Few would question that the aim of the Open Access (OA) Movement — to make all research papers freely available on the Web — is a laudable one. OA will considerably benefit the research process, and maximise the use of public funds. It was encouraging therefore to see the topic of OA aired in a number of presentations at the recent Internet Librarian International (ILI). Listening to them, however, I found myself wondering how many acts of selfishness stand between us and OA.
There is today no shortage of discussion about OA. A simple search for the term on Google demonstrates that. Most of these discussions, however, tend to take place amongst the various warring factions of the OA Movement, particularly researchers and librarians, plus the occasional scholarly publisher brave enough to put his head above the parapet.
I was interested, therefore, to hear at ILI the opinions of someone with a less partisan view; the view, moreover, of an economist. For the conference keynote was given by Danny Quah, professor of economics at the prestigious London School of Economics. True, Quah is himself a researcher, but it was clear that it was as an economist that he spoke. He also brought a welcome international perspective to the debate.
Quah had been asked by conference chair Marydee Ojala to give a paper on the weightless economy (a term Quah coined) and "the knowledge glut". In the event, Ojala commented on her blog, he didn't talk about either of these, but "the economics of publishing."
However, Ojala may have missed the point. Speaking as an economist, Quah set out to ask a very important question about the so-called knowledge economy. That is, why, despite the glut of information in the world today, is some information increasing in price? He clearly also wanted to draw to the attention of his librarian audience the important role they play in this counterintuitive development.
Maximum social good
Modern economists, explained Quah, work on the assumption that in free markets the greatest social good is achieved when supply and demand are in equilibrium. To help achieve this, he added, brokers, or intermediaries, constantly work to match customers with suppliers. In doing so, intermediaries "perform a useful function — one that increases welfare for society — and they earn the resulting appropriate rewards."
Indeed, he added, the extraordinary thing about free markets is that maximum social good is arrived at through a process in which everyone acts selfishly. "[P]eople do good for society by doing well for themselves", he said, not least the intermediaries, whose sole aim is that of "single-mindedly, just narrowly trying to get suppliers and demanders to meet."
He added: "It is far from the brokers' minds, and rightly so, that in merely doing their job a greater social good might be attained."
Nevertheless, he concluded, the model is not foolproof. When social institutions are created or destroyed, for instance, the opposite effect can occur. And when this happens the system may not automatically be able to repair itself.
That, he argued, is precisely what has happened in the scholarly journal market. Where economists would expect an increase in supply to have caused prices to decrease, the rapid growth in published research we have seen over the past several decades has led to an increase in the price of scholarly journals.
Even more puzzling, he added, this has occurred during a period of unprecedented advances in the technology for distributing information. As he put it, "In the face of arguably the greatest improvement in information dissemination technology in pretty much all of recorded history … academic journal prices have not fallen but actually increased."
And journal prices have increased in an extraordinary manner. By 2000, Quah said, the average annual subscription of science and technology journals had reached $1,200, having increased by 80% over the previous decade. In the case of biomedical journals, he added, the market experienced a more than doubling of prices in the seven years after 1994.
An important feature of this price inflation, added Quah, is the difference in price between journals produced by commercial publishers, and those produced by non-profit publishers.
So where, for instance, in 2001 the top 10 most-cited economics journals produced by commercial publishers had an average annual subscription rate of $1,370, the cost of the top 10 most-cited economics journals produced by non-profit publishers was just $190.
How could it be, asked Quah, that the market is able to tolerate a 600% mark-up like this?
And in case anyone accuse him of trying to compare apples and oranges, he added, we should note that the same disparity is evident when costs are calculated on a price-per-page basis: thus where the cost of a page produced by non-profit publishers averaged 18 cents, the figure for commercial publishers was 82 cents.
Likewise, when calculated on a per-citation-basis the average non-profit price was 15 cents per citation, compared to $2.40 in the case of commercial publishers.
"Evidently," concluded Quah, "the premium that the marketplace willingly pays commercial publishers remains high — between 5 and 16 times according to these back-of-the-envelope calculations."
Peculiar economic commodity
So why has a glut in scholarly information led not to a fall in price but to an increase? Because, answered Quah, "Information is a peculiar economic commodity. It does not trade easily or conveniently in conventional markets."
As a consequence, he added, "the social institution that has emerged historically to allow information exchange, production, and dissemination is an intellectual property rights (IPR) system."
The problem with the IPR system, however, is that while it is a good way of assigning priority, and according proprietary rights in new information and ideas, it is not an effective pricing mechanism, said Quah.
In short, when the IPR system is used for pricing, rather than assigning priority and ownership, it causes problems — because while ordinary property rights foster market competition, intellectual property rights create and sanction monopolies. As such, rather than facilitating market competition, IPRs stifle it.
The market outcome, said Quah, is one in which price is separated from cost, "and the price mark-up over cost turns out to be whatever the marketplace will bear."
Add to this the fact that the market for scholarly journals is inelastic, he said, and it becomes apparent why there is no market control on the price of scholarly journals.
While Quah did not directly state it, his point was surely that the dysfunction in the market for scholarly journals is a direct result of publishers insisting that, as a condition of publication, researchers have to sign over copyright in their papers, thereby giving publishers an exclusive right to distribute them (at whatever price they want).
Certainly, Quah's analysis touched a raw nerve for some in his audience. Conscious that ILI organiser Information Today is itself also a commercial publisher, the company's president Tom Hogan suggested that Quah's figures did not take into account the fact that learned societies are able to subsidise their publishing activities through membership subscriptions.
"As I said during my talk," Quah replied cannily, "my aim is not to point fingers."
In short, Quah's thesis appeared to be that in a free market diverse selfish actions are aggregated in such a way as to maximise public good — an economic theory first enunciated by Adam Smith in his 1776 book The Wealth of Nations. Smith devised the metaphor of the "Invisible Hand", which economists today frequently use to characterise the way in which in a free market multiple selfish acts can lead to outcomes that have beneficial consequences not just for those individual actors, but for society at large.
In the case of the information market, Quah argued, the IPR system has destroyed the benign social function that the invisible hand can have.
Quah's talk spurred me to think about the various actors in the OA drama, and their different motivations. Might we, I wondered, reach a better understanding of the problems besetting the scholarly journal market if we considered the motivations of the different actors, and the selfish actions that drive the market? Could this also alert us to the dangers ahead, and help us see what needs to be done?
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