why?

Björn Brembs has been writing for years about the fact that every market has a luxury segment: you can buy a perfectly functional wristwatch for $10, yet people spend thousands on high-end watches. He’s long been concerned that if scholarly publishing goes APC-only, then people will be queuing up to pay the €9,500 APC for Nature in what would become a straightforward pay-for-prestige deal. And he’s right: given the outstandingly stupid way we evaluate reseachers for jobs, promotion and tenure, lots of people will pay a 10x markup for the “I was published in Nature” badge even though Nature papers are an objectively bad way to communicate research.

But it feels like something stranger is happening here. It’s almost as though the whole darned market is a luxury segment. The average APC funded by the Wellcome Trust in 2018/19 was £2,410 — currently about $3,300. Which is almost exactly the average article cost of $3,333 that we calculated earlier. What’s happening is that the big publishers have landed on APCs at rates that preserve the previous level of income. That is understandable on their part, but what I want to know is why are we still paying them? Why are all Wellcome’s grantees not walking away from Elsevier and Springer-Nature, and publishing in much cheaper alternatives?

Why, in other words, are market forces not operating here?

I can think of three reasons why researchers prefer to spend $3000 instead of $1000:

  1. It could be that they are genuinely getting a three-times-better service from the big publishers. I mention this purely for completeness, as no evidence supports the hypothesis. There seems to be absolutely no correlation between price and quality of service.
  2. Researchers are coasting on sheer inertia, continuing to submit to the journals they used to submit to back in the bad old days of subscriptions. I am not entirely without sympathy for this: there is comfort in familiarity, and convenience in knowing a journal’s flavour, expectations and editorial board. But are those things worth a 200% markup?
  3. Researchers are buying prestige — or at least what they perceive as prestige. (In reality, I am not convinced that papers in non-exceptional Elsevier or Springer-Nature journals are at all thought of as more prestigous than those in cheaper but better born-OA journals. But for this to happen, it only needs people to think the old journals are more prestigious, it doesn’t need them to be right.)

But underlying all these reasons to go to a more expensive publishers is one very important reason not to bother going to a cheaper publisher: researchers are spending other people’s money. No wonder they don’t care about the extra few thousand pounds.

How can funders fix this, and get APCs down to levels that approximate publishing cost? I see at least three possibilities.

First, they could stop paying APCs for their grantees. Instead, they could add a fixed sum onto all grants they make — $1,500, say — and leave it up to the researchers whether to spend more on a legacy publisher (supplementing the $1,500 from other sources of their own) or to spend less on a cheaper born-OA publisher and redistribute the excess elsewhere.

Second, funders could simply publish the papes themselves. To be fair several big funders are doing this now, so we have Wellcome Open Research, Gates Open Research, etc. But doesn’t it seem a bit silly to silo research according to what body awarded the grant that funded it? And what about authors who don’t have a grant from one of these bodies, or indeed any grant at all?

That’s why I think the third solution is best. I would like to see funders stop paying APCs and stop building their own publishing solutions, and instead collaborate to build and maintain a global publishing solution that all researchers could use irrespective of grant-recipient status. I have much to say on what such a solution should look like, but that is for another time.

10 Responses to “Why the price of scholarly publishing is so much higher than the cost”

  1. brembs Says:

    Yes, exactly the third option: stop paying any legacy publisher anything and implement a system that sustains an actual market.

    Just a side point: people are chasing impact points when they publish. For instance, in physics, there are just three journals with double digit IFs: 20, 17 and 15. So if you can make it into a 20IF journal you publish there and don’t sacrifice 3 impact points just because you may save some money. Anything single digits doesn’t even register as competition. So if you take readership, prestige and the stochastic nature of peer-review into account, you likely end up with just one journal that fits any given paper perfectly – so you again have no choice, just as in the subscription case. And with every rejection at one journal, the more important becomes the next journal so again, authors have no choice.

    I’d say that is one of several factors (some you mention) why, in more than ten years, APC prices have just continued where subscriptions have left off: money is just a consideration that comes last.

