Economics and Usage of Digital Libraries: Byting the Bullet

9.7 The market model

Clearly, the financial cost of producing a market-model journal is high because editors and referees are paid and authors receive royalties on their papers. Again, we will report on subscription fees and author fees. Fishwick et al. suggested that published papers be sold to users either by subscription to the publisher's whole list, by subscription to specific parts (e.g., within a specific subject area), by a two-part tariff which consists of a reduced subscription price combined with reduced transaction cost per individual article, or simply on a pay-per-use basis. We were unable to explore the likely proportion of subscriptions to sales of individual articles but we did consider the effect of sales of individual articles on author royalties. The author fee pays for editorial and refereeing work and contributes 10% of production costs. The author receives a royalty of 5% on subscriptions income and sales of articles. The administration of royalty fees adds to costs in this model as do additional tasks associated with unfunded papers — Fishwick et al. suggested that the editorial office should seek funding for these from appropriate charitable foundations. In the model, this administration is undertaken by a half-time secretary, who, we estimated, would be capable of processing 600 manuscripts per annum (a journal with an 80% rejection rate that publishes 120 papers per annum would process 600). Table 9.3 presents the submission if the overhead rate and rejection rate are varied.

Obviously, the rejection rate has little impact on submission fees in this model because author fees contributed to only 10% of production costs. The fee is collected primarily to pay editors and referees who are unpaid in other models. The author pays for the peer-review function while subscribers pay for publication of journal articles.

In this model, we varied the value of the following elements to determine the effect on subscription price: rate of overhead, profit margin, and size of subscription base. The results, reported in Table 9.4, show that the subscription price of a market-model journal is generally 10-12% less than that for the traditional-model journal and the latter does not include a submission fee.

Royalty income is related to the sale of subscriptions and individual articles. The royalty is included in the market model as an incentive to publish only high-quality material. The royalty rate is related to journal income. Income is static as any increase in subscriber numbers is used to reduce the price of subscriptions and articles. Thus, author royalties increase only in relation to those of other authors published in the same journal, i.e. a relatively popular paper will generate more income for its author than one that is not frequently read.

Finally, we revised the traditional model to explore the figures generated if both authors and subscribers contributed to costs. This would effectively distribute costs across two groups both of which contribute to demand. The subscription fees generated by the traditional model are modest without author contributions. Author fees reduce them further. However, administration of both sets of fees would add to costs. It is often argued that authors and end users are drawn from the same group so the distinction is not necessary. This is not entirely true, however; many journal readers never write papers. Readers from industrial, professional and clinical settings often are not part of the academic research community. Thus, journals funded only by author fees would subsidise these users. The question to be asked is whether or not this matters as long as scholarly publication is as efficient as possible for the academic community.