Revenue Models for Journal-Publishing in the Open Access Era

Roger Clarke **

Notes of 11 April 2005

Prepared to accompany an invited presentation on 'The Impact of Open Access: Journal-Publishing's Cost-Profiles' 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

This document is at http://www.anu.edu.au/people/Roger.Clarke/EC/JP-RM.html

Contents

• 1. Introduction
• 2. The Concept of a Business Model
• 3. Generic eBusiness Models
• 4. Journal-Specific eBusiness Models
• 5. Rowland (1999)
• 6. Willinsky (2003)
• 7. Crow & Goldstein (2003)
• 8. Conclusions
• References

1. Introduction

These notes draw together some sources on business models. Some are generic. Others are targeted specifically at organisations that conduct electronic publishing, particularly of refereed journals, and more particularly still that adopt open access approaches to journal-publishing.

2. The Concept of a Business Model

The term 'business model' is used in many different senses, and no one definition prevails. At its broadest, it is equivalent to 'business architecture', and refers to the set of products, services, actors and information flows involved in an organisation's activities. Another intrepretation is that it describes the business processes whereby the organisation creates value for its customers.

A particularly critical concern is the manner in which revenue is derived and distributed. When eBusiness entrepreneurs seek venture capital, they are asked 'What's your business model?'. What the potential investor wants to know about is the likely future sources of revenue. A useful interpretation of the term 'business model' is therefore that it is the answer to the question 'Who pays what, to whom, and why?'. That is the sense in which the term is used in these notes.

3. Generic eBusiness Models

Since the Internet became widely available from about 1993 onwards, it has been applied to many longstanding approaches to doing business. But there have also been many innovative ideas, which have sought news kinds of answers to the business model question.

Exhibit 1, extracted from Clarke (2004), suggests a framework that can be applied to any form of business for which telecommunications-based tools are central.

Exhibit 1: A Framework for eBusiness Models

• Who pays?
  • the consumer
    • direct and immediate reciprocation
    • deferred reciprocation
    • conditional deferred reciprocation
    • indirect reciprocation
  • the producer
    • services as per mission statement
    • legal obligation
    • cross-subsidisation, loss-leaders and network-effect generators
    • for indirect reciprocation
    • for deferred reciprocation
  • third parties
    • advertisers or sponsors
• What for?
  • goods and/or services
  • value-add to goods and/or services
  • complementary goods and/or services
  • expertise in applying the goods and/or services
  • assurance of quality and security
• To Whom?
  • directly to the business enterprise
  • directly, through value-add along the value-chain
  • indirectly, along the value-chain
  • bundlers of goods and/or services
  • bundlers of payment services (transaction aggregator, invoice consolidator)
• Why?
  • necessity / lock-in
  • value
  • cost
  • quality and security

4. Journal-Specific eBusiness Models

During the last few years, a number of specific proposals have been published, suggesting ways in which refereed journals can generate the necessary revenue to enable them to perform their functions.

For-profit journal-publishers should consider the principles enunciated in Shapiro & Varian (1999) pp. 53-102. The primary focus of these notes, however, is on not-for-profit publishing, and especially that undertaken within the context of 'open access'.

Broadly speaking, not-for-profit journal-publishers rely on the following sources of revenue:

• subscriptions
• an allocated portion of organisational membership fees
• advertisements
• reprints
• copyright licence fees
• sponsorships in cash
• sponsorships in kind
• grants

These are not mutually exclusive, and many organisations draw from multiple revenue sources. In particular, many journals are sustaining a reasonable level of institutional subscriptions, at least in the short term, even after moving to an open access model; and some journals generate useful cash-flow from royalties and from reprints.

More specifically in the context of open access, the following categories of revenue-source are identified by Soros (2002): "There are many alternative sources of funds for this purpose, including the foundations and governments that fund research, the universities and laboratories that employ researchers, endowments set up by discipline or institution, friends of the cause of open access, profits from the sale of add-ons to the basic texts, funds freed up by the demise or cancellation of journals charging traditional subscription or access fees, or even contributions from the researchers themselves".

Similarly, Suber (2004c) identified these models:

• revenue from sponsorship of the publication of each paper by its author and/or the author's employer, grantor, or similar;
• 'some pay for all' (as with broadcast radio and TV);
• revenue from subscription fees for enhanced editions and/or ancillary services.

A recent contribution in this vein is Swan et al. (2005). The following sections provide more detailed proposals put forward in three particularly relevant papers.

5. Rowland (1999)

In Rowland (1999), the following categories of "non-commercial electronic alternatives" are distinguished:

• free journals. In this case, all costs are covered by sponsorship including voluntary work. (He also included self-published papers, and preprints published in institutional archives under this classification. They are not refereed journals, and are best addressed separately);
• free electronic versions but paid-for printed versions. The positive experiences of the Florida Entomological Society (Walker 2002) is referred to, suggesting that revenue from printed versions would decline, but would continue to be substantial for some time at least;
• Universities publish their own work. This fails to reflect the fact that the academic communities of all disciplines, and of almost all sub-disciplines, are much broader than individual universities, and that institutions responsible for accreditation processes have traditionally operated across multiple universities;
• The author pays. The initial suggestion was that this might be as low as $50 per submission (as distinct from published article), or $500 per published article. The cost-profiles developed in Clarke (2005) for unincorporated mutuals (negligible) and associations ($730) support that contention. But some associations, and all for-profit publishers, have since proposed much higher figures (e.g. in HCSTC 2004). These have been as low as $630, but mostly in the range $1,425 to $4,375; and the analysis in this paper came to the estimates of $3,400 and $4,200.
• Distributed 'journals'. This model, attributed to Smith (1999), involves separation of the publishing and accreditation functions, such that a host institution (university or research centre) absorbs the costs of publication, and a journal notionally comprises a set of links to versions of articles published on host institutions' sites. The Caltech Consortium model can be viewed as a special case of this approach;
• Cheaper competitors. This approach involved initiatives by associations to apply technology in order to re-engineer journal publishing processes, and force prices down.

