# Accessibility, sustainability, excellence: how to expand access to research publications/Annex E: Analysis of the Possible Financial Impact of Shifts to Open Access Publishing in the UK

​ Annex E
TRANSITION TO THE OPEN ROAD GOLD SCENARIO MODELLING UPDATE
Prepared by:
Cambridge Economic Policy Associates Ltd.
​ INTRODUCTION
Research Information Network (RIN) has commissioned CEPA to provide analysis of the costs to the UK of transitioning to a situation where there is a greater proportion of author-side payments or “Gold Open Access”. This analysis is a follow-up to previous work by RIN, CEPA and Mark Ware (i.e. the Heading for the Open Road report, hereafter referred to as ‘OR Report’).
In response to similar work which has been undertaken by other stakeholders, this note carries out additional sensitivity analysis on the Gold Scenario in the OR Report.
There are two key conceptual differences between the results in this note and those in the OR Report:
Notwithstanding these changes, all of the caveats relating to the Gold Scenario modelling set out in the OR Report apply here. (For example, the breakeven points relate to ‘average’ institutions; and the analysis of costs assumes that publishers reduce subscription prices in proportion to the increase in Gold OA articles).
The sensitivities covered in this note are:
| Sensitivity 1 | Sensitivity 2 | Sensitivity 3 | Sensitivity 4 |
| The level of article processing charge (APC) | The level of Gold uptake in the UK and globally | The level of Gold uptake in rest of world versus UK | The % of corresponding authors from the UK |
ASSUMPTIONS
Assumptions that we have used to define the Gold OA Scenario in this note, which differ from those in the OR Report, include:
    a) Number of articles produced. As requested by RIN, we have updated the model inputs to reflect two estimates, from a recent BIS commissioned report, for article production:
   * The UK produced 123,594 articles in 2010.
   * The world produced 1,935,954 articles in 2010.
    These figures are roughly 20% higher than those previously assumed in the OR Report 2010 baseline (98,280 for UK and 1,576,218 for the world).
    b) Library costs. In the OR Report we used top-down estimates of total library costs to calculate the per article library costs which were used in the model. In light of the assumed increase in articles produced (see (a) above) and the desire to keep total library costs consistent with the OR Report, we made the per article library costs have been reduced in order to leave total library costs unchanged.
    c) Subscription costs from 'other' organisations. The model splits costs between academic institutions (RLUK, HEC, etc.) and other organisations (government and independent/corporate libraries). In the OR Report we assumed that these 'other' libraries had access to a specific number of articles/journals. Having increased the number of articles produced in the 2010 baseline, we adjusted the model to ensure that the number of subscriptions for ‘other’ organisations remained constant (i.e. didn't increase).
Given these changes to the modelling assumptions (and the conceptual differences referred to above), the estimates in this note differ from those presented in the OR Report. The 2010 estimates against which the sensitivities are compared are shown in Table 0.1 below.
Table 0.1: UK 2010 publishing and distribution funding
| | Cost Category | 2010 |
| Academic Institutions | Author-side payments | 11.1 |
| Academic Institutions | Subscriptions | 112.0 |
| Academic Institutions | Access Provision | 52.1 |
| Academic Institutions | Transition costs | n/a |
| Academic Institutions | Total | 175.2 |
| Others | Author-side payments | 2.8 |
| Others | Subscriptions and other revenues[1] | 67.5 |
| Others | Access Provision | 51.4 |
| Others | Transition costs | n/a |
| Others | Total | 121.7 |
| Annual Total | Annual Total | 296.6 |
For ease of reference, Table 0.2 provides details of the key assumptions in the OR Report cost modelling that relate to the Gold Scenario. The same assumptions are used in the Gold Scenario modelled for the purpose of this note.
