Some Economics of Academic Journal Pricing

Some Economics of Academic Journal Pricing

The Changing Economics of Academic Journals Ted Bergstrom University of California Santa Barbara Ted Bergstrom University of California Santa Barbara Outline of talk Trends in prices and numbers of journals Self-archiving Site Licenses, Bundling, Price Discrimination and Bargaining.

A curious market structure Private profit-maximizing firms and non-profit publishers are both significant players. Most of the workforce--authors and referees--work for free. Econ Journals by Publisher: 2004 For Profits: Number of Journals Price/Page Elsevier

63 $0.91 Blackwell 16 $0.88 Taylor & Francis 32 $0.96

Springer-Kluwer 48 $0.97 Non-profits 112 $0.31 Price per Recent Cite in 2004 For Profits Elsevier $2.62

Blackwell $3.20 Taylor Francis $4.49 Springer Kluwer $4.56 Non Profits $0.56 Cost and benefit shares for a complete economics collection in 2004

Share of Cost Share of Pages Share of Cites Nonprofit 11% 32% 45%

For profit 89% 68% 55% Trends in Publishers' Price Per Page Prices are Deflated to Constant Dollars 1.2 Blackwell 0.8

Elsevier 0.6 Taylor & Francis Springer+ Kluwer 0.4 Nonprofit 0.2 0 19 70 19 74

19 78 19 82 19 86 19 90 19 94 19 98 20 04 Dollars per page

1 Year Has Elsevier turned over a new leaf? Note the lower percent increases in price per page for Elsevier than for others, including non-profits. What is going on? Percent and Absolute Price/Page % Change Absolute 2004 2000-2004 Change Blackwell

0.86 66% $0.34 Elsevier 0.91 5% $0.05 Taylor-Fra 0.96 24%

$0.19 Society & 0.27 Univ Press 20% $0.05 Two things going on All major for-profit publishers converging to Elseviers per-page prices. Mergers have reduced number of players. Is there collusion or just imitation?

Since 2000, non-profits have increased prices by about $.05 per page and added online access. How often do economists self-archive? Studies show papers that are free on the web tend to be cited more often than those that are not. Many readers have no access to publisher-posted copies. Small universities, private sector, and third world countries. Most authors want their papers to be read. Labor economists show strong effect of

citations on salaries. Professional influence depends on citations, downloads, presence on course reading lists, correspondence with online readers. Our study We sampled 25 economics journals and looked at the table of contents of the two most recent issuestotal of 545 articles. We Google-searched for a free online copy of each article (same title, same author(s)) Results About 73% of economics articles are available.

Much higher percentage of selfarchiving for major journals than for minor journals. 100 percent posted: J Political Economy Quarterly J Econ J Financial Econ Review Econ Studies More than 80 percent posted:

Economica J Finance J Econometrics J Public Econ Am Econ Rev J Econ Theory J Monetary Econ 60-75 percent posted:

European Ec Review Int J Game Theory J Labor Econ Economic Journal Kyklos Less than 50 percent posted:

Public Choice Ec Inquiry Public Finance Rev Resource & Energy Ec Theory & Decision Ecological Econ Health Econ Regression of Journal characteristics on Probability of Self-Archiving Variable Coefficient

Std Error Impact Factor .039** .015 Price/Article .014** .006 Number Subs .00056**

.00025 A Small Paradox Authors of papers in top journals are more likely to self-archive This is paradoxical, since top journals are more widely available. If you publish in an obscure journal, you need to self-archive to be widely read. Implications With free access to most articles available, value to faculty of highpriced subscription is much reduced. This should increase price

elasticity of demand and exert downward pressure on prices. Prices of Leading Journals For Profits Price Price/Article % Posted J Finance $2084 $31 100

J Econometrics $2728 $33 91 J Pub Econ $2234 $19 90 J Ec Theory

$2629 $27 83 J Monetary Ec $1810 $29 81 Leading Nonprofits

~$330 ~$5 85-100 Why subscribe? Ensure that you have final version. Convenience and certainty of search. How much is this worth for a single library? Enough to allow non-profits to maintain current high prices? ~$30 per article

Enough to sustain prices of major nonprofits? $2-$10 per article The monopolists problem Diversity of demand protects us from exploitation by monopolists. If we all had same value for his product, monopolist could extract entire benefit by charging that price. If our values differ and monopolist doesnt know who has which value, he cannot extract full consumers benefit. Three Monopolists devices Two strategies commonly used by monopolists in effort to extract more from consumers. Price Discrimination (with secret

prices) Group Sales Product Bundling Price Discrimination Charge more to those who are likely to be willing to pay more. Libraries more than individuals Big universities more than small Group Sales Electronic site licenses rather than individual electronic subscriptions. Also consortia of small colleges. Paper editions: Need to share a single copy in a single location--library. Electonic site licenses: Main reason is

fiscal. Monopolist has better estimate of average willingness to pay than of individual willingness can extract more revenue. Bundling All-or-nothing deal for large journal bundle Easier to predict average value of a bunch of journals. Monopolist can extract bigger share of surplus. Makes entry more difficult and reduces competitive pressure. The librarians problem Ken Frazier: You read that right.

Dont buy the Big Dealthe Big Deal serves only the Big Publishers. Tough choices for librarians. How do you evaluate the Big Deal package? Will your faculty get addicted to online junk journals? Big Deal increases journal expenditures and availability. Favors big journal publisher. Crowds out books, other journals Reduces librarians role in selection. How can librarians cope Bargain hard. Understand your position if you reject Big Deal. Take the publishers Big Deal offer price and divide by 2. See which of

the publishers offerings you would buy if you spent that money on individual journals. (Simple way: Rank journals by cites per dollar. Choose top ones until you run out of money. The coping librarian Remember: If you dont subscribe, Faculty can still get articles. Many are posted by authors. Most are just an email request away. And pay-per-view is available when quick response is necessary. Site licenses to most of the stuff in the Big Deal bundles isnt worth much. Offer such a low price for the bundle that you would be glad to get it.

Fraction of Cites Economics Journals: Costs and Citations 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 0.00

0.10 0.20 0.30 0.40 0.50 0.60 Fraction of Cost 0.70 0.80

0.90 1.00 Rewards to shopping The froth is not worth much. If you set cost per citation as criterion, you can get 50% of cites for 10% of cost 90% of cites for 46% of cost 95% of cites for 56% of cost Costs and Cites: All ISI Journals Percent of Cites

1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 For Entire JCR 6800 Journals from BergstromMcafee dataset

65% of cites for 10% of cost 92% of cites for 50% of cost 95% of cites for 60% of cost Data on Journal citations and articles Preston McAfee and I maintain an online database of cost-effectiveness of about 6,000 academic journals at We are happy to share more detailed information with libraries that want to use this for value-based shopping.

Want more information? papers, statistics, weasels manual, etc

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