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Comment on Hindawi’s Profit Margin is Higher than Elsevier’s by Ahmed Hindawi

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One quick reference for the revenue per article would be the recent article in Nature titled Open access: The true cost of science publishing: “Data from the consulting firm Outsell in Burlingame, California, suggest that the science-publishing industry generated $9.4 billion in revenue in 2011 and published around 1.8 million English-language articles — an average revenue per article of roughly $5,000. Analysts estimate profit margins at 20–30% for the industry, so the average cost to the publisher of producing an article is likely to be around $3,500–4,000.” You can read the full article at http://www.nature.com/news/open-access-the-true-cost-of-science-publishing-1.12676.

I agree with you that there are some differences between subscription publishers and open access publishers (e.g., open access publishers wouldn’t have large sales forces that are needed at selling subscriptions to libraries). However, they both share most of what we think of as scholarly journal publishing. For example, subscription and open access publishers both have the need to create journals that are well respected by the academic community. They both need to peer revenue manuscripts submitted to their journals in order to accept only those manuscripts that match or exceed a particular level of quality and to provide their submitting authors (including those whose manuscripts are rejected) with a professional service that helps them improve their current and future manuscripts. Subscription and open access publishers both need to publish their accepted manuscripts using high quality standards and make them as discoverable as possible (by getting them indexed in appropriate secondary databases and search engines).

But as far as revenues, costs, and profits are concerned, I think the biggest difference between subscription publishers and open access publishers is that the open access is creating a competitive market unlike the subscription market, which is anything but competitive. This is an argument that has been presented many times by many people over the last few years. It basically boils down to the following: As a reader, a researcher does not have the open to choose what to read (the proofs of this mathematical theorem is in this paper published in this journal, not anywhere else) but as an author, a researcher has a few options of where to publish their paper (a few journals within the same quality band covering the same subject area). I believe this will lead to a significant contraction of the scholarly journal market (my best guess would be a contraction by a factor of somewhere between 2 and 10).

In a truly competitive, commoditized market, producers of a particular good or service cannot charge much higher than the average ongoing cost of that good or service. Please note that I didn’t say: producers cannot charge much higher than their own cost. In a competitive market (and I believe that open access publishing will establish a much more competitive market than the current subscription publishing market), an individual company may have a high profit margin, if that company is able to lower their cost significantly below the “average ongoing cost” within their industry. That company can enjoy a much higher than average profit margin for a period of time, until their competitors become able to lower their costs to a matching level (in which case price competition will force them to lower their prices). I don’t think open access will completely commoditize the market, but it will certainly create a much more competitive market that we have with subscription publishing and this will have a dramatic effect on the revenue per articles that publishers will be generating.


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