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Roger Clarke's 'A Cost-Profile of Journal-Publishing'

A Cost-Profile of Journal-Publishing
Appendix 6: For-Profit Publisher, with Conventional, Subscription-Based Access

Version of 24 March 2006

This document is an Appendix to 'A Cost-Profile of Journal-Publishing'

© Xamax Consultancy Pty Ltd, 2005-06

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This document is at http://www.rogerclarke.com/EC/JP-CP-FPCS.html


Category Description

This Appendix presents an indicative cost-profile for a particular kind of journal-publisher.

The organisational category addressed here is an organisation that publishes multiple journals, for profit, applying conventional, subscription-based access. It may be a corporation, or a business unit of an Association which is obliged by the Association to generate a surplus. In a sample of 21 journals from 1999-2000, Willinsky (2003a) noted that 6 made a surplus; but he concluded that most subsidised journal publication from membership fees.

It is assumed to have many journals. It has substantial investment in brand-image, a strong competitive stance, aggressive protection of content, provides hard-copy issues to its subscribers, and makes soft-copies available on the Web to its subscribers, and to others on a per-article basis for a fee.

To enable the computation of per-article estimates that are reasonably comparable with those for other categories, each journal is assumed to comprise quarterly Issues, each with 7-8 articles, for a total of 30 articles p.a.


Costs

Establishment Costs

1

Conception and articulation of the journal's name, scope, philosophy and modus operandi

Undertaken by senior academics, but with greater involvement from senior executives, and an orientation more strongly towards saleability than service.

4 executive-weeks – $20,000

2Preliminary negotiations within the intellectual communityUndertaken by senior academics, but influenced by saleability as well as service
3Preliminary negotiations with potential providers of operational resourcesUndertaken by senior academics, but with a commitment to in-house performance or controlled outsourcing by the publisher
4Preliminary negotiations with potential providers of infrastructureUndertaken by senior academics, but with a commitment to in-house performance or controlled outsourcing by the publisher
5Acquisition of investment and working capitalUndertaken by either senior academics or senior executives, but with a commitment to in-house performance or controlled outsourcing by the publisher
6Appointment of Board, Editor and Editorial Committee(s)Undertaken by senior academics
7Accumulation of Referees ListUndertaken by senior academics
8Acquisition of infrastructure

Undertaken by senior executives, and with a commitment to the publisher's infrastructure, and with the Web-site run using sophisticated and expensive tools.

Allocated share of infrastructure worth millions – say $50,000

9Acquisition of operational resources

Undertaken by senior executives, and with a commitment to the publisher's infrastructure, and with the Web-site run using sophisticated and expensive tools.

1-2 staff weeks – say $5,000

10Acquisition of intellectual property (logos, trademarks, copyrights, licences)Undertaken by senior executives, with emphasis on branding and content-protection as well as service.

2-4 staff-weeks – say $10,000

11Preparation of formal components of the printed journal and web-siteUndertaken by senior executives and staff.

1-2 staff-weeks – say $5,000

12Preparation of web-siteSupervised by senior executives, and undertaken by staff, but with emphasis on branding and content-protection as well as service.

1-2 staff-weeks – say $5,000

13Announcement to the communityUndertaken by senior academics, and marketed by senior executives and staff.

1-2 staff-weeks – say $5,000

14Issue of initial calls for papersUndertaken by senior academics

Operations Costs

• Submission-Related

1

Receipt, acknowledgement and management Editor, Editorial Committee and Referees, supported by a paid assistant, and possibly also by junior academics or students.

$10,000 p.a., equivalent to $2,500 per Issue or $330 per article

2Conduct and management of the assessment process

Editor, Editorial Committee and Referees, generally gratis, but possibly with an honorarium for the Editor, and possibly allowances, free advertising or similar partial recompense.

$5,000 p.a., equivalent to $1,250 per Issue

• Article-Related

1

Production-editingBy the publisher's professional staff or contractors, requiring 0.1 EFT p.a.

