He'd be overwhelmed today.

Photographer: Bachrach/Getty Images

Academic Publishing Is All About Status

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
Read More.
a | A

As a young professor at the Massachusetts Institute of Technology in the 1940s and 1950s, Paul Samuelson made a habit of visiting the offices of the Quarterly Journal of Economics, then based at MIT, to look through the other economics journals that arrived in the mail. “I’d read every journal, every article,” he told me a decade ago.

Nowadays, no economist would do this. For one thing, there are too many economics journals for any one person to read. For another, cutting-edge research now invariably makes its way onto the Internet long before showing up in a journal. 

“In the old days, journals were viewed as a means of disseminating ideas,” Pinelopi Goldberg, an economics professor at Yale and editor in chief of the American Economic Review, said this week in San Francisco. “I think that doesn’t apply any longer.”

So what are academic journals for? Goldberg, speaking during a panel discussion about the peer-review process at the big annual gathering of academic economists, offered this answer: “The most important function that journals have these days is the certification of quality.”

This is interesting. Back in November, I wrote a column about the seeming unsustainability of the business of academic journal publishing. I was very much under the influence of Peter Suber’s charming book “Open Access,” which argues that since academic authors (1) want their work to reach an audience and (2) aren’t paid for it by the journals anyway, of course they’ll eventually embrace open-access publishing and make their research free to all. This in turn led me to wonder whether the big for-profit academic publishers, RELX (formerly Reed Elsevier), foremost among them, could sustain their impressive profit margins.

As I learned soon after that column was published, people have been wondering this for decades. There’s even a legendary (within academic publishing) Forbes article from 1995 about Reed Elsevier, with opening lines disconcertingly similar to the ones in my column and the headline, “The Internet’s First Victim?”

The Web has claimed many publishing victims since then. RELX has clearly not been one of them. The Forbes article estimated that in 1994 Reed Elsevier’s academic publishing division earned $225 million in operating income on $600 million in revenue; in 2014 that was $684 million on $2 billion (2015 earnings will be reported next month).

If academic publishing were all about dissemination of information, this resilience would be really hard to explain. Yes, in some fields journals are still the only way to get access to research, or articles become freely available only well after they’ve been published in journals. But in economics almost every paper of significance is now available in some form free on the Internet before it is published in a journal. Yet economics journals that keep their articles behind paywalls and charge hundreds or thousands of dollars a year for library subscriptions continue to thrive.

This is apparently because the journal editors and referees are still needed to certify the quality of research, certification that informs hiring and tenure decisions and provides information on the relative quality of university academic departments. Also, scholars who want to cite others’ work in their own academic papers need access to the published versions to make sure they get the wording and the page numbers right.

This could conceivably all be done by open-access journals, which generally charge authors to publish articles that are then made available free to anyone with an Internet connection. But the open-access business model makes it harder to be selective: the fewer articles you select, the less money you bring in. So the most prestigious journals in most fields remain the ones that follow the traditional model of making subscribers -- mostly university libraries -- pay the bills.

These journals are getting more and more selective as time goes by. According to Glenn Ellison of MIT, who also took part in the peer-review discussion, the average acceptance rate at the top general-interest economics journals has declined from 18 percent in 1980 to about 6 percent now.

This trend will be familiar to anyone who has looked at admission rates to top universities. Despite ever-rising tuition costs and the growth of much-cheaper online alternatives, the highest-status universities keep getting more selective. The best way to understand this, I think, is to see both academic journals and top universities less as purveyors of information or knowledge than as dispensers of status. Information may want to be free, but status will always be scarce.

In economics, most of the journals at the very top of the status list, such as the American Economic Review and Journal of Political Economy, are published by non-profit associations and university presses that aren’t all that aggressive on pricing. A personal electronic subscription to the AER is free with a membership to the American Economic Association, which costs at most (it’s a sliding scale based on income) $40, while an institutional electronic subscription costs $760. But the rest of the top 50 is heavy on journals owned by for-profit publishers, RELX in particular. Its top-ranked economics journal, the Journal of Financial Economics, costs $145 a year for an individual, $4,274.40 for an institution.

RELX and the other big for-profit publishers sell these subscriptions to university libraries in bundles that combine many titles and can cost huge sums of money. Journal subscriptions accounted for 69 percent of academic library spending on information resources in 2012, according to the National Center for Education Statistics, up from 51 percent in 1994.

Librarians and other university administrators grumble about forking over all this cash for access to research that in many cases the universities themselves financed, and potential disrupters keep appearing in this age of cord-cutting and digital unbundling. (Green Mountain College communications professor Jason Schmitt describes some of the forces at work in a recent piece on Medium.) Also, the refereeing process that journals rely on to ensure quality is under pressure. The AER’s Goldberg said that senior faculty are doing less and less refereeing, leaving the work to junior faculty at top journals and graduate students elsewhere. It still feels like the current arrangement can’t hold up forever.

Forever is an awfully long time, though. In 2011, Sanford Bernstein analyst Claudio Aspesi downgraded RELX to underperform (aka “sell”) because of concerns that library budget crunches and the rise of open access would threaten its profit margins. Three years later the share price had roughly doubled, and Aspesi threw in the towel, concluding that open access wasn’t as big a threat to the journal business as he had thought. Since then (Sept. 24, 2014), RELX stock is up another 19 percent in British pounds (7 percent in U.S. dollars). Maybe academic publishers will be the Internet's last victim.

  1. The official name is the Allied Social Science Associations annual convention and the biggest of the associations is the American Economic Association. But this particular panel was organized by the American Finance Association.

  2. Forbes: “It’s hard to imagine a sweeter business than publishing academic journals. The editorial content is distributed free of charge by scholars …” Me: “Publishers of academic journals have a great thing going. They generally don't pay for the articles they publish …”

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor responsible for this story:
James Greiff at jgreiff@bloomberg.net