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2 Costs of Publication Electronic publishing has not only revolutionized the publishing in- dustry, but it has also tremendously changed the fundamental economics of the STM journal business. Many new issues affect both for-profit and not-for-profit publishers. For publishers, the costs of journal production appear to be increasing rapidly, much more than if publishers had stayed with print alone. Two obvious factors are responsible for these rising costs: the cost of new technology and the increasing volume of publishing. Thus, it is natural to begin with a consideration of the costs of STM publishing. MAIN ELEMENTS OF EXPENSE BUDGETS FOR SOME STM JOURNAL PUBLICATIONS1 Many STM journal publications have the same or similar cost compo- nents. First are the processing costs for the contents (including articles, 1 This chapter is based on the remarks of Michael Keller, Ida M. Green University Librarian at Stanford University and publisher of HighWire Press, who provided a keynote "Overview of the Costs of Publication," as well as on the comments of invited speakers-- Kent Anderson, publishing director at the New England Journal of Medicine; Robert Bovenschulte, director, Publications Division, American Chemical Society; Bernard Rous, deputy director and electronic publisher, Association for Computing Machinery; and Gor- don Tibbits, president, Blackwell Publishing USA. Unlike the summaries of the subsequent sessions, the comments made by several participants in the audience are incorporated into the presentation material as well. 9

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10 ELECTRONIC PUBLISHING reports of research results, and methods of scholarly investigation) of STM journals, in several subcategories:2 (1) manuscript submission, tracking, and refereeing operations; (2) editing and proofing the contents; (3) com- position of pages; and (4) processing special graphics and color images. Internet publishing and its capacity to easily deliver more images, more color, and more moving or operating graphics have made this category of expense grow rapidly in the past decade. The second category of expense is not only a familiar one, but is also one of two targets for elimination from publishers' costs: This includes costs for paper, printing, and binding, as well as mailing. A third category is the cost of Internet publishing services. These are new costs and include many activities performed mainly by ma- chines typically maintained by highly paid technical support staff, though in some situations the publishing staff performs quality control pre- and post-publication to check and fix errors that may have been introduced into the publishing process. The elements of all the above costs vary tre- mendously among publishers and Internet publishing services. The fourth cost category--publishing support--includes items such as supporting fa- cilities, marketing, and other miscellaneous expenses. The final category is the cost of reserves. The results of a recent sampling by Michael Keller of the changes in six not-for-profit publishers' costs over the past decade indicated several trends. It appears the publishers now exercise much tighter controls over their bud- gets than they did 10 years ago. Although the rate of change in editorial costs has not changed much (e.g., costs continue to scale with the number of submissions and inflation in salary and benefit costs), printing, paper, and binding costs are down, at least on a unit basis. The new costs associated with electronic versions of the same publications also can be significant. In short, there is a dynamic balancing act with regard to publishers' costs in the Internet era, with some costs increasing and some decreasing. Most intriguing, however, is the possibility of removing substantial amounts of publishing costs by switching to electronic-only journals delivered over computer networks, thereby eliminating printing, binding, and mailing paper copy to all subscribers. 2The cost budgets for Science and Nature, for instance, would have more elements than specified. And costs for secondary and tertiary publications include different elements than these. These sorts of costs in STM publishing are not covered here.

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COSTS OF PUBLICATION 11 DIGITAL ARCHIVES Successful creation and operation of true digital archives--protected repositories for the contents of journals--would permit the removal of the printing, binding, and mailing costs. True digital archives will have their standards and operational performances publicly known and monitored by publishers, researchers, and librarians alike. The operations and content of such archives will need to be audited regularly. The annual costs are not yet well understood; they can range widely, from only tens of thousands of dollars per year for a simple approach such as LOCKSS (Lots of Copies Keep Stuff Safe), which are not formal archives,3 to $1.5 million per year for a large archive at a major university. Publishers, especially not-for-profit publishers, feel a very strong obligation to preserve that digital heritage, although there is no consensus about exactly who should do so: they them- selves, libraries, some other third-party archivers, or some combination of all of them. CONVERSION OF BACK SETS Another cost currently confronting many publishers is the conversion of back sets of print journals to digital form, providing some level of metadata and word indexing to the contents of each article, and posting and providing access to the back sets. HighWire Press has done a review of the costs of converting the back sets of its journals. They estimate that about 20 million pages could be converted and that the costs of scanning and converting pages to PDF, keying headers, loading data to the HighWire servers, keying references, and linking references could approach $50 mil- lion, or about $150,000 per title. Most of that sum is devoted to digitizing companies and other sub-contractors of HighWire Press. If all this retrospective conversion of back sets occurred in one year, HighWire would have to spend internally about $250,000 in capital costs and about $300,000 in initial staff costs, declining to annual staff expendi- ture of perhaps $250,000 or $275,000 thereafter. On average, for the 120 publishers paying for services from HighWire that would mean about an additional $2,500 in new operating costs to HighWire Press each year. In other words, the increase in annual costs to publishers for hosting and pro- 3 See http://lockss.stanford.edu.

