Interview with Joseph Esposito
For podcast release Wednesday, December 17, 2014
KENNEALLY: According to a recent industry report from Simba Information, article processing charges – so-called APCs – the fees that publishers collect from authors for making their work available under open access rules are expected to grow 80% by 2017. Indeed, the report projects OA publishing revenues will rise at a pace far faster than traditional publishing.
Clearly, open access is here to stay. And the disruption that OA has generated has publishers rethinking business models and turning to technology for a solution. Our experts today will share insights on open access as a business and what that means for scholarly publishers. You’ll also hear how technology solutions are emerging to meet the open access challenge.
And joining me now is Joe Esposito. Joe is president of Processed Media. And Joe, welcome to our program.
ESPOSITO: Very nice to be here. Thank you very much.
KENNEALLY: Well, we’re happy to welcome you here. Joe Esposito is a management consultant working primarily in the world of digital media software and publishing. He has particularly focused on research publishing, especially with the migration to digital services from a print background.
Prior to setting up his consulting business, Joe served as CEO of three companies, Encyclopedia Britannica, Tribal Voice, and SRI Consulting. And he has received grants from the Mellon, MacArthur and Hewlett foundations, all concerning research into new aspects of publishing.
Of special interest to many of us today is the fact that Joe is the author of more than 200 posts to the Scholarly Kitchen blog. And Scholarly Kitchen blog, you should be following it, if you’re not already, covers what’s hot and what’s cooking in scholarly publishing. It’s presented by the Society for Scholarly Publishing, SSP, as part of its mission to advance scholarly publishing and communication. The Scholarly Kitchen blog was established in February, 2008 to keep members and others aware of new developments in publishing.
And Joe, you are a frequent contributor, contributing today not on the topic of open access but on libraries. And we follow what you write very closely. And so one of your more recent posts – pair of posts, actually, looked at open access and kind of keyed in on that report that I briefly mentioned from Simba. And you talked about the size of the open access market in scholarly publishing and what its growth over the last 10 years or so and its maturation really means for today and for the future.
So I wonder if you could recap some of the major points you made there. And our headline for this notion is From Woodstock to Wall Street. And by that, I guess, what we mean is that open access, more than 10 years ago, really began as a revolutionary movement. But we’re seeing today is something quite different.
ESPOSITO: Well, that’s certainly the case. Indeed, when you listen to some of the rhetoric surrounding open access, it almost sounds like the anti-Vietnam War protests from the 1960s. It’s really kind of wild and over the top. And you then look at what we’re really talking about, which is simply trying to provide access to some people who don’t have library subscriptions for research material.
What was interesting to me about the Simba report is that it took a very sober glance at the marketplace for open access material and began to summarize just how large that market is. In other words, open access now is being looked at with a cold, rational eye instead of the eye of the wild enthusiast or the advocate. It’s a very, very big change in the tone of what is going on today.
KENNEALLY: Well, indeed. And we will talk about some of the particulars of that Simba report. And in your blog post, you mentioned that one of the things that’s such a challenge when talking about the size of open access relative to the rest of scholarly publishing is just part of it is hidden from view, and that makes looking at the economic impact and the economic models, the business models, that much more challenging.
ESPOSITO: Yeah. That’s absolutely the case. It’s one thing to be able to trace the APCs, the author publishing charges that are going for gold open access. But how do you do a quantification, if any quantification is possible, for multiple copies of an article that might appear in institutional repositories, some of which may be authorized, some of which are not. So there’s no real way of adding that up.
For people who are in the business of publishing, of course the market of open access is what’s the key thing, not the many copies of open access articles that are out there. Most people in the business of publishing are concerned about those extra copies of open access articles largely from the point of view that they may be cannibalizing subscription sales. But in fact, in terms of people coming up with competing businesses, it’s really the gold open access publishers that are taking the lead here.
And I’d like to point out that it’s no longer the wild eyed activists. Virtually every large journals publisher today has an open access program. And the phrase I use for that is that open access is now being domesticated by established publishers. It’s no longer an activists’ game.
KENNEALLY: Well, indeed, and the very largest of the OA publishers, of course, is Springer, which is the owner of BioMed Central.
ESPOSITO: Yeah. In that Simba report, there’s a very interesting chart. It lists the top 10 open access publishers by revenue. And I didn’t check all of them out, but I believe that seven or eight of them are commercial publishers and two are not-for-profits.
So what we really have here is a situation where open access has gone from being, you know, as we say in the slide here, it’s gone from being Woodstock, it’s gone from being peace, love and happiness, into a business, as you would expect it would. And by making it into a business, it now has some guarantee of sustainability, because businesspeople look at things and try to find where the demand is going to be and follow that demand.