Table 0.2: Key cost-related assumptions that affect the Gold Scenario
| Input | Discipline (location) | 2015 Baseline | Gold Scenario |
| Article allocation — Share of articles published via APCs | S/T/S (UK and Global) | 5.4% | 15% |
| Article allocation — Share of articles published via APCs | M (UK and Global) | 12.8% | 40% |
| Article allocation — Share of articles published via APCs | A/H (UK and Global) | 1% | 5% |
RESULTS - SENSITIVITIES
For our sensitivity analysis, our starting point is the updated Gold Scenario (hereafter referred to as the ‘Central Case’). As stated in Section 1, we run sensitivities based on:
The Central Case that we have used in the report is one in which the APC is set a level at which there is a zero impact on academic institutions (on average).
​ Table 0.3 below provides an explanation of each of the cost categories shown in our results. These categories are consistent with the OR report.
​ Table 0.3: Explanation of Cost Categories
| Cost Category | Description |
| Total average annual net cash costs | Costs that will occur both now (as of 2015) and in perpetuity. These include: Transition Costs. The additional ongoing cash costs incurred under the transition to the Gold Scenario, which are split between academic institutions and other organisations. This includes the costs of advocacy, marketing, communications and information provision regarding Gold open access at each institution. Steady state costs. Ongoing cash costs of the scholarly communication system, which are split between academic institutions and other organisations. Costs include: Publication & Distribution costs. Peer review management and editing of articles received, composition of approved articles into journals, marketing, and transportation of journals to libraries and other buyers. Access provision costs. Activities carried out mainly by libraries to make journals accessible to end users: Procurement, receiving and indexing, archiving, management and administration, IT systems, and library storage. |
| 20-year NPV Costs and Savings | This calculation takes the future stream of net costs over a 20 year period (starting in 2015), and determines the net present value of those future costs/savings by discounting their value at 3.5% per year. |
Some additional notes to consider in relation to the cost categories:
* Costs are split between academic institutions (e.g. RLUK, etc.) and other organisations (government, corporate and independent libraries).
* NPV stands for 'Net Present Value'.
* Figures exclude 'transaction costs' ('one-off' costs of moving to the Gold Scenario as they are not ongoing).
* Figures exclude 'non-cash costs' (peer review 'time' costs, and user search/print costs).
​ Sensitivity 1 - Level of APC
Table 0.4: Results of sensitivity 1 (figures in £m)
| | Cost Category | Central Case | Sensitivity 1: APC | Sensitivity 1: APC | Sensitivity 1: APC | Sensitivity 1: APC | Sensitivity 1: APC |
| | Cost Category | Central Case | -20% | -10% | +10% | +20% | +50% |
| Academic Institutions | Author-side payments | 22.0 | 17.6 (-4.4) | 19.8 (-2.2) | 24.2 (+2.2) | 26.4 (+4.4) | 33.0 (+11.0) |
| Academic Institutions | Subscriptions | -18.7 | -18.7 (0) | -18.7 (0) | -18.7 (0) | -18.7 (0) | -18.7 (0) |
| Academic Institutions | Access Provision | -3.5 | -3.5 (0) | -3.5 (0) | -3.5 (0) | -3.5 (0) | -3.5 (0) |
