more on nature’s own publishing model: So Nature has been claiming all along that it is not possible to successfully running an open-access, yet selective journal that only publishes a few articles. Well, now that the era of funder-mandated archiving has begun, what is Nature going to do ? Is it going to change its business model, or shut shop ? Or are we suddenly going to see how it was indeed possible, all along, to run a “selective” journal that allows free access to its scientific content ?
In my mind, one of the major flaws in declan butler’s serial analyses of PLOS’ finances is that he does not compare them to those of other groups, including NPG. If declan is reporting on this dispassionately and wants to be taken seriously by people interested in well-substantiated and comprehensive arguments, then perhaps he should skip the gonzo journalism and attempt a more serious analysis. There is precious little data available (at least, to amateurs like me) on NPG’s business model, but Greg Laden has just provided a link to some interesting numbers from a 2004 presentation from NPG to the UK House of Commons (friendfeed discussion here).
The written submission to the House, while very sparse, is sufficiently interesting to merit some consideration. I will stick to the numbers alone; we each have our own views on Nature as a journal, so I will not quibble with the detailed descriptions of their “superior product”. Also, since I am an amateur at reading business statements, if my analysis has errors, I am eager to be corrected ! In what follows, indented text in italics is from Nature’s written submission to the House of Commons.
1. You stated that, under a pay-to-publish system, Nature would have to charge authors between £10K and £30k per article. Can you supply a breakdown of the costs that would necessitate this charge? (Q16)
The £30,000 figure was arrived at simply by dividing the annual income of Nature (£30 million) by the number of research papers published (1,000). This assumes that author fees would be the only source of revenue (ie. a totally open access model). The £10,000 figure is derived from estimates of the costs of selecting, reviewing, editing, designing and producing the research article element of Nature and the amount NPG would need to charge in order to cover these expenses adequately. For this calculation, it has been assumed that the very significant and extensive costs of producing the `front half (news, comments, reviews etc) would continue to be predominantly covered by a combination of subscription and advertising revenues. <…> The profit margin before interest and tax in 1984 was 15% and will be 19% this year. However, NPG’s profit margin can vary considerably by year and has fallen to 7% in some years between 1984 and 2002, as a result of market conditions and investment decisions
I think we can ignore the 30,000 pound number; the scientific community does not have to subsidize all of NPG’s profits. Exactly how much profit is necessary in order to keep improving the services provided by the journal is a complicated question (see discussion of margin below), but that requires more data and analysis. The 10,000 pound number is interesting because if we take Nature’s word for it, then this is their estimate of how much it costs to produce a zero-profit high-end journal that publishes about 1000 articles per year; of course, this means that PLOS’ is substantially under-estimating its expenses by only charging authors 2500 dollars per submission, assuming a similar no. publications per year. And this is the crux of the long-standing debate between NPG and PLOS; is PLOS naive, or is Nature inefficient ? If Nature is indeed working at a high level of economic efficiency, then how are they going to function now with federally-mandated open-access in the UK and the US ?
The margin figures are critical, but hard to interpret. Perhaps Nature’s analysts should take a Stats 101 class on how to report a distribution ? All we get is the minimum, and the most recent value (rather than say, the median or mean)… Is that the profit margin for Nature alone, or for the entire NPG publication stable that definitely appears to be following the “haute couture” model of publishing that Declan accuses PLOS of ? If it is the profit margin for Nature alone, then it appears that since the income is 30 million pounds per year, the costs for Nature amount to about 26.3 million pounds per year (assuming a 14 % profit margin). Of this amount, 10 million is the cost of publishing the research articles, so that means it costs 16.3 million pounds per year to produce the front-half of the journal. Is there anyone with experience in publishing who knows if these numbers make sense ?
Further, there is an important assumption in the numbers Nature gives above: Nature seems to be assuming that the advertising and subscription revenues (which, after going open-access, may be higher, lower or the same as they are now) will just about cover the cost of producing the front-half of their journal. Since the current income (from advertising and subscription) is 30,000 pounds, this seems to suggest that Nature assumes that the revenue from advertising and subscription (to the front-half) will drop substantially to a level that just about covers the production costs for the front-half. And if the production costs for the front-half are about 16.3 million pounds, then that is a 50 % drop in subscription and advertising revenues. How do they justify this ? Also, if this assumption is true, then it seems that Nature’s front-half material will just about allow it to break even, and it is the research articles that allow it to make a nice profit. Therefore, I think one could argue that much of the “value added by Nature” to the research it publishes (something they like to brag about) does not generate much profit, and is therefore not of much value (since in their capitalist model, distinctions between inherent value and economic value are tenuous). It is the free material supplied by the scientists and reviewed by scientists that the readership considers valuable. Nature could argue that it is their selection process, which allows readers to focus on a filtered subset of articles, that gives the research material Nature publishes such value. If this is the case, then Nature should be able to derive the same benefit from simply listing and discussing interesting papers that are published elsewhere; this, I contend, is a great role for Nature in an ideal world for scientists. In other words, Nature could function as a high-end ScienceDaily.
I agree with Bjorn Brembs: submitting articles in a serial fashion to journals until they are accepted is highly inefficient, wasteful and an anachronism. It leads to repeated reviews, delays the publication of science, and wastes valuable resources. (Btw, David Zetland, an economist formerly at Davis, has yet another interesting alternative to this publication merry-go-round: let journals bid for the right to publish data placed in an E-bay like repository).
Site licences for Nature-branded journals are generally negotiated directly between NPG and the institution, without the involvement of subscription agents. The price charged per title depends, firstly, on the number of full-time employees and, secondly, on discounts. Increasingly large discounts are applied for each additional title taken.
So yes, the bulk published NPG titles do subsidize Nature to at least some extent.
The mix of subscription and advertising revenues has provided stability by spreading the costs of publication across advertisers and Nature’s hundreds of thousands of readers, rather than the much smaller number of published authors.
From a cursory glance, it appears that this might be true if there was keen competition for papers and Nature was operating with a very small profit margin, with prices dropping further as the number of subscribers increased. But in the absence of meaningful competition, having a lot of readers merely improves Nature’s bottom line, since there is no pressure to reduce prices. More serious analysis would be extremely useful here …
ps. There is much interesting material on this whole issue at Greg Laden’s blog (e.g. here and here). I don’t share greg’s fervent anti-capitalism and am less emotional about these issues, but that is merely incidental.Permalink publishing Comments (View)