So I think that the irony here is that, even as the passion has diminished and has been transmuted into a sober, rational economic perspective, even as that has happened, it also, at the same time, and paradoxically, is guaranteeing the future success of open access because people are seeing it as something that can generate profits.
KENNEALLY: Well, indeed, and we have seen ourselves, at Copyright Clearance Center, just what you’re talking about. At the Frankfurt Book Fair, we organized a town meeting and had on the stage with us representatives of the Nature Publishing Group, of Wiley and other publishers. And as you pointed out, they have reorganized themselves around open access to first of all, to publish open access journals, but to deliver services and to do some new and innovative things that really grow out of this open access evolution.
And I think, finally, before we get into some of the numbers, a point that you may want to just emphasize for the audience here is that, as this market matures, really what we’re seeing is the business, as you say, this move from Woodstock to Wall Street, kind of coming to the fore. And so open access is going to be subject to many of the same economic principles as any business.
ESPOSITO: Yeah, exactly right. When the various funding agencies began to say that they would pay for gold open access, you would have to be pretty slow not to pick up on the fact that this represents an entirely new market for publishing. It used to be that most of the revenues came downstream. Most of the revenues came from libraries. There were revenues outside of the libraries, of course, such as hospitals, some individual subscribers and so on.
But what has happened now is you have a new customer, and the customer is now the author. And the author is having those bills paid by the sponsoring agency for his or her research. That’s a new market. And this is really going to be an additive market for publishing in the future. It’s really quite astonishing how quickly this has come about and how quickly this has been established as a bona fide business.
KENNEALLY: Right. Well, let’s look at some numbers. And we are speaking right now with Joe Esposito of Processed Media and a regular and much admired contributor to the Scholarly Kitchen blog from SSP. If you are online with us right now and tweeting the program, our Twitter hashtag is cccopenaccess. You can follow Copyright Clearance Center at copyrightclear. If you have a question for Joe, use the chat box in the lower right-hand corner of the screen and let us know what’s on your mind.
So we do have some numbers, which are quoted here from that Simba report looking at open access journal publishing over the next three years. And some of the points that we’ve already started to speak to, which is really coming up with a number for open access within the FTM journals marketplace is a challenge itself. But what is the number, and what does it mean that it’s 2.3%, Joe?
ESPOSITO: Well, first, you have to think about what’s the 100%? And the figure you typically hear is a figure in the range of $10 billion to $10.5 billion for total revenues for journal sales. So what we saw from that Simba report is they went out and they did an assessment of everybody who was, in fact, making money with open access. And they discovered that the total figure came to 2.3% of that total.
Now, what I guess I would say to you is that 2.3% is, on one hand, it’s a small number. And if you’re looking at the slide right now, you see that tiny orange slice, which is the open access portion of this much bigger pie. On the other hand, who wants to walk away from 2.3% of the revenue? And furthermore, it’s the section of the marketplace that’s growing most rapidly. It is important –
ESPOSITO: Go ahead.
KENNEALLY: I’m sorry, Joe, but just because you are somebody who really does look at the impact of the digital transition in publishing and, as you point out, it’s not just 2.3% and so therefore not important, but what is important is just how quickly this has grown. We’re looking at a startup business that didn’t exist only a few years ago.
ESPOSITO: Yeah. And that’s it exactly. It’s growing very, very rapidly from a very small base. And I would say, and not everybody would agree with me, I would say that 2.3% is pretty significant. You talk to any publisher and say we’re going to cut your sales by 2.3%, and you’re going to hear howls. 2.3% is very attractive, and that figure is going to grow beyond 4% in a very short period of time. That all again is in that report we’ve been citing.
It is important to note that these figures are exclusively for gold open access, the so-called author pays model, because there is, as far as we can determine, no revenue attached to green open access. But I see this as a very, very significant thing that we have this beachhead of open access revenue in the overall publishing market.
KENNEALLY: The other thing that has been measured by Simba, on our next slide, is a look at the volume of open access articles relative to the total number published in a single year, which they peg at two million. What’s the relevance of this figure here?
ESPOSITO: Well, first, we should note that this figure has been corroborated by a librarian named Walt Crawford as well, and he independently came up with the same figures. The assumption right now is there are about two million peer reviewed research articles published every year, a figure that seems to be growing by a rate of between 3% and 4% a year. Right now about 20% of those articles are being published in open access format, which gives us 20%, or 400,000 articles. That’s a very, very big number. So on one hand, we’ve got 2.3% of revenue being open access, but we have 20% of the articles being open access.