| Academic Institutions | Transition costs | 0.2 | Constant at £200k for academic institutions | Constant at £200k for academic institutions | Constant at £200k for academic institutions | Constant at £200k for academic institutions | Constant at £200k for academic institutions |
| Academic Institutions | Total | 0.0 | -4.4 (-4.4) | -2.2 (-2.2) | 2.2 (+2.2) | 4.4 (+4.4) | 11.0 (+11.0) |
| Others | Author-side payments | 5.5 | 4.4 (-1.1) | 5.0 (-0.6) | 6.1 (+0.6) | 6.6 (+1.1) | 8.3 (+2.8) |
| Others | Subscriptions and other revenues | -9.5 | -9.8 (-0.3) | -9.6 (-0.2) | -9.3 (+0.2) | -9.1 (+0.3) | -8.6 (+1.2) |
| Others | Access Provision | -2.1 | -2.1 (0) | -2.1 (0) | -2.1 (0) | -2.1 (0) | -2.1 (0) |
| Others | Transition costs | 0.8 | Constant at £800k for Others | Constant at £800k for Others | Constant at £800k for Others | Constant at £800k for Others | Constant at £800k for Others |
| Others | Total | -5.2 | -6.7 (-1.4) | -6.0 (-0.7) | -4.5 (+0.7) | -3.8 (+1.4) | -1.7 (+3.5) |
| Annual Total | Annual Total | -5.2 | -11.1 (-5.8) | -8.1 (-2.9) | -2.3 (+2.9) | 0.6 (+5.8) | 9.4 (+14.6) |
| 20-year NPV Net Total | 20-year NPV Net Total | -76.9 | -162.7 (-85.8) | -119.8 (-42.9) | -34.0 (+42.9) | 9.0 (+85.8) | 137.7 (+214.6) |
Points to note are as follows:
* Even in the Central Case other sectors of the UK economy (‘Others’) make significant savings (c£5.2m). This reflects the fact that the non-academic institutions (i.e. the Others’ produce a small number of articles that they would have to pay for in the Gold Scenario—and this cost is small relative to the savings that they make from not having to pay subscription fees. The APC would have to increase significantly, well over 50%, for this group to incur cash costs from a global shift to author-side payments.
* Variation in APC can have a fairly significant impact on UK academic institutions annual cash costs. If the APC rises by 20%, UK academic institutions annual net costs will rise by £4.4m. However, for the UK as a whole some of these cash costs are offset by ​savings in the other sectors of the economy. The ‘Others’ save £3.8m, meaning that the additional costs to the UK are only £0.6m.
Sensitivity 2 - level of Gold uptake in the UK and rest of the world
Table 0.5: Results of sensitivity 2 (figures in £m)
| | Cost Category | Central Case | Sensitivity 2: level of Gold uptake in the UK and rest of the world | Sensitivity 2: level of Gold uptake in the UK and rest of the world | Sensitivity 2: level of Gold uptake in the UK and rest of the world | Sensitivity 2: level of Gold uptake in the UK and rest of the world |
| | Cost Category | Central Case | 10% | 30% | 40% | 50% |
| Academic Institutions | Author-side payments | 22.0 | 3.2 (-18.9) | 31.6 (+9.6) | 45.9 (+23.8) | 60.1 (+38.1) |
| Academic Institutions | Subscriptions | -18.7 | -2.7 (+16) | -26.9 (-8.2) | -39.0 (-20.3) | -51.1 (-32.4) |
| Academic Institutions | Access Provision | -3.5 | -0.5 (+3) | -5.0 (-1.5) | -7.2 (-3.8) | -9.5 (-6) |
| Academic Institutions | Transition costs | 0.2 | Constant at £200k for academic institutions | Constant at £200k for academic institutions | Constant at £200k for academic institutions | Constant at £200k for academic institutions |
| Academic Institutions | Total | 0.0 | 0.2 (+0.2) | -0.0 (-0.1) | -0.2 (-0.2) | -0.3 (-0.3) |
| Others | Author-side payments | 5.5 | 0.8 (-4.7) | 7.9 (+2.4) | 11.5 (+6) | 15.0 (+9.5) |
| Others | Subscriptions and other revenues | -9.5 | -1.4 (+8.1) | -13.6 (-4.1) | -19.7 (-10.2) | -25.8 (-16.3) |
