Academic Publishing Meets Open Access

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.”
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If you want to read an article from the Journal of Financial Economics, and you don't have a subscription or access to a library that does, publisher Elsevier will charge you $39.95. For one article!

Don't despair, though. You can also just go to the Social Science Research Network, where drafts -- in some cases final drafts -- of every single article in the current issue of the JFE (and probably every single article from the last 20 years of JFE, although I didn't have time to check that) are available for free download.

This situation, which has persisted for decades now, is what I would call interesting. It's about to get even more interesting, as Elsevier announced this morning that it is buying SSRN and combining it with the research-collaboration platform Mendeley, which it acquired in 2013.

The news was greeted on Twitter with much gnashing of teeth. "Terrible news that Elsevier -- who profit from limiting access to research -- have acquired open access archive SSRN," groaned University of Michigan economist (and former Bloomberg View contributor) Justin Wolfers. "Well, working with the enemy of open access erases the trust/goodwill SSRN built over the years," concluded Carleton University international relations scholar Stephen Saideman. "Takedown notices and vanishing working papers to follow I presume," Barnard College economist Rajiv Sethi predicted. One of the more positive reactions came from University of Toronto economist Matt Mitchell: "This is either Elsevier getting better or SSRN getting much, much worse."

Michael Jensen, the Harvard Business School emeritus professor who co-founded not only SSRN but the Journal of Financial Economics, offered these words of assurance this morning:

We realize that this change may create some concerns about the intentions of a legacy publisher acquiring an open-access working paper repository. I shared this concern. But after much discussion about this matter and others in determining if Mendeley and Elsevier would be a good home for SSRN, I am convinced that they would be good stewards of our mission. And our copyright policies are not in conflict -- our policy has always been to host only papers that do not infringe on copyrights. I expect we will have some conflicts as we align our interests, but I believe those will be surmountable.

Elsevier -- a division of the Anglo-Dutch company RELX Group, formerly known as Reed Elsevier -- is the world's biggest publisher of academic journals. It's also seriously profitable. For 2015 RELX reported earning 760 million British pounds ($1.2 billion) in operating profit on 2.1 billion pounds ($3.2 billion) in revenue from its scientific, technical & medical sector (aka Elsevier). That 36 percent margin appears to have been earned for the most part by selling university libraries subscriptions to journals that report the findings of research funded by universities, governments and foundations. The university-professor authors, editors and referees of the journals, meanwhile, usually receive no monetary compensation for their work.

That's not all there is to it -- the Scholarly Kitchen blog has an occasionally updated post by publishing consultant Kent Anderson that's currently titled "96 Things Publishers Do" (it started as 60), which makes clear that Elsevier and rivals such as Springer and Wiley-Blackwell provide services of real value. Still, the academic publishers do have a remarkable business model -- charging universities for access to the research that universities produce. And since the rise of the Internet made it easy to envision (and create) alternative distribution mechanisms for research, professors have been condemning this business model as a betrayal of academic principles and outside observers (myself included) have been pronouncing it doomed.

The most famous such pronouncement was a December 1995 Forbes article that wondered if Elsevier would be "The Internet's first victim?" It definitely wasn't:

Still, Elsevier's revenue and operating profit trajectories do appear to have flattened a bit in the last few years. The publishers' world is changing as universities and other funders of research demand that it be made freely available and researchers in many fields become accustomed to sharing their work-in-progress online. So Elsevier is adapting. It has already become one of the biggest publishers of open-access journals, which generally pay the bills by charging authors for submitting articles. And as the Scholarly Kitchen's Roger G. Schonfeld reported in a post today on the SSRN deal:

Elsevier has been pursuing a strategy of reducing the share of its revenues coming from content and increasing the share coming from analytics and other services.

In fact, Elsevier parent RELX now calls itself a "provider of information and analytics." That certainly sounds more forward-looking than "publisher." Whether it's anywhere near as profitable is something we'll have to wait and see. But SSRN at least provides a clue as to how one can make money in academic publishing without charging either the authors or the users of the research. It did so by adopting a "freemium" Internet business model a decade before the likes of LinkedIn and Dropbox did.

As journalist David Warsh described it in 2003, SSRN got its start in 1992 as an online discussion list for finance professors organized by Wayne Marr (then of Clemson) and John Trimble (then of Washington State). Marr asked Jensen, one of the most prominent figures in the field, to lend his name to the effort.

A discussion list? Sure, said Jensen, before leaving on a month-long business trip. By the time he returned, the business had changed. Now Marr wanted to distribute abstracts of completed but not-yet-published new work in finance. And so the Financial Economics Network was born.

There were the usual difficulties. Trimble wanted to charge large sums for the service; Marr left eventually to pursue other interests (a similar network devoted to Biblical studies). “I ended up holding the bag for this thing that I never really started, but now I felt responsible for,” says Jensen. “I don’t like to give up on things. I like them to succeed.”

In an interview with me in 2004, Jensen said there was also some interest early on from venture capitalists. 

We said no. Some partners were angry. I said we wouldn’t know how to spend it. If we’d taken it, it would be gone.

Instead, Jensen and several other professors bootstrapped the operation -- hiring Jensen's former tax accountant, Gregg Gordon, as chief executive officer -- and eventually figured out ways to pay the bills. Subscribers to SSRN emails that alert them to new research in a specific field are usually charged for the privilege, while organizations such as law schools and central banks that distribute working papers through SSRN are charged for that. I talked to Jensen, Gordon and Elsevier spokesman Tom Reller on Monday and they said the plan was to continue with that approach while layering on (and, I presume, charging for) data-analytic capabilities of a sophistication that SSRN hasn't been able to afford up to now.

It could also be, as critics of the deal intimated on Twitter today, that Elsevier will instead end up strangling SSRN to protect its subscription-based business model. But it's hard to see that working over the long run. A few professors could just start another SSRN -- and probably for less money than it took the first time around.  In fact, economists already have one: volunteer-run RePEc -- for Research Papers in Economics -- which has been around since 1997 and put out a statement today that it “cannot be bought.” 

(Updates with statement from Research Papers in Economics in last paragraph.)
  1. Individual subscriptions are a mere $134 a year; institutional subscriptions cost a whopping $3,909, although they're usually sold to university libraries bundled together with lots of other Elsevier journals.

  2. It's not online, but a 1998 Forbes follow-up is.

  3. The annual subscription fees range from $95 for financial economics research alerts to no charge for anthropology and archeology.

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

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Justin Fox at

To contact the editor responsible for this story:
Susan Warren at