$10,000 p.a., equivalent to $2,500 per Issue

2CataloguingBy the publisher's professional staff or contractors, but included in the time for Production-editing, immediately above

• Issue-Related

1

EditorialEffort by the Editor
2Production-editingBy the publisher's professional staff or contractors.

$1,000 per issue, equivalent to $4,000 p.a.

3Production

For hard-copy issues, by an outsourced service provider.

Assuming 1,000 copies per Issue and $5.00 per tome, then $20,000 p.a., equivalent to $5,000 per Issue

For the Web-site, by the publisher's professional staff or contractors

$5,000 p.a., equivalent to $1,250 per Issue

4ProtectionBy the publisher's professional staff or contractors.

$10,000 p.a.

5DistributionFor hard-copy issues, by an outsourced service provider

Assuming 1,000 copies per Issue, then $5,000 p.a., equivalent to $1,250 per Issue

• Generic

1

MarketingSubstantial, undertaken primarily by the publisher's staff.

$10,000 p.a., equivalent to $2,500 per Issue

2Customer relationship managementSubstantial, undertaken by the publisher's staff.

$10,000 p.a., equivalent to $2,500 per Issue

3Archive managementUndertaken by the publisher's staff.

$5,000 p.a., equivalent to $1,250 per Issue

4IndexingUndertaken by the publisher's staff.

$5,000 p.a., equivalent to $1,250 per Issue

5GovernanceUndertaken by the Editor and Editorial Committee, with some limited support from publisher executives and staff

Infrastructure-Maintenance Costs

1

Editor and Editorial Committee(s)Undertaken by senior academics
2A pool of refereesUndertaken by senior academics
3Communications channelsArranged by senior academics, supported by junior academics or students
4Norms for communications and formattingUndertaken by senior academics
5Production facilitiesUndertaken by the publisher's senior executives and staff. Covered by treating the amortised establishment costs as an ongoing annual figure
6Subscription-list facilitiesUndertaken by the publisher's senior executives and staff. Covered by treating the amortised establishment costs as an ongoing annual figure
7Distribution mechanismsUndertaken by the publisher's senior executives and staff. Covered by treating the amortised establishment costs as an ongoing annual figure

Financial Costs

1

Interest on investment capital

$100,000 Establishment Costs, at a rate of 5% basic plus a risk factor of 10%.

$15,000 p.a., equivalent to $3,750 per Issue

2Interest on working capital1/6th of annual turnover of $124,000, at a rate of 5% basic plus a risk factor of 10%.

$3,000 p.a., equivalent to $750 per Issue

TOTAL COSTS

Establishment$100,000, amortised over 5 years = $20,000 p.a., equivalent to $5,000 per Issue
Operations – Submission-Related$15,000 p.a., equivalent to $3,750 per Issue
Operations – Article-Related$10,000 p.a., equivalent to $2,500 per Issue
Operations – Issue-Related$44,000 p.a., equivalent to $11,000 per Issue
Operations – Generic$30,000 p.a., equivalent to $7,500 per Issue
Infrastructure MaintenanceCovered in the Establishment Cost calculation
Financial$18,000 p.a., equivalent to $4,500 per Issue
TOTAL

$137,000 p.a., $34,250 per Issue.

For an eJournal only:
$112,000 p.a., $28,000 per Issue


Business Model

With a subscription-based revenue model, the publisher is dependent upon attracting sufficient subscribers. In the case of a print-journal, an average subscription rate of $300 p.a. (e.g. one-third individuals @ $100 and two-thirds institutions @ $400), would require 460 subscribers to reach breakeven. An eJournal only, at the same subscription-rates, would need only 375 subscribers.

Some journals have, or develop, sufficient reputation that the publisher is able to exploit its monopoly position; but many journals do not. Other avenues through which for-profit publishers can enhance revenue include differential services for various market-segments, and non-availability of particular journals other than within bundles of multiple journals.



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