This report arose from the efforts of a team of OA experts, including Rob Johnson, Mattia Fosci, myself, Stephen Pinfield, and Michael Jubb. Together, we considered the economic factors contributing to the current state of the open-access publishing market, and evaluated the potential for European policymakers to enhance market competition and sustainability in parallel to increasing access.

In the context of this project, we also evaluated the impact of the OpenAIRE Post-Grant OA Pilot and our findings are available to download as an Annex at the above link. Please find the Executive Summary of the main report below.

Introduction

In May 2016 the European Council of Ministers set a goal of immediate open access (OA) to scientific publications as the default by 2020. There is widespread agreement that making scientific publications available free of charge to the reader can advance knowledge, enable innovation, and contribute to Europe’s growth and competitiveness.

Without intervention, immediate OA to just half of Europe’s scientific publications will not be achieved until 2025 or later. Readers in academia have greater access, to more content, than ever before. Despite this, the majority of publications arising from public investments in research remain inaccessible to the public, and the growth of OA appears to be slowing.

This study considers the economic factors contributing to the current state of the open access publishing market, and evaluates the potential for European policymakers to enhance market competition and sustainability in parallel to increasing access.

The state of the open access market

The scholarly publishing market is an ‘intermediated market’, with researchers acting as both producers and consumers of research, while the purchase of content is typically undertaken by academic libraries. The market for scholarly journals alone is worth some $10 billion per year, with scientific, technical and medicine (STM) publications accounting for the vast majority of this figure.

We identify four pathways to open access for scientific articles:

• Open access archiving (‘Green OA’) – the practice of archiving a version of an article for free public use in an institutional or subject repository.
• Gold-Hybrid – peer-reviewed articles within a subscription-based journal are made immediately open access, typically on payment of an article publication charge (or APC) to the publisher or through an offsetting agreement.
• Gold-APC – publication in journals that make all of their content OA via payment of an APC, and do not rely on subscriptions.
• Gold no-APC – publication in fully open-access journals which do not charge an APC.

The global open access market is approaching $500 million in size, but accounts for only 5% of the journals market. The proportion of immediate open access content is substantially higher, at almost 17% of global articles in 2014. The wide discrepancy between open access’s share of revenues and articles reflects both the use of non-market based mechanisms to deliver open access content, and the lower cost of open access publication.

Competition in the open access market

Competition in the scholarly publishing market depends on two primary variables: barriers to entry and market concentration. Barriers to market entry do not arise from financial or legislative constraints, but from cultural inertia. Top-tier academic journals are non-substitutable goods for both authors and readers, and operate as mini-monopolies within a discipline or field. Career incentive structures that reward publishing in established journals with a high ‘impact factor’ reinforce the dominant position of large publishers. A cultural bias against open access publications in certain disciplinary and national contexts stifles growth among smaller OA publishers. Competition is further hindered by excessive market concentration, and a lack of transparency due to widespread use of non-disclosure clauses. While scholarly publishing is a global market with over 5,000 journal publishers, five commercial publishers accounted for more than 50% of all articles published in 2013.
Open access has made progress where the academic community is receptive (e.g. physics) or where research funders have issued firm mandates in the public interest (e.g. life sciences and medicine). To date, these examples remain the exception rather than the rule, and have led to the emergence of two parallel markets, rather than transformation of the subscription market. Gold-APC journals operate in a small,  competitive and buyer-driven market, while the subscription market remains characterised by inelastic demand, and dominated by large commercial publishers. Cases of journals successfully transitioning, or ‘flipping’, from subscription to Gold-APC or Gold no-APC models remain few and far between.

Sustainability in the open access market

The failure to transition from subscriptions to open access reflects both anaemic demand for open access from the academic community, and publisher concerns that open access business models are unsustainable. Global article volumes are rising inexorably by 3-4% per annum, and most commercial and not-for-profit publishers (often owned by or affiliated to learned societies) remain financially wedded to the subscription model. This has served science and society effectively for centuries, but it has also resulted in a publishing industry with a significant legacy cost base, and profit margins of over 30% in some cases.

The commercial incentives for subscription publishers to move to APC-based open access remain weak. Mean APCs are approximately €1,500 (Gold-APC) and €2,500 (Gold-Hybrid), while average subscription revenues are double this, at €4-5,000 per article.  Open access would also jeopardise licensing revenues and corporate subscriptions, estimated at some 20% of STM publishers’ current income. Recent initiatives aimed at repurposing existing library subscription budgets for open access, such as the Open Access 2020 movement, assert that there is sufficient money in the system to make the transition. Publishers have also recognised the opportunity for OA to generate additional revenue streams. However, unless the gap between per article revenues under the OA and subscription models narrows significantly, or threats to the sustainability of the subscription model increase, progress towards a large-scale transition is likely to remain slow.

So-called born OA publishers offer a partial answer to these questions. Free from the need to sustain legacy cost bases and high margins, new market entrants have been able to develop viable business models at much lower price points. A number of publishers have now built successful business models based on APCs, but questions remain over whether this approach can be successfully replicated in niche disciplines, and for highly selective journals.

Competitive forces are weak in the subscription market, but open access risks replacing barriers to access with barriers to publication. Authors in Eastern and Southern Europe are at particular risk of exclusion, since they neither qualify for fee waivers nor have access to the funds necessary to pay APCs. Shifting publishing costs towards authors rather than readers is likely to increase expenditure for the most research-intensive institutions. Intervention by research funders and redistribution of financial flows within the system could help to alleviate these problems, but the practical implementation of these measures faces considerable challenges.

