162.1 IDENTIFYING OVER-PRICED JOURNALS
Richard W. Meyer, Trinity University, meyer@trinity.edu.
[Received March 25, 1996]
A simple model emerges from the verified assumptions in some recent articles, which is useful in identifying overpriced journals. Chuck Hamaker (Prices no. 156 (Feb 260): pg 2) shares some excellent insights and notes package arrangements publishers are pushing. Those package efforts provide simple protection schemes that weren't needed in the print domain where users substitute library access for personal subscriptions. In the electronic domain users will substitute article by article purchasing for personal subscriptions. Since few scientists are likely to read every article in every journal of interest, publishers face the prospect of declining revenues.
In the latest issue of _Library Journal_ (March 16, 1996): 32-35, Don King and Carol Tenopir expose several myths regarding journal publishing. They do a very helpful job explaining some of the issues with pricing, and if they are accurate with the estimates given, it is easy to take an additional step to build a model for predicting the extent of over-pricing. In particular, King and Tenopir mention that scientists do not cancel personal subscriptions because they do not need the journals. Indeed, individuals cancel subscriptions because they respond much more elastically to price changes than do libraries. As their article verifies, when price goes up, individuals are likely to cancel and substitute use of a library subscription. On the other hand, as we are very much aware, libraries try very hard not to cancel journals because user demands press upon them. As a result, publishers have been able to extract profit by the simple ploy of multi-part (differential) pricing. They charge libraries higher prices than individuals. However, economic theory reveals this pricing scheme to be a double edged sword for librarians to use in the fight against unfair rent extraction, if we want to take the time to apply it.
All the hullabaloo aside about costs of production, the final price of a journal is determined by the mix of demand and supply, not costs of production. Cost of production will determine only whether a given producer will decide to offer a product. Furthermore, economic theory (repeatedly verified, I might add) says that in a competitive market, the price of a given commodity will equilibrate at a level equal to the marginal cost of production. All that is required for a market to be sufficiently competitive in this regard, is for the consumer to be able to substitute for the product. While the reader of _Polymer Science_ cannot meaningfully substitute the _Journal of Applied Polymer Science_, s/he can substitute library use of the journal for a personal subscription. The report by King and Tenopir suggests that this is exactly what scientists do. Therefore, it is reasonable to conclude that, in general, the price to individuals for any given scholarly title is a very close approximation of the marginal cost to produce the publication.
Again on the other hand, the price established for libraries is often much higher. Publishers can make a reasonable argument that this difference is based upon their needs to reclaim their losses to photocopying of library subscriptions by scientists. Indeed, there is good evidence to support this contention in another article, this time by S. J. Liebowitz in the _Journal of Political Economy_; 93/5 (1985): 945-957. However, the price difference often seems more than sufficient to recover publisher losses, and that impression is substantiated by King and Tenopir. What is more important, the relative difference in prices provides a simple measure of the monopoly extraction rate exercised by publishers. Simply dividing the price to libraries by the price to individuals yields an index of monopoly power (or to put it more candidly, profit enhancement power) of publishers.
There are, of course, lots of other variables that impact this index. The amount of advertising, circulation rate, page charges all affect revenue streams that allow publishers to mitigate the price to libraries. Profit requirements, ownership, and exchange rates also legitimately affect the prices and the index as well. But, on the whole, the index is a supportable indicator of who is trying the hardest to maximize profit. Try making some comparisons to see if the index squares with your impressions of who are the worst offenders.
Here are a few examples:
Title/ Price to Library/ Price to Individual/ Index
College & Research Libraries/ $50/ $25/ 2.00
Information Technology and Libraries/ $50/ $22.50/ 2.22
LRTS/ $55/ $27.50/ 2.00
Cataloging & Classification Quarterly/ $150/ $43.20/ 3.47
Journal of Financial Economics/ $873/ $95/ 9.19
Journal of Financial & Quan Analysis/ $85/ $40/ 2.13
Journal of Business Financing & Accounting/ $417/ $161/ 2.59
J of Academic Librarianship/ $125/ $50/ 2.50
Social Science Quar/ $59/ $30/ 1.96
Dynamics & Stability of Systems/ $342/ $98/ 3.49
Ergodic Theory & Dynamic Systems/ $434/ $198/ 2.19
Journal of Amer Chem Soc/ $1624/ $120/ 13.53
Tetrahedron/ $7,330/ $ ??/ ?? Could it be worse than the next
one?
