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Study on the economic and technical evolution of the scientific ...

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7.3.2. COMPETITION IN THE READER/LIBRARY-PAY AND<br />

AUTHOR-PAY SYSTEMS<br />

Within <strong>the</strong> existing reader/library-pay system <strong>of</strong><br />

diffusi<strong>on</strong>, libraries play <strong>the</strong> role <strong>of</strong> “budget<br />

minister” for universities, instituti<strong>on</strong>s <strong>and</strong><br />

researchers <strong>and</strong> negotiate directly with publishers.<br />

Given this c<strong>on</strong>tracting mode, competiti<strong>on</strong> for<br />

<strong>the</strong> library revenues is made in a market where<br />

journals are viewed as complement ra<strong>the</strong>r than<br />

substitute: as we have shown, this magnifies<br />

<strong>the</strong> benefits <strong>of</strong> portfolio size <strong>and</strong> also makes<br />

competiti<strong>on</strong> ra<strong>the</strong>r ineffective in decreasing prices.<br />

This lack <strong>of</strong> price discipline is exacerbated by<br />

<strong>the</strong> passivity <strong>of</strong> <strong>the</strong> research community, both<br />

in communicating to <strong>the</strong> librarians <strong>the</strong>ir needs<br />

<strong>and</strong> in not internalizing <strong>the</strong> cost <strong>of</strong> accessing<br />

publicati<strong>on</strong>s.<br />

Bey<strong>on</strong>d making research results accessible<br />

through individual web pages or repositories,<br />

<strong>the</strong>re are two (n<strong>on</strong> c<strong>on</strong>flicting) <strong>the</strong>oretical<br />

possibilities for increasing price competiti<strong>on</strong> in<br />

<strong>the</strong> market: shift price competiti<strong>on</strong> to a level<br />

where journals are viewed as substitute ra<strong>the</strong>r<br />

than complement or make researchers <strong>and</strong><br />

users more price sensitive. Author-pay systems<br />

or o<strong>the</strong>r reader-pay systems like pay-per-download<br />

may achieve <strong>the</strong>se goals.<br />

In an author-pay system, where authors pay for<br />

being published in exchange for a free access<br />

<strong>of</strong> readers to <strong>the</strong>ir article, competiti<strong>on</strong> shifts to<br />

<strong>the</strong> market for authors. Everything else being<br />

equal, authors should prefer to submit <strong>and</strong><br />

publish in journals charging a lower price. In a<br />

pay-per-download system <strong>the</strong> reader may also<br />

be more price sensitive but <strong>the</strong> price effect<br />

<strong>the</strong>re is less clear since journals are viewed as<br />

complements, <strong>and</strong> since <strong>the</strong> equilibrium price<br />

per download is likely to be small. There are<br />

instances <strong>of</strong> such <strong>of</strong>ferings <strong>on</strong> <strong>the</strong> market <strong>and</strong><br />

JISC is currently experimenting with hybrid<br />

systems combining both author-pay <strong>and</strong><br />

pay-per-download systems.<br />

There are benefits <strong>and</strong> costs associated to<br />

reader-pay (<strong>the</strong> current subscripti<strong>on</strong> system or<br />

pay-per-download), or author-pay systems.<br />

We ga<strong>the</strong>r in <strong>the</strong> following table some <strong>of</strong> <strong>the</strong>se<br />

trade-<strong>of</strong>fs. The magnitude <strong>of</strong> <strong>the</strong>se effects is<br />

difficult to quantify at this point because <strong>the</strong>y<br />

are highly dependent <strong>on</strong> <strong>the</strong> way <strong>the</strong> industry<br />

actors will coordinate. For instance, both<br />

pay-per-download <strong>and</strong> author-pay systems<br />

require that <strong>the</strong> researcher has access to a<br />

budget (sometimes significant since <strong>the</strong> current<br />

price for an author-pay article is around 3000<br />

Euros.) This requires political interventi<strong>on</strong> by<br />

ei<strong>the</strong>r injecting extra budget towards publishing<br />

<strong>and</strong> access to researchers or re-allocating some<br />

<strong>of</strong> <strong>the</strong> existing budget between libraries <strong>and</strong><br />

researchers.<br />

Recent data discussed in <strong>the</strong> previous subsecti<strong>on</strong><br />

suggest that articles published in open access<br />

journals are more cited than articles in o<strong>the</strong>r<br />

journals. This result is c<strong>on</strong>sistent with <strong>the</strong> view<br />

that a zero access cost for readers should<br />

increase diffusi<strong>on</strong>. It is well known that<br />

“network effects” can be more easily created<br />

when <strong>on</strong>e side <strong>of</strong> <strong>the</strong> market is heavily subsidized<br />

(e.g, Baye <strong>and</strong> Morgan, 2001). This is true for<br />

<strong>the</strong> current reader-pay system by which authors<br />

do not pay for <strong>the</strong> certificati<strong>on</strong> service provided<br />

by <strong>the</strong> publishers; however, in this case, network<br />

effects benefit publishers who can attract a lot<br />

<strong>of</strong> authors, that is who have a large portfolio<br />

<strong>of</strong> journals. In author-pay, all researchers are<br />

potential readers <strong>and</strong> this network effect<br />

benefits all journals <strong>and</strong> all publishers, sometimes<br />

independently <strong>of</strong> <strong>the</strong>ir portfolio. This suggests<br />

that author-pay may facilitate entry in <strong>the</strong> market,<br />

by limiting <strong>the</strong> competitive advantage given to<br />

publishers with large portfolios.<br />

The recent literature <strong>on</strong> pricing <strong>on</strong> two sided<br />

markets (e.g., Rochet <strong>and</strong> Tirole, 2004 for an<br />

overview) points out that it is important to<br />

c<strong>on</strong>sider both <strong>the</strong> platforms’ fixed charge <strong>and</strong><br />

<strong>the</strong> usage fee. In <strong>the</strong> current system, usage<br />

pricing is d<strong>on</strong>e in a roundabout way since <strong>the</strong><br />

subscripti<strong>on</strong> <strong>of</strong> a library to a journal or <strong>the</strong> big<br />

deal c<strong>on</strong>tracts c<strong>on</strong>tains an ex-ante evaluati<strong>on</strong><br />

<strong>of</strong> <strong>the</strong> future usage <strong>of</strong> <strong>the</strong> journal. By c<strong>on</strong>trast,<br />

a pay per download system will be closer to an<br />

ex-post usage. Hybrid systems where an<br />

instituti<strong>on</strong> pays a fixed fee for <strong>the</strong> right to<br />

access a collecti<strong>on</strong> <strong>and</strong> final users pay a<br />

per-download fee for actually getting access to<br />

a particular article are made possible by <strong>the</strong><br />

new technologies. The <strong>the</strong>oretical implicati<strong>on</strong>s<br />

<strong>of</strong> such hybrid systems are unclear as are <strong>the</strong><br />

benefits <strong>of</strong> heavily subsidizing <strong>on</strong>e side <strong>of</strong> <strong>the</strong><br />

market.<br />

67

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