1. Economic Implications of Alternative publishing models: Exploring costs AND benefits John Houghton Centre for Strategic Economic Studies Victoria University, Australia John.Houghton@vu.edu.au John.Houghton@vu.edu.au +61 409 239 109

2. Implications of alternative publishing models JISC EI-ASPM Project  JISC-funded project on the Economic Implications of Alternative Scholarly Publishing Models, in collaboration with Loughborough University.  The aim of the project is to explore the institutional, budgetary and wider economic implications of alternative models for scholarly publishing (i.e. subscription publishing, OA publishing and self- archiving).  Phase I seeks to describe the publishing models, and identify all the costs and potential benefits involved.  Phase II seeks to quantify as many of the costs and benefits as possible, and to compare costs and benefits. Centre for Strategic Economic Studies

3. Phase I: Approach and activity model JISC EI-ASPM Project  There are two approaches in the literature: (i) a focus on the publishing process, and (ii) systems perspectives putting publishing in a wider context.  Studies that focus on publishing activities alone tend to overlook areas in which costs are shifted around the system, confuse that shifting with cost reduction and not take account of the full system costs.  We adopted a system perspective and our costing includes activities related to publishing and those relating to funding research, performing research, and research library and dissemination functions.  We developed an activity model based on IDEF0 – often used for business process re-engineering. Centre for Strategic Economic Studies

4. Scholarly communication process model http://www.cfses.com/EI-ASPM/SCLCM-V7/ http://www.cfses.com/EI-ASPM/SCLCM-V7/ Centre for Strategic Economic Studies

5. Cost model and matrix approach JISC EI-ASPM Project  Scholarly communication is multi-dimensional, so we adopted a ‘matrix approach’ to costing:  Activities (e.g. peer review);  Actors (e.g. universities);  Objects (e.g. journal articles); and  Functions (e.g. quality control and certification).  With the aim of being able to break down and re-assemble the scholarly communication value chain along any of these dimensions. Centre for Strategic Economic Studies

6. An Impacts Framework RESEARCH Most/Many served, but not all CONSUMERS/ SOCIETY Few served INDUSTRY/ GOVERNMENT Part served, but not all SUBSCRIPTION PUBLISHING Current reach OPEN ACCESS Potentially serves all RESEARCH Access for all, research participation based on merit, not means. Potential benefits: Speeding up discovery. Reduction of duplicative research. Fewer blind alleys. New research possibilities. Better educational outcomes & enhanced research capabilities. SOCIETY Access as needed, informed consumers (e.g. health and education). Potential benefits: Contribution to the 'informed citizen' and 'informed consumer', with implications for better use of health and education services, better consumption choices, etc. leading to greater welfare benefits, which in turn may lead to productivity improvements. INDUSTRY/GOVT (1) Access as needed, more informed producers and policy. (2) New businesses add value to content (e.g. Weather Derivatives). Potential benefits: Accelerate and widen opportunities for collaboration, commercialisation & adoption. The potential for much wider access for GPs/nurses, teachers/students, and small firms in consulting, engineering, ICT, nanotechnology, biotechnology, etc. The potential for the emergence of new industries based upon the open access content. Centre for Strategic Economic Studies

7. Dimensions of impact: Access and Permission Centre for Strategic Economic Studies

8. Phase II: Quantifying costs and benefits JISC EI-ASPM Project  We adopted a staged approach to Phase II that tackles it from the bottom-up (as case studies and scenarios) and the top- down (in a simple economic model).  We explore the costs of the process elements and system costs, to see cost differences and direct savings.  We present cases and scenarios exploring the cost savings resulting from the alternative publishing models throughout the system, to see the indirect cost differences and savings.  Then we model the impacts of changes in accessibility and efficiency on returns to R&D. Centre for Strategic Economic Studies

9. Library handling costs UK SCONUL libraries Centre for Strategic Economic Studies

10. Estimated system costs per article UK Higher Education Centre for Strategic Economic Studies

11. An approach to overall impacts A modified Solow-Swan model  There is a vast literature on returns to R&D, which while varied shows that social returns to publicly funded R&D are high – typically 20% to 60% a year.  The standard approach assumes that all R&D generates useful knowledge (efficiency) and all knowledge is equally accessible (accessibility), which is unrealistic.  We introduce ‘accessibility’ and ‘efficiency’ into the standard model as negative or friction variables, and look at the impact of reducing the friction by increasing access and efficiency. Centre for Strategic Economic Studies

12. Impact estimation ranges JISC EI-ASPM Project An example of the estimation tables (UK Higher Education R&D, GBP millions) Centre for Strategic Economic Studies

13. Estimating potential impacts Publicly funded research in the UK  With public sector R&D spending at ₤8.4 billion a year and a 20% return to R&D, a 5% increase in accessibility and efficiency would be worth ₤172 million pa.  With higher education R&D spending at ₤6.1 billion, a 5% increase in accessibility and efficiency would be worth ₤124 million pa.  With RCUK competitive grants funding at ₤1.6 billion, a 5% increase in accessibility and efficiency would be worth ₤33 million pa.  These are recurring annual gains from one year’s R&D expenditure. Centre for Strategic Economic Studies

14. Comparing cost and benefits JISC EI-ASPM Project  It is not possible to compare toll and OA publishing directly at the national level: toll access publishing seeks to provide UK subscribers with access to worldwide research, whereas OA publishing seeks to provide worldwide access to UK research.  We approach it from both sides and try to explore the lower and upper bounds by looking at:  Ceteris paribus scenarios – the implications of simply adding OA publishing and self-archiving to current activities, all other things remaining the same; and  Net cost scenarios – the implications of OA publishing and self- archiving as alternatives to current activities, by adding the estimated savings to estimated returns. Centre for Strategic Economic Studies

15. Transition or an alternative system? JISC EI-ASPM Project  There is a lag between R&D expenditure and the realisation of returns to the research, so in the transition the impacts are lagged by 10 years and their value discounted. Hence, over a transitional period of 20 years, we are comparing 20 years of costs with 10 years of benefits.  In an alternative ‘steady-state’ system, the benefits of historical increases in returns would enter the model in year one, so it would be comparing 20 years of costs with 20 years of benefits.  It is more realistic and of more immediate concern to model the transition, but a transitional model returns significantly lower benefit/cost ratios than would an alternative ‘steady-state’ model (i.e. the ‘steady-state’ benefits might be 3 to 10 times greater). Centre for Strategic Economic Studies

16. Exploring FAQs JISC EI-ASPM Project  Then we explore some FAQs, including:  The diversion of research funding to author-pays – looking at it from both sides, asking (i) if current Wellcome Trust or RCUK spending on author-pays fees is beneficial, and (ii) what is the maximum percentage of funds that could be diverted to author fees before exhausting the benefits;  The impact of delayed OA – estimating the impact of a one year delay or ‘OA embargo’ on returns to R&D; and  The impact of speeding up the research and discovery process – estimating the impact of a one year reduction in the lag between R&D expenditure and its economic impact (e.g. from self-archiving pre-prints). Centre for Strategic Economic Studies

17. Summary and current status  JISC will be launching our report in London next week.  We will also be making parts of the model available online, so people can explore various scenarios using different assumptions and variables.  The scholarly communication life-cycle model is already on the web in ‘browseable’ form.  See http://www.cfses.com/projects/EI-ASPM.htm and the JISC website at http://www.jisc.ac.uk/.http://www.cfses.com/projects/EI-ASPM.htmhttp://www.jisc.ac.uk/ Centre for Strategic Economic Studies