  2. Fair Miles Says:

    You can make several analogies to different kinds-of-(not)-markets and each of them will ilustrate a portion of what happens. You can go with the chair-making industry, the wrist-watch comparisons or Apple’s prestige strategy, or the non-market of non-interchangeable-infrastructure (such as roads and water). I have found all of them useful to understand the problem.
    Now, when we switch from understanding by analogy to proposing solutions, I think you’re dragging two assumptions that I wouldn’t be so sure are (still) valid: (1) the “collective buyer” as the sum of individual rational decision-makers, (2) the expanding phase of capitalism.
    Under the first one you end up assigning the free variable (value) of a product/service according to observed collective behavioural patterns instead of the other way round (“if they do that, then value must be this”) to support an irrefutable model. Things such as “winner-takes-all” platforms or cartelised providers will quickly show the limits of those approaches.
    Under the second, you assume free competence of infinite providers based on quality (of product, of service) so the invisible hand can exert its mighty powers of self-regulation and price will optime up to a mid point between cost and value. Show me a global-scale market that is working under such principles where you can ignore as minor disturbances things like the financial system, imperialism and other historical (international) power relationships, ramping concentration/consolidation dynamics, corporation lobby over regulatory social institutions, or a growing well-educated pauperised workforce.
    I’d say all those factors can play (I say do play) a non-negligible role in this “publication market”, so proposed solutions should at least consider them.

    [BTW, which is the provided value we get when we buy an APC from a specific journal? Is it a well-fed peer-review staff? It is a high-quality team of style editors or ilustration designers to overcome my professional limitations? Is it a much efficient robot that helps me stay away from the dark temptation of plagiarism and marks my bibliography? Is it the IF as a surrogate measure of readership or potential impact and future success? Is it a shinier car than my neighbour?]

  3. Mike Taylor Says:

    You are of course right, Fair Miles, that efficient markets are a bit of a myth. The reason neoliberalism fails as a philosophy is because (in practice if not in theory) it’s predicated on the assumption that markets are free and fair by default; whereas all our experience says that in fact every market is quickly cornered and perverted unless that is actively prevented by regulation. That is why my own political philosophy is broadly capitalist, but with as much regulation as is necessary to ensure that the competition which provides the magic sauce can actually happen.

  4. JeffF Says:

    Be careful preferring the third option (no APCs) over the first option. If there is NO money for APCs in a grant, I am strongly incentivized to ignore my OA goals and publish in a subscription journal. It is worth $3300 of my personal money or even $1000 of a student assistant wage to not publish in a subscription journal for free? I’d like to say I’d always stick to principles, but on small grant fields APCs can be a meaningful part of my $.

    Paying a fixed APC rate (option 1) incentivizes me to find a good journal that charges that rate. If NSF did that in the US, publishers would quickly and coincidentally adjust APCs to the NSF price point, but that’s better than wild, at least.

  5. Toby Green Says:

    There is another option. What if authors’ employers took over the responsibility of publishing? After all, they’re the ones currently footing the bill (via their libraries). That’s what happens with governments, IGOs, NGOs, private sector – these organisations publish their staff’s research papers on their websites. The cost is absorbed as an overhead.

  6. Mike Taylor Says:

    JeffF, I am taking it as read that at this point progressive funders — and increasingly, all funders — are requiring OA publication as a non-negotiable condition of receiving a grant.

    I think you are dead right that “publishers would quickly and coincidentally adjust APCs to the NSF price point”, though!

  7. Mike Taylor Says:

    Toby, employer-based publishing is certainly an option, but to my mind it has three downsides: siloing of published works in a not very useful way (I need to know who Matt Wedel’s employer was in 2006); duplication of effort, which could be reduced by sharing infrastructure; and divergence into a multitude of publishing platforms with broadly similar capabilities but numerous annoying little differences. I think we can do better.

  8. Stuart Taylor Says:

    Mike, I think you are spot on with your analysis. As regards Toby’s suggestion, I think that with a similar effort to maximise discoverability, tagging etc that journals make, the potential ‘siloing’ would be minimised. I agree that some degree of collaboration and harmonisation would be preferable as a way of duplicating effort.

  9. brembs Says:

    Whether or not siloing becomes a problem, I’d say, depends on the actual implementation.
    Yes, if every institution would just set up their own little ‘walled garden’, little would be gained.
    If, however, institutions could be coaxed into (by now, after 30 years, it’s become plenty clear they won’t do so on their own) following common standards, then the physical location of a research object becomes less important. You can see that in, e.g., ORC, where you have one place to search all platforms using that standard. Moreover, functionalities within the research objects are standardized, such that, e.g., a citation just links two research objects together according to a set of rules, no matter where these research objects are – and so on for any functionality for text, data or code.

    From that perspective, avoiding silos and ensuring competition between service providers to ensure low costs entail two crucial criteria: one is a set of open, enforceable standards, the other is some leverage with which to coax institutions into taking these standards up.

  10. […] course that’s not to deny that there’s plenty more work to be done, and plenty of other ways our present scholarly publishing infrastructure desperately needs changing. But in pushing for that, let’s not neglect how much things have […]

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