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12 ELECTRONIC PUBLISHING viding access to the converted back sets would be a fraction of 1 percent of their current expenses each year. These figures, of course, omit any costs for digitizing and other services provided by contractors and subcontractors. Although the costs of back-set conversion are high, the experience of HighWire suggests that the payoff could be 5-10 times more use of articles in the back sets than is presently experienced. Articles on the HighWire servers are read at the following rates: Within the first 3 months of issue, about 95 percent of all articles get hits (this presumes that a hit means that somebody is actually reading something). In the next 3 months, that is, when the articles are 4-6 months old, slightly less than 50 percent of all articles get hits. And when articles are 10 months or more old, an average of only 7-10 percent of all articles get hits. However, that rate of hits seems to persist no matter how old the online articles are. Based on citation analyses, only 10 percent of articles in print back sets older than the online set of digital versions get cited, though not necessarily read. That they should do so is entirely consistent with the belief com- monly held since 2001 by publishers associated with HighWire that the version of record of their journals is the online version. This is leading many publishers to digitize the entire run of their titles as the logical next step. In any case, unless other sources of funds are forthcoming, the costs of back-set conversion will become a temporary cost in the expense budgets. Other STM journal publishers, however, have indicated that their back-set conversion and subsequent maintenance costs have been considerably higher. THE VALUE OF MAINTAINING THE EXISTING STM JOURNAL PUBLISHING INFRASTRUCTURE Some stakeholders in the STM journals chain believe that in the future articles will be delivered freely to all users, through a diffuse distribution scheme based on authors simply posting their articles on their own Web sites or on an archive like the Cornell e-print arXiv. Google, or more spe- cialized search engines, would be used by readers to access relevant articles on demand. This approach, they assert, could obviate the need for todays' expensive publishing apparatus. Nonetheless, most communities in STM assert that there remains a strong requirement for formal peer review of STM journal content, and it seems clear that many of the functions provided by good publishers are highly valued and demanded by scientists. There is no question that pro-

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COSTS OF PUBLICATION 13 viding relevant, reliable, and consistent levels of content in journals costs money. Highly distributed, diffuse STM publishing with sketchy peer re- view, dependent upon new search engines to replace the well-articulated scheme of thematic journals and citations in a multidimensional web of related articles, represents a descent into information chaos. BALANCING THE NEED FOR SPEED WITH THE MAINTENANCE OF QUALITY The pressures to distribute information rapidly are growing, even as high-quality content must be maintained. For example, the New England Journal of Medicine (NEJM) publishes information about health, and if it publishes erroneous articles, these can have serious impacts. Recently, the journal published a set of articles about SARS, Sudden Acute Respiratory Syndrome, within two weeks of receipt from the author, and these were completely peer reviewed, edited, and illustrated papers. They were trans- lated into Chinese within two days of initial publication and distributed in China in the thousands in print, with the hope that they would make a major difference. COSTS OF NEW TECHNOLOGY With the expansion of technology costs, publishers are delivering a much more valuable product to their users. Enormous new functionalities are being made available to scientists. The access to information is swift and convenient, improving scientists' productivity. Technology now imbues all facets of publishing--from author creation and submission, all the way through to peer review, production and editing, and output and usage. The costs of the technology are not just related to the Web, but apply to all the other technical systems that publishers must create and integrate. The various technological enhancements can have value, and some publishers have been surprised at how much demand there has been for new applications. There is thus pressure on the publishers to compete with other publishers' innovations. On the one hand, many of the recent inno- vations that drive up publishers' IT costs are very little used and not of great value. On the other hand, it is very hard to predict utility in advance of introducing such innovations. Some technologies that are developed on the margin eventually become quite popular. Moreover, even an innovation that is not much used today may turn out to be one that is very valuable 5

