Saturday, November 10, 2007

What is the price of journal?

What’s the price of a journal?

For that matter, what is the price of a car or a novel or a loaf of bread? All these things are frequently discounted, but we don’t throw up our hands and claim that they don't have a "real” price. Yet on several occasions recently, I’ve heard people say that we can't tell the price of journals because they are often discounted.

When the editorial board of the journal Topology resigned and began a competing journal, Elsevier wrote: “Because the majority of our subscribers purchase this journal in a larger set of journals, most are paying a fraction of the institutional subscription price.” I’ve heard similar arguments from other publishers, who like to compute the “price” of a journal by dividing the total revenue by the number of “subscribers”. But that’s not the price! It’s the “average revenue per subscriber."

The (list) price of a journal is set by the publisher, and it’s plainly visible to anyone who examines annual price lists. For some journals, there may be a two-tiered price, one for institutions and one for individuals, but in every case there is a price. Just as for cars or novels or bread, journals may be sold at a discount. But it's important to remember that publishers discount journals for business reasons, not because, in a sudden fit of remorse, they want to lower the price. Journals are sometimes discounted to agents, who consolidate them to help libraries purchase from multiple publishers. They are discounted to institutional members of scholarly societies as a member benefit, in return for dues. And journals are discounted to subscribers who buy bundles of journals, often making a commitment to buy for several years. In each case, the publisher is discounting journals in order to gain some advantage -- it's a simple business arrangement.

There is nothing wrong with discounting journals; it's good business. But it doesn’t change the price. Indeed, the price is the starting point for all discounting arrangements, defining the terms of a bargain: I’ll return a portion of the price in return for some action on your part – consolidating, being a member, or purchasing a bundle. Confusing the discounted price with the actual price ignores one half of the bargain.

We should pay attention to the list price of a journal because inevitably some subscribers (quite often, most) pay the list price. But there are other reasons not to let publishers substitute the "average revenue per subscriber" for the price. The average revenue is a quotient, and publishers control both the numerator and the denominator.

Unlike the list price, we must rely on the publisher to tell us the numerator, that is, the total revenue for a journal. Calculating total revenue sounds straightforward until one realizes that when selling bundles, large publishers apportion revenue among many journals – a somewhat mysterious process that isn’t easily discovered. For many publishers, the total revenue assigned to a particular journal is a very fuzzy number indeed.

The denominator is even more problematic. How many subscribers does a journal have? If a publisher adds many journals to bundles at no charge, the number of subscribers will quickly rise. But adding unwanted (and frequently unused) journals to bundles doesn't really change the number of subscribers to each journal in any meaningful way. Allowing publishers to use these arrangements to calculate either the average price per journal (for an institution) or the average revenue per subscriber (for the publisher) is like allowing politicians to count all those people who might have voted for them (but didn't vote) in an election. And allowing publishers to tell us the "real" price of their journals is like asking car salesmen to dictate the "best" price for their cars.

Scholars face a crisis today caused by high journal prices. If they are going to make headway in addressing that crisis, they have to get smarter about journals and more sophisticated about business practices. They can't allow publishers to redefine the problem by redefining the price. That's neither smart nor sophisticated.

John Ewing


Greg said...

Your posts are very interesting. You should write more frequently.

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