6. Willinsky (2003)

In Willinsky (2003), nine 'flavours' of open access scholarly publishing are differentiated:

• the eprint archive. (This paper treats this category as being adjacent to refereed journals);
• unqualified open access journals. The example provided is First Monday. This corresponds to the cost-profile for unincorporated mutual eJournals
• the dual mode open access model. This involves a subscription-based hard-copy version, and a complete and immediately accessible online version;
• delayed open access. This involves exclusive access by subscribers for a period of time, typically one year;
• author-fee open access. The BioMed Central operation is mentioned, as are variants that leave the choice to the author;
• partial open access. This is along the lines of an 'editor's choice' open article per issue;
• [low] per-capita [income] open access. This is an application of existing arrangements to make content available in the least-developed nations;
• open access abstracts, aka open access 'lite'. This falls a very long way short of a genuinely open access model, and is better portrayed as a marketing tool that leverages off the open access movement;
• cooperative funding models. "The leading libraries would join in underwriting the direct expenses of open access journals on a long term basis".

7. Crow & Goldstein (2003)

In Crow & Goldstein (2003), the following taxonomy of revenue-sources is provided, together with a considerable body of guidance in relation to their implementation:

• SELF-GENERATED INCOME
  • INPUT FEES
    • Author submission/publication charges or article processing fees
    • Off-print sales
  • AFFINITY RELATIONSHIPS
    • Advertising
    • Sponsorships
    • Co-hosting of conferences and exhibits
  • ALTERNATIVE DISTRIBUTORS
    • Convenience-format licenses or distributor format fee
  • RELATED PRODUCTS AND SERVICES
    • Journal publication in off-line media (print or CD-ROM)
    • Value-added fee-based services
  • ELECTRONIC MARKETPLACE
    • Contextual E-commerce
    • Community Marketplace
• INTERNAL AND EXTERNAL SUBSIDIES
  • INTERNAL SUBSIDIES
    • Dues Surcharge
  • GRANTS AND CONTRIBUTIONS
    • Foundation Grants
    • Institutional Grants and Subsidies
    • Government Grants
    • Gifts and Fundraising
    • Voluntary Contributors
    • In-kind Contributions
  • PARTNERSHIPS

8. Conclusions

For-profit publishers have been trying to convince senior academics, librarians and politicians that not-for-profit journal-publishing is not viable, and that open access, if it is worth pursuing at all, needs to be conceived as an offering of specialist publishing corporations.

The richness of alternative approaches to business models demonstrates that there is ample scope for innovation in order to avoid the unnecessarily high expense and inherent barriers of conventional for-profit publishing.

References

Clarke R. (2004) 'Open Source Software and Open Content As Models for eBusiness' Proc. 17th Int'l eCommerce Conf., Bled, Slovenia, 21-23 June 2004, at http://www.anu.edu.au/people/Roger.Clarke/EC/Bled04.html, accessed 26 March 2005

Crow R. & Goldstein H. (2003-) 'Guide to Business Planning for Converting a Subscription-based Journal to Open Access' Open Society Institute, Edition 1.0, January 2003, revised Edition 3, February 2004, at http://www.soros.org/openaccess/oajguides/business_converting.pdf

HCSTC (2004) 'Science and Technology - Tenth Report' U.K. House of Commons, Science and Technology Committee, July 2004, at http://www.publications.parliament.uk/pa/cm200304/cmselect/cmsctech/399/39902.htm

Rowland F. (1999) 'Electronic publishing: non-commercial alternatives' Learned Publishing' 12, 3 Page (July) 209-216, at http://thesius.ingentaselect.com/vl=2851540/cl=71/nw=1/rpsv/~885/v12n3/s7/p209

Shapiro C. & Varian H.R. (1999) 'Information Rules: A Strategic Guide to the Network Economy' Harvard Business School Press, 1999

Smith W.T. (1999) 'The deconstructed journal - a new model for academic publishing' Learned Publishing 12, 2 (April 1999) 79-91, at http://thesius.ingentaselect.com/vl=2554576/cl=41/nw=1/rpsv/~885/v12n2/s3/p79

Suber P. (2004) 'What is Open Access? An Overview' Proc. Conf. Open Access Publishing, Society for Scholarly Publishing, November 2004, slide-set at http://www.sspnet.org/i4a/pages/index.cfm?pageid=3674

Willinsky J. (2003) 'The Nine Flavours of Open Access Scholarly Publishing' J. Postgrad. Med. 49, 3 (July-September 2003), 263-267, at http://www.jpgmonline.com/article.asp?issn=0022-3859;year=2003;volume=49;issue=3;spage=263;epage=267;aulast=Willinsky;type=2

Bibliography

Swan A., Needham P., Probets S., Muir A., Oppenheim C., O'Brien A., Hardy R., Rowland F. & Brown S. (2005) 'Developing a model for e-prints and open access journal content in UK further and higher education' Learned Publishing 18, 1 (March 2005) 25-40

Author Affiliations

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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Created: 29 March 2005 - Last Amended: 11 April 2005 by Roger Clarke - Site Last Verified: 15 February 2005
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