My office is located at Broadway and 43rd Street in Manhattan. For my morning coffee, the Starbucks across Broadway offers 78 combinations of coffee, cow’s milk and sugar. A large cappuccino costs $4.45, which is the same price as the Starbucks on the corner where I live. Seven miles away, in Jackson Heights, Queens, the large cappuccino costs $4.25.
If I do not want to cross Broadway, which usually involves being accosted by six adults dressed as Elmo, I can cut across 43rd Street to a fancy sandwich shop, for (slightly) fewer combinations of coffee, cow’s milk and sugar, at slightly lower costs. Alternatively, if I don’t want to cross the street, I can choose among fewer options at still lower prices from a food cart on my corner, also known as “man in a can” coffee.
So what does my daily coffee run have to do with open access?
These robust price and product variations are typical of business to consumer (B2C) models. Prior to the ongoing revolution in scholarly publishing known as open access, business-to-business (B2B) was the predominant business paradigm. Publishers and societies sold print journal subscriptions – along with reprints and ad space – to corporations and academic libraries. There were of course situations where publishers interacted directly with consumers, such as with member subscriptions but, for the most part, revenues from institutional purchasers funded the publishing process.
With open access, authors now pay so-called Article Processing Charges (APCs). As a result, the publishers’ B2B paradigm morphs into one of B2C; the author’s role changes from being a supplier and user, as in the subscription model, to being the supplier, the user and, most critically, the buyer (or consumer). In other words, the author holds even more power than before and, most critically, holds the power of the purse.
As journal publishers develop business models for this increasingly B2C world, they can look not only at the actions of traditional competitors, but should also study consumer-oriented businesses like Starbucks, and even the man in the can. If they do, what might they learn?
There is no “one-and-only answer.”
In the debate over journals and open access, parties often take absolutist positions: “Open access is the inevitable end-point of all scholarly publishing,” “APCs of X dollars are too high and unsustainable,” “Y dollars is the correct price for all APCs,” and “unless a specific license is used, open access is not achieved.”
Within a few blocks of my office, I can buy a T-shirt for $5 or for $100. Does the $5 vendor believe that the $100 designer store is unsustainable or, for that matter, that the two are competing? I seriously doubt it. One is charging primarily for a brand, and the other is charging cost-plus. Neither questions coexistence. Consumers welcome the options. Likewise, in publishing, there seems to be plenty of room for cost-plus open access, premium open access, hybrid open access, license variation, and even publishing in subscription journals for authors not interested in open access.
Brands matter and they don’t matter.
If I choose to buy a Starbucks cappuccino for $4.45, I do so because of the Starbucks brand, which provides me with assurances of standardized taste and quality and of an arguably superior product—including frothy milk. If I buy a large regular coffee from the man in the can, I may have an expectation of taste and quality, but I am not paying — or willing to pay — a brand premium. Sometimes the brand reputation justifies the higher price and longer line at Starbucks, and sometimes I just want a quick caffeine hit. Understanding this, consumer-oriented companies often use brands to segment and dominate different markets. For example, Gap, Inc. owns, from low to high – in terms of quality and price – Old Navy, The Gap, and Banana Republic. Each has a brand expectation and price and, by owning all three, Gap Inc. can effectively segment the market for what is essentially the same type of goods – T-shirts, jeans and sweaters.
Everyone loves a (perceived) bargain.
All else being equal, would you rather pay $1.75 for a Starbucks cappuccino with a promotional coupon or $1.25 for a Man in a Can coffee at the normal price? What if the price is the same with the coupon? Some people use coupons and some pay retail; some buy generic while others prefer premium brands. Tailoring products to different segments is the best way to maximize revenues. Using promotions and coupons is a great way to learn about consumer behavior within each segment.
Customers require convenience.
Some consumers will pay a premium for convenience while others will simply make it a requirement of doing business. Regardless, as we have learned from innovations in one-click ordering and online payments, consumers prefer simplicity. When deciding between two otherwise equal online merchants, I will choose the one that makes the buying experience seamless. When choosing between two restaurants of equal quality, I will choose the one that will seat me when I want to be seated.
Customers have expectations of customer service, and premium prices require a premium experience.
We will tolerate brusque sales help at a warehouse discount clothing store, but we will not return if we are treated the same way at a designer shop. This concept need not be negative. Federal Express made a business out of selling a commodity, postal delivery, to customers who “absolutely, positively, needed to send something overnight,” for a 3000 percent markup. Some publishers already allow authors to pay more to speed publication post-acceptance, but is there a class of authors who would pay a premium to jump the queue on submission because an article needs to be published by a publisher-guaranteed date? Could concierge services be offered to authors who publish frequently in your journals? What about issuing rewards points for frequent authors?
Once a publisher accepts the B2C paradigm shift, it’s easy to look for new business ideas in other industries, around town, or even across the street. This is where open access is taking the scholarly publishing industry. Just think of all of the ways in which airlines segment us to increase revenues. We still do not know the open access equivalent of an airport lounge but some day we will.
This article originally appeared in the show daily of the London Book Fair and is published here with the permission of the author and Publishers Weekly.
Roy Kaufman is Managing Director of New Ventures at the Copyright Clearance Center, responsible for expanding service capabilities as CCC moves into new markets and services. Previously, Roy served as Legal Director at Wiley-Blackwell. He is a member of the Bar Association of the State of New York, the Copyright and Legal Affairs Committee of the International Association of Scientific Technical and Medical Publishers and the UK's Gold Open Access Infrastructure Program. He was the founding corporate Secretary of CrossRef, and formerly chaired its legal working group. He has lectured extensively on the subjects of copyright, licensing, open access text/data mining, new media, artists' rights and art law. Roy is Editor-in-Chief ofArt Law Handbook: From Antiquities to the Internet and author of two books on publishing contract law