Costs of Print Journals

Just how expensive is the current print journal system? While careful studies of the entire scholarly journal system had been conducted in the 1970s [KingMR, Machlup], they were obsolete by the 1990s. Recent studies, such as those in [AMSS, Kirby], address primarily prices that libraries pay, and they show great disparities. For example, among the mathematics journals considered in [Kirby], the price per page ranged from $0.07 to $1.53, and the price per 10,000 characters, which compensates for different formats, from under $0.30 to over $3.00. Such statistics are of greatest value in selecting journals to purchase or (much more frequently) to drop, especially when combined with measures of the value of journals, such as the impact factors calculated by the Science Citation Index. However, those measures are not entirely adequate when studying the entire scholarly journal publishing system. For example, in the statistics of [Kirby], the Duke Mathematics Journal (DMJ ), published by Duke University Press, is among the least expensive journals at $0.19 per page. On the other hand, using the same methodology as that in [Kirby], the International Mathematics Research Notices (IMRN ), coming from the same publisher as DMJ, would have been among the most expensive ones several years ago and would be around the median now (its size has expanded while the price has stayed about constant). The difference appears to come from the much smaller circulation of IMRN than of DMJ and not from any inefficiencies or profits at Duke University Press. (This case is considered in more detail in Section 4.)

To estimate the systems cost of the scholarly journal publishing system, it seems advisable to consider total costs associated with an article. In writing the "Tragic Loss" essay [Odlyzko1], I made some estimates based on a sample of journals, all in mathematics and computer science. They were primary research journals, purchased mainly by libraries. The main identifiable costs associated with a typical article were the following:

1. revenue of publisher: $4,000

2. library costs other than purchase of journals and books: $8,000

3. editorial and refereeing costs: $4,000

4. authors' costs of preparing a paper: $20,000

Of these costs, the publishers' revenue of $4,000 per article (i.e., the total revenue from sales of a journal, divided by the number of articles published in that journal) attracts the most attention in discussions of the library or journal publishing "crises." It is also the easiest to measure and most reliable. However, it is also among the smallest, and this fact is a key factor in the economics of scholarly publishing. The direct costs of a journal article are dwarfed by various indirect costs and subsidies.

The cost estimates above are only rough approximations, especially those for the indirect costs of preparing a paper. There is no accounting mechanism in place to associate the costs in items (3) and (4) with budgets of academic departments. However, those costs are there, and they are large, whether they are half or twice the estimates presented here.

Even the revenue estimate (i) is a rough approximation. Most publishers treat their revenue and circulation data as confidential. There are some detailed accounts, such as that for the American Physical Society (APS) publications in [Lustig] and for the Pacific Journal of Mathematics in [Kirby], but they are few.

The estimate of $4,000 in publishers' revenue per article made in [Odlyzko1] has until recently been just about the only one available in the literature. It is supported by the recent study of Tenopir and King [TenopirK], which also estimates that the total costs of preparing the first copy of an article are around $4,000. The estimate in [Odlyzko1] was based primarily on data in [AMSS] and so is about five years out of date. If I were redoing my study, I would adjust for the rapid inflation in journal prices in the intervening period, which would inflate the costs. On the other hand, in discussing general scholarly publishing, I would probably deflate my estimate to account for the shorter articles that are prevalent in most areas. (The various figures for size of the literature and so on derived in [Odlyzko1] were based on samples almost exclusively from mathematics and theoretical computer science, which were estimated to have articles of about 20 pages each. This figure is consistent with the data for these areas in [TenopirK]. However, the average length of an article over all areas is about 12 pages.) Thus, on balance, the final estimate for the entire scholarly literature would probably still be $3,000 to 4,000 as the publisher revenue from each article.

The $4,000 revenue figure was the median of an extremely dispersed sample. Among the journals used in [Odlyzko1] to derive that estimate, the cost per article ranged from under $1,000 for some journals to over $8,000 for others. This disparity in costs brings out another of the most important features of scholarly publishing, namely lack of price competition. Could any airline survive with $8,000 fares if a competitor offered $1,000 fares?

Wide variations in prices for seemingly similar goods are common even in competitive markets, but they are usually associated with substantial differences in quality. For example, one can sometimes purchase round-trip trans-Atlantic tickets for under $400, provided one travels in the off-season in coach, purchases the tickets when the special sales are announced, travels on certain days, and so on. On the other hand, a first-class unrestricted ticket bought at the gate for the same plane can cost 10 times as much. However, it is easy to tell what the difference in price buys in this case. It is much harder to do so in scholarly publishing. There is some positive correlation between quality of presentation (proofreading, typography, and so on) and price, but it is not strong. In the area that matters the most to scholars, that of quality of material published, it is hard to discern any correlation. In mathematics, the three most prestigious journals are published by a commercial publisher, by a university, and by a professional society, respectively, at widely different costs. (Library subscription costs per page differ by more than a factor of 7 [Kirby], and it is unlikely that numbers of subscribers differ by that much.) In economics, the most prestigious journals are published by a professional society, the American Economic Association, and are among the least expensive ones in that field.

Many publishers argue that costs cannot be reduced much, even with electronic publishing, since most of the cost is the first-copy cost of preparing the manuscripts for publication. This argument is refuted by the widely differing costs among publishers. The great disparity in costs among journals is a sign of an industry that has not had to worry about efficiency. Another sign of lack of effective price competition is the existence of large profits. The economic function of high profits is to attract competition and innovation, which then reduce those profits to average levels. However, as an example, Elsevier's pretax margin exceeds 40% [Hayes], a level that is "phenomenally high, comparable as a fraction of revenues to the profits West Publishing derives from the Westlaw legal information service, and to those of Microsoft" [Odlyzko2]. Even professional societies earn substantial profits on their publishing operations.

Not-for-profit scientific societies, particularly in the United States and in the UK, also often realize substantial surpluses from their publishing operations.... Net returns of 30% and more have not been uncommon. [Lustig]

Such surpluses are used to support other activities of the societies, but in economic terms they are profits. Another sign of an industry with little effective competition is that some publishers keep over 75% of the revenues from journals just for distributing those journals, with all the work of editing and printing being done by learned societies.

Although profits are often high in scholarly publishing, it is best to consider them just as an indicator of an inefficient market. While they are a substantial contributor to the journal crisis, they are not its primary cause. Recall that the publisher revenue of $4,000 per article is only half of the $8,000 library cost (i.e.,

costs of buildings, staff, and so on) associated with that article. Thus even if all publishers gave away their journals for free, there would still be a cost problem. The growth in the scholarly literature is the main culprit.

Even in the print medium, costs can be reduced. That they have not been is due to the strange economics of scholarly publishing, which will be discussed in Section 4. However, even the least expensive print publishers still operate at a cost of around $1,000 per article. Electronic publishing offers the possibilities of going far below even that figure and of dramatically lowering library costs.