Journal Organic Chem/ $1058/ $81/ 13.25
Journal of Community Health/ $255/ $58/ 4.39>br>
Amer Journal of Public Health/ $160/ $100/ 1.60
To help with deselection decisions, simply calculate the index for every title, make a list, and rank it by index. Identify those with the highest indexes (particularly within a given field). Review those identified against content, advertising, size, and so forth. Follow this by the usual process of evaluating whether to cancel or retain any given title as the old budget crunch squeezes in.
Unfortunately, there may be a problem with this methodology for some titles. Many appear to have so diminished personal subscriptions, that they no longer indicate the price inside the journal. In particular, some major overseas publishers indicate only the institutional price, or no price at all. Meaningful application of the index described here, particularly in a more sophisticated analysis incorporating additional variables will require some source to determine the individual prices accurately. If you have any ideas on this issue, I would like to hear about them. I am beginning a study funded by the Andrew W. Mellon Foundation to regress prices for approximately 6,000 titles on a variety of variables. One outcome of the study will be to enhance the simple model noted here.
162.2 QUESTIONS ABOUT TENOPIR AND KING ARTICLE IN LJ
Peter Graham, Rutgers University Libraries (psgraham@rci.rutgers.edu):
[Received May 6, 1996]
Has anyone more knowledgeable than me (i.e. most anyone) done a critique of this LJ article in the March 15 issue (p. 32-35)? It seems to me to assert a number of things on which there is not consensus, and to express some misleading ideas.(By Tenopir and King, it is apparently the result of an SLA study grant.)
Example: on the publishing explosion, which they dismiss, the authors say "Since scientific knowledge doubles about every 15 to 17 years, when scientists graduate...they will have been exposed to only about one-sixth of the new knowledge they must acquire...during their careers." This simply isn't true. If the field of biology explodes by 100% by dividing and twigging, this has no bearing on what the geologist must know. Or do they mean a career lasts 75-90 years?
Example: in Figure 2 text on p. 34, they say "In order to recover costs, a journal...would have to charge at least [x]. If there are only [y] subscribers, the price would have to be at least [z]." The terminology of "would have to" takes a stance assuming a number of definitions in favor of publishers but I'm not sure always agreed to by other analysts.
Example: "the library[-purchased] journals tend to be a better buy for the parent organization than personal subscriptions." This assumes that the institution is paying for the personal subscriptions, not a practice I'm familiar with.
And that's part of "Myth 6: Libraries should boycott 'greedy' publishers." The boycott issue is fair to examine, but the "greedy publisher" issue is thrown in as though it too is a myth, and not addressed. The authors don't discuss, even to refute, the very high profit margins we are hearing of from a number of the global publishers in the sciences at this time. The article doesn't discuss (as myth or reality) the perception that prices are going up for profit-taking reasons and because they can.
There are useful issues in the article as well (e.g. the myth that photocopying hurts publishers). But it didn't seem an article that was dealing with all the real issues of the serials problem, nor correctly with all of them.(It doesn't help that it's careless in points: "In 1965...for every nine scientists one article was published; by 1994 that figure had edged up to one article per ten scientists." They mean edged down.) And I'd be interested in their definition of "scientist" as they count them, i.e. academics or non-academics or both; it seems relevant when analyzing publishing.
I hope a contributor to SPN can comment. Thanks.
The mailbox is: tuttle@gibbs.oit.unc.edu.
From Dana Roth, Caltech, dzrlib@cco.caltech.edu (received March 27, 1996):
I wish there was some way to 'force' publishers to respond to
my question about asking authors to help with the publication
costs. The only response I have had in the last ten years was
from the former manager of Springer Verlag-NY, who responded:
"I was at a seminar last week where the message was that one
should entertain suggestions, no matter how ridiculous they
sound, at least for a short time." There is hope, however, in
that a recent article in the QJRAS on electronic publishing
suggested that the authors should pay for the cost of their
electronic preprints.
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From Bill Miller, Florida Atlantic University, miller@acc.fau.edu (received March 19, 1996):
Can anyone provide me with a rationale for why STM journals inflate in price more than other materials? Is it inherently more expensive to edit science articles than to edit articles in other areas? Do science journals use more expensive paper, or are they mailed from more exotic locales with classier and more expensive postal systems? Do science journals increase in bulk by 10-25% per year? These questions arise after trying to explain to a state legislator why our library's budget would have to increase by three times more than the rate of inflation in order to stay even.
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