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14 ELECTRONIC PUBLISHING or 10 years from now. So, publishers are experimenting and attempting to stay abreast of technological developments to remain competitive. The experience of HighWire Press, for example, has been that those publishers who first define and create advanced features subsidize some of the costs for publishers that follow. At the same time, those early adopters reap the benefits of innovation in attracting authors and readers. Eventu- ally, many of the innovative features become generally adopted, and usually at a lower cost of adoption than paid by the innovators to innovate. THE DIFFICULTY OF MOVING FROM PRINT TO ELECTRONIC-ONLY VERSIONS There is not only a continuing demand for print versions from some customers, libraries, and users, but also from the publishers themselves, because the profit margins that are realized from the print side are actually necessary for some of them at this time. For a variety of reasons, in some communities there are many readers for whom online reading and search- ing are not presently good options. Because of the preservation issue, most librarians are not yet ready to give up print either. Yet for many research communities, especially in the basic sciences that develop rapidly, there is real promise for dropping the print versions of journals altogether. That does not necessarily mean, however, the total dis- continuation of those paper, printing, and binding costs. Once print ver- sions are eliminated, there might be a cost savings for publishers of 15, 20, or 25 percent. Ending print versions of journals is probably a worthwhile goal. The concern, however, is that the costs of managing the rising volume of publication will wipe out whatever transitory gains there may be from saving on print costs. STRENGTHS AND WEAKNESSES OF THE PEER-REVIEW PROCESS The peer-review process is both a significant cost and the highest value added by the journal publishers. Although many STM journals have rigor- ous peer-review procedures, the peer-review process at the New England Journal of Medicine (NEJM) was provided as just one example. First, inter- nal editors at the NEJM review incoming article submissions, judging them for interest, novelty, and completeness. Papers that are of initial interest are sent to two to six external peer reviewers. Returned reviews are used to

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COSTS OF PUBLICATION 15 judge whether the submission will move forward. If it does, it is brought before a panel of associate editors, deputy editors, and senior editors; the paper is explained, questions are asked, and the work is judged by that group, usually during a very thorough discussion. Having passed the edito- rial board, the article is sent for both a statistical and a technical review. Queries are brought to the author, who must respond. The peer-review process lasts anywhere from a few weeks to a few years. Sometimes the NEJM asks the authors to either complete experiments or to provide addi- tional data. As far as weaknesses in the peer-review process, or ways in which it could be improved, one of todays' concerns is that time pressures in medi- cine are so great that finding willing peer reviewers is increasingly difficult. The situation could be improved by educating the scientific community to understand the value of this interaction in the STM publishing process, reflecting that value in the academic rewards system. As the number of submissions has risen, the number of people avail- able to provide dependable reviews of articles has not increased. Publishers are calling upon the same people time and time again, and they perform peer review for the most part without compensation. COST-CONTAINMENT STRATEGIES If the only imaginable strategy for supporting the costs of publication is to increase subscriptions paid for by the libraries and laboratories, then frankly, there is no future for STM publishing. If the publishers are to survive, they must have strategies for reducing costs or increasing income from other sources of revenue. Even as the costs of journal subscriptions have increased, and publish- ers' costs have increased, the cost per person of accessing the body of re- search articles has plummeted dramatically in the electronic context, and this trend is likely to continue. There are many potential ways of collabo- rating on technologies that can bring production costs down dramatically. For example, using open-source software can reduce development costs sig- nificantly. There is no reason why publishers should develop unique, pro- prietary online systems. Moreover, with innovations from commercial vendors such as Adobe and Microsoft and simple services such as e-typesetting in China, India, and other places, the costs for both small and large publishers alike can be lowered. The use of simpler, standard formats that all publishers agree to

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16 ELECTRONIC PUBLISHING adhere to and avoiding the use of very complex Web sites are also effective cost-saving measures. VULNERABILITY OF SECONDARY AND TERTIARY PUBLISHERS In the next decade, the segment of STM publishing that appears to be most at risk is the secondary publishing industry, that is, the abstracting and indexing services and the tertiary publishers, those producing review articles long after the leading-edge researchers have studied the most useful articles. Secondary publishers are particularly vulnerable, because they are be- ing overtaken by numerous sophisticated search engines and by develop- ment of peer-to-peer data about usage patterns--the sort of features and functions provided by Amazon.com, for example. The secondary publish- ers, therefore, must find ways to become more effective, more precise, as well as more general. They need to seek out different approaches, particu- larly automated services. However, if STM information does move toward a highly distributed and diffuse dissemination mode, in which authors place their contributions on individual servers, there could be a huge role for secondary publishing. The secondary publishers are vulnerable now, not necessarily because secondary publishing is vulnerable, but because they are competing with primary journal publishers who are, perhaps inadvertently, providing sec- ondary services. Secondary publishing is in some sense merging together with primary publishing, especially in the aggregator business. ELECTRONIC PUBLISHING BY SMALL AND MID-SIZED SOCIETIES For a small or mid-sized society it may be very risky to stop delivering printed journals, which are perceived by society members as a strong ben- efit. One reason that some smaller societies can manage to publish elec- tronically involves the compounding effect of information exchange that occurs at the meetings that they have with their electronic service provid- ers. Technologically, many scientific societies cannot afford to publish elec- tronically on their own. Societies also have varying business circumstances. For example, the Endocrine Society is tied to its print clinical journal because it generates $2