KENNEALLY: Well, indeed. And we were speaking about the leading open access publishers. You mentioned that Springer is number one. I believe Simba placed the Public Library of Science – PLOS as it’s known – at number two. And what’s interesting here, again it’s the story of the startup, the success of the startup here, is that PLOS really has altered this marketplace by its own existence. It really changed what we think about a journal.
ESPOSITO: PLOS is a revolutionary organization, and their leading service, which is PLOS ONE, is really the product out there that is transforming the way people are thinking about open access and how it can work as a business. What PLOS ONE has done is really – first of all, it has made open access profitable. But it’s also introduced a number of things, a whole new notion of what peer review should be, for example. And PLOS ONE is being copied by one publisher after another. So it truly is a seminal organization in the publishing space.
KENNEALLY: Right. And there are some more numbers to look at here. We are speaking, as I mentioned, with Joe Esposito, taking a kind of a really sharp eye at a report from the Simba Information Group looking at the open access market. And so Joe, you alluded to this before, there’s a question what this all will mean in the future, when we’ve got these numbers of 2.3% of a total market in dollars and 20% when measured in articles. And the question that you raised in a follow-up post to the original post for Scholarly Kitchen was to ask the question, was this going to be additive, substitutive or subtractive? And you’ve got a prediction. But tell us what those other terms mean, additive and substitutive as well as subtractive.
ESPOSITO: Well, if we have a 10.5 journals business out there and we say that open access is going to be additive, what that means is that the market is going to be bigger than $10.5 billion, whatever that number happens to be.
If we say it’s subtractive, what we’re saying is what many open access advocates are saying. And that is that open access is going to essentially be a substitute for toll access publications, so then that $10.5 number would start to come down.
And if we say it’s simply substitutive, that is to say open access is going to have the same kind of revenues attached to it as toll access publications do, then we continue to have a $10.5 billion market that’s growing in the low single digits every year.
But that’s the point of those terms. I think that, if you are the head of a publishing organization, what you’re most likely to be contemplating is the big gap between the 2.3% of revenue earned by open access publications and the 20% of volume. Now, that’s a big gap. It’s almost a 10 times gap.
And you’d have to begin asking yourself, are these figures going to converge? Will, at some point, the pricing and the market share as measured in the number of articles become much more closely aligned, and what will that mean then for my organization in the future?
KENNEALLY: Well, your own prediction is actually not new to anyone who follows you, because you said much the same about 10 years ago. You really believe that it’s going to be additive, and it really is growing out of this notion of OA as a business in scholarly publishing. And you use an analogy that we’ll all be familiar with right now because, as we watch the price of a gallon of gas, or a liter, I suppose, outside the U.S., fall rather significantly, the point about the oil market is it’s not what’s in the ground but how good people are at getting it out. And that really has an impact on price. So it’s the creativity of people in scholarly publishing that is going to lead us to an additive marketplace is your view.
ESPOSITO: Yes. And what people always lose sight of is they think that the product you’re selling is the article. They think the product you’re selling is the book. They think that the product you’re selling is a barrel of oil. The product you’re selling is the human imagination.
Now, I don’t mean to sound highfalutin about this, but it’s a question of who figures out where market is going to be, how you can find demand for products and services and how to deliver things these efficiently. I’m sure that nobody really anticipated 50 years ago that the scholarly publishing market is going to look the way it does today. And the reason it looks the way it does today is because a lot of people put their creative minds together collectively and started to invent an industry. So I think this is the part that’s always lost in the discussion, which is that people are not passive. They’re creative. Some people are more creative than others, certainly. But without question, the value that’s being created in publishing is something that is a function of the kinds of thinking that people bring to publishing.
And I guess I just have to say I’m an optimist. I think that this is a growth business if you have the right creative people taking the lead.
KENNEALLY: Right. And of course the thing that we’re talking about being creative around is the use of technology. Technology made open access possible in the first place, and it seems a reasonable prediction that technology is going to be the important factor in growing this market in the future.
ESPOSITO: I would say it’s the creative interaction of technology with content, that people are going to find new ways of teasing out value. Nobody knew what Mendeley could mean until Mendeley existed. It takes Mendeley to make us understand the implications of file sharing and community-based communications in the world of scholarly communications. It sometimes takes the entrepreneur to make us see that, yes, it’s technology, but it’s the human creativity applied to that technology and intersecting with content that makes the difference. Again, this sounds a little bit abstract. But when you actually look at all the new services we have today and say, well, where were these 10 years ago, it’s just astonishing how many new things there are.
KENNEALLY: Well, indeed it is. And we will watch you and your post in the Scholarly Kitchen blog, Joe, to learn more about it in the coming weeks and months. Joe Esposito of Processed Media, thanks so much for joining us.