Open access as a public service

Market forces alone are not sufficient to deliver widespread access to scientific information. There are clear indications that the subscription market is not functioning effectively, due to non-substitutability, excessive concentration, lack of transparency and perverse incentives. The virtual elimination of technical barriers to dissemination of scientific knowledge has coincided with growing recognition of its status as a global public good. This characterisation is consistent with the European Council’s goals for open access in Europe, the use of APC price caps by some funders, and the existence of public-private partnerships delivering free or subsidised access in lower and middle-income countries. The dissemination of a public good represents a public service, albeit one which may be legitimately delivered by private actors.

A case could be made for direct regulation of the scholarly publishing market on public interest grounds. We do not advocate such an approach at this point. Scholarly publishing is a successful European export industry, operating in a global market. Attempts at direct regulation in such a market would meet fierce resistance from the industry, prove difficult to implement in practice and are unlikely to find support in other jurisdictions. The best pathway to change lies in strengthened incentives for open-access publication and archiving, redirection of financial flows in the system, and other measures which act on the market by influencing customer behaviour.

The open access policy environment

The European Council’s call for immediate open access as the default by 2020 represents a step change in the policy environment. EC policy on open access has evolved steadily in recent years, with an open access pilot under Framework Programme 7 (the EC’s Research & Innovation programme for the period 2007-2013), and the inclusion of open access as a general principle of the successor programme, Horizon 2020. In 2012, the EC recommended that member states define clear open access policies.

Despite these moves, our study finds that the open access policy environment remains highly variable across Europe. Southern European nations are notably more likely to favour OA archiving. Countries with a significant academic publishing industry are more likely to favour Gold OA. Case studies from four European countries (Hungary, Norway, Portugal and the United Kingdom) illustrate wide discrepancies in national policy environments, availability of funding, monitoring measures, support for different OA pathways, and author attitudes.

Further challenges stem from the global nature of scholarly publishing. The European bloc’s share of worldwide article output has fallen below 30% in recent years. The United States produces just under 20% of global articles, but continues to exert enormous influence on the marketplace. US legislators favour ‘public access’ mandates based on wider adoption of the OA archiving model. This approach is at odds with Europe’s stated preference for immediate open access and more liberal licensing arrangements. Chinese policy has also prioritised OA archiving to date. Chinese academic culture strongly favours high-profile subscription journals, and institutional open access policies and infrastructure continue to lag behind Europe and the US. The absence of a co-ordinated global commitment to reform of the subscription market is likely to limit the effectiveness of European efforts in this regard.

Charting a path towards a sustainable and competitive OA market

Our study has considered the rate of progress towards two goals:

1. increasing the proportion of research that is immediate OA
2. developing a competitive and sustainable OA market.

These must be recognised as distinct objectives, which are not necessarily synergistic. A rapid increase in immediate OA may be achieved at the expense of reduced competition, while attempting to tackle the underlying cultural barriers to an effective market may limit access in the short-term.

Current policy interventions in Europe are not sufficient either to deliver the goal of immediate open access by 2020, or to significantly improve market competitiveness. Recent evidence indicates that growth in the open access market has slowed to 10-15% per annum, but a growth rate of 25% every year since 2014 would be needed for the majority of content to be immediate OA by 2020. As things stand, authors lack real incentives to switch to open access publications, and there is no commercial imperative for publishers to ‘flip’ subscription journals to an open access business model.

The roadblocks to achieving widespread open access and a competitive and sustainable market can thus be summarised as follows:

1. Weak author incentives
2. Disparate national and disciplinary contexts
3. No clear route to transition for subscription publishers
4. Lack of competition in the market
5. Suboptimal infrastructure
6. Inadequate monitoring and reporting

As part of our work we considered the findings of 20 previous studies on the transition to OA. This identified a number of favoured policy interventions which can address the identified barriers:

• Offsetting of subscriptions and open access expenditure
• Strengthening consortia and pursuing collective action
• Promotion of changes in author behaviour and incentives
• Development of repository infrastructure
• Support for Gold no-APC platforms
• Improving transparency of publication costs
• Developing mechanisms to monitor OA content

Each of the four pathways to open access (OA archiving, Gold-Hybrid, Gold-APC and Gold no-APC) also finds support, but no single  measure is supported by a clear majority of stakeholders.

Suggestions for a roadmap to open access

There is a strong case for intervention by policy makers to promote OA, and to address current market failures. However, there is little consensus on the most appropriate pathway to immediate open access. Varying disciplinary and national contexts mean that a balanced programme of support is needed, recognising the distinct strengths and weaknesses of each pathway. Efforts to deliver short-term increases in access must be complemented by measures which can lead to a more competitive and sustainable market.

This report forms the starting point for a roadmap to a competitive and sustainable open access market in Europe. We consider that the overall aim of this roadmap should be to address the six roadblocks we have identified to a competitive and sustainable open access market, as follows:

1. Author incentives – Create incentives and remove disincentives for authors to adopt OA publishing and archiving.
2. Publisher incentives – Provide subscription publishers with a viable route to flip their business models to open access.
3. Competition – Improve transparency in the market, with the goal of making the costs of publishing and accessing scientific research as open as the research itself.
4. Pluralism – Support diversity of approach, reflecting the varying disciplinary and national contexts across Europe.
5. Infrastructure – Develop robust infrastructure, built on common, open standards, to allow open access to scale rapidly and efficiently.
6. Monitoring – Implement effective mechanisms to monitor policy compliance, the proportion of open access content, and the sustainability of different stakeholders in the scholarly communications process.

Concrete actions which can be taken to deliver these goals, and their implications for the different pathways to open access, are outlined in the roadmap accompanying the final version of this report.