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COSTS OF PUBLICATION 17 million per year of pharmaceutical advertising. Moreover, not all of the smaller societies are yet able to convert to electronic publishing. The Ameri- can Psychological Society several times tested in quite elaborate detail whether it could publish its own journals online, and recently has decided it cannot. In this case, the risks, particularly for a small organization with modest reserves, simply cannot be taken. The suggestion that there be differential service levels poses difficulties as well. The Association for Computing Machinery (ACM) moved to mul- tiple service levels in order to maintain a benefit for personal membership in the organization, as its institutional subscriptions. But differentiating service levels adds real cost and complexity to any journal publishing sys- tem. It also adds complexity for the end user, and additional communica- tions activities for the society that needs to explain its tiers to the different users. SOME UNANTICIPATED COSTS OF ELECTRONIC PUBLISHING Customer support costs for electronic publishing have been substan- tially different from the print paradigm. Not only is there a larger volume and variety of customer complaints and requests for improvements, but also the level of knowledge and the expertise required to answer user ques- tions call for much more costly staff. The cost of sales currently is higher. The product is different and the market is shifting. Many publishers, such as the ACM, no longer sell subscriptions; rather, they license access. Addi- tional personal contact is required to market and sell an electronic site li- cense, so this requires additional and expensive sales personnel. Also, digital services are built on top of good metadata, and metadata creation and de- velopment costs are high. The richer the metadata, the higher the costs. Subject classification can be costly as well. Finally, what were thought to be some upfront, one-time costs for electronic publishing have turned out to be recurring costs, and some recur with alarming frequency. REASONS WHY THE COSTS OF ELECTRONIC PUBLISHING ARE POORLY UNDERSTOOD The costs of electronic publishing are not at all well understood, and there are some very good reasons why this is the case. First, as has already been mentioned, electronic publishing is not a single activity.

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18 ELECTRONIC PUBLISHING Second, electronic publishing costs remain fuzzy because we still live in a bimodal publishing world. Some direct expenses can be charged to either print or electronic cost centers. Where a publisher allocates costs often de- pends on the conceptual model of a particular publishing enterprise. Third, the decisions about whether to charge costs to a print or to an electronic publication can also be part of a political or business process. There are times when it is desirable for the publisher to isolate and protect an existing and stable print business, and in that circumstance the pub- lisher will attribute any new costs to the digital side. Or, the publisher may desire to minimize positive margins on the digital side, in order to avoid debate over the pricing of electronic products. At other times, the need to show that the online publication has taken wings, is self-sustaining, and has a robust future can tilt the allocation of all debatable charges to the print side. Fourth, it is difficult to compare print and electronic costs because the products themselves are just not the same. Fifth, accounting systems sometimes evolve more slowly than shifts in the publishing process. New costs appropriate to online publications are sometimes allocated to pre-existing print line items. Sixth, electronic publishing has not yet reached a steady state. There is a great deal of development, some of which lowers costs and some of which increases them. These are some of the reasons why the costs of electronic publishing remain obscure, and also why a study of such costs would be both difficult to carry out and very important to attempt. WHAT WOULD A STUDY OF JOURNAL COSTS ACCOMPLISH? It is critical for the research community to have a common under- standing of the problem set. A high-quality study of costs and benefits of electronic journal publishing from the birth of the World Wide Web to the present could elevate the level of discourse among the stakeholders. Such a study could document, in a neutral way, the profound transformation of an important aspect of the national research effort. That there is likely to be as much change in the next 10 years as in the past decade does not obviate the need for the study. Furthermore, such a study may help to develop new strategies or evolve current ones for accommodating needs of scientists and scholars in reporting their research findings and for ensuring the long-term survival of the history of science, medicine, and technology. How experi-

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COSTS OF PUBLICATION 19 mental business models might provide competitive pressure on traditional business models and pricing is a topic for discussion and examination over time. If publishing costs are to be studied well, however, there must be an acknowledgment of the diversity of the publishing landscape. If only a few publishers participate, the selection bias could drive the study to the wrong answers. It also is necessary to consider which components need to be ana- lyzed. The questions to be asked must be properly framed and a reasonable control group selected. In short, a study of this nature could be valuable, but it needs to be well designed, rigorously conducted, and carefully interpreted.