| Others | Access Provision | -2.1 | -0.3 (+1.8) | -3.0 (-0.9) | -4.3 (-2.3) | -5.7 (-3.6) |
| Others | Transition Costs | 0.8 | Constant at £800k for Others | Constant at £800k for Others | Constant at £800k for Others | Constant at £800k for Others |
| Others | Total | -5.2 | -0.0 (+5.2) | -7.9 (-2.6) | -11.8 (-6.5) | -15.7 (-10.4) |
| Annual Total | Annual Total | -5.2 | -0.0 (+5.3) | -7.9 (-2.7) | -11.9 (-6.7) | -16.0 (10.7) |
| 20-year NPV Net Total | 20-year NPV Net Total | -76.9 | 1.3 (+78.2) | -116.7 (-39.8) | -175.7 (-98.8) | -234.7 (-157.8) |
Key points to note are as follows:
Sensitivity 3 - Level of uptake in rest of world versus UK
Table 0.6: Results of sensitivity 3 (figures in £m)
| | Cost Category | Central Case | Sensitivity 3: level of uptake in the rest of world versus UK | Sensitivity 3: level of uptake in the rest of world versus UK | Sensitivity 3: level of uptake in the rest of world versus UK | Sensitivity 3: level of uptake in the rest of world versus UK |
| | Cost Category | Central Case | 80% | 60% | 40% | 20% |
| Academic Institutions | Author-side payments | 22.0 | 22.0 (0) | 22.0 (0) | 22.0 (0) | 22.0 (0) |
| Academic Institutions | Subscriptions | -18.7 | -15.2 (+3.5) | -11.7 (+7.1) | -8.1 (+10.6) | -4.6 (+14.1) |
| Academic Institutions | Access Provision | -3.5 | -2.8 (+0.7) | -2.2 (+1.3) | -1.5 (+2) | -0.9 (+2.6) |
| Academic Institutions | Transition costs | 0.2 | Constant at £200k for academic institutions | Constant at £200k for academic institutions | Constant at £200k for academic institutions | Constant at £200k for academic institutions |
| Academic Institutions | Total | 0.0 | 4.2 (+4.2) | 8.4 (+8.4) | 12.6 (+12.6) | 16.8 (+16.8) |
| Others | Author-side payments | 5.5 | 5.5 (0) | 5.5 (0) | 5.5 (0) | 5.5 (0) |
| Others | Subscriptions and other revenues | -9.5 | -7.7 (+1.8) | -5.9 (+3.6) | -4.1 (+5.3) | -2.3 (+7.1) |
| Others | Access Provision | -2.1 | -1.7 (+0.4) | -1.3 (+0.8) | -0.9 (+1.2) | -0.5 (+1.6) |
| Others | Transition Costs | 0.8 | Constant at £800k for Others | Constant at £800k for Others | Constant at £800k for Others | Constant at £800k for Others |
| Others | Total | -5.2 | -3.1 (+2.2) | -0.9 (+4.4) | 1.3 (+6.5) | 3.5 (+8.7) |
| Annual Total | Annual Total | -5.2 | 1.1 (+6.4) | 7.5 (+12.7) | 13.9 (+19.1) | 20.2 (+25.5) |
| 20-year NPV Net Total | 20-year NPV Net Total | -76.9 | 16.7 (+93.6) | 110.4 (+187.2) | 204.0 (+280.9) | 297.6 (+374.5) |
Key points to note are as follows:
Sensitivity 4 - UK corresponding authors
Table 0.7: Results of sensitivity 4 (figures in £m)
| | Cost Category | Central Case | Sensitivity 4: UK corresponding authors as % of articles with UK authors | Sensitivity 4: UK corresponding authors as % of articles with UK authors | Sensitivity 4: UK corresponding authors as % of articles with UK authors | Sensitivity 4: UK corresponding authors as % of articles with UK authors |
| | Cost Category | Central Case | 85% | 75% | 65% | 55% |
| Academic Institutions | Author-side payments | 22.0 | 18.2 (-3.9) | 16.0 (-6.1) | 13.8 (-8.3) | 11.6 (-10.5) |
| Academic Institutions | Subscriptions | -18.7 | -18.7 (0) | -18.7 (0) | -18.7 (0) | -18.7 (0) |
| Academic Institutions | Access Provision | -3.5 | -3.5 (0) | -3.5 (0) | -3.5 (0) | -3.5 (0) |
| Academic Institutions | Transition costs | 0.2 | Constant at £200k for academic institutions | Constant at £200k for academic institutions | Constant at £200k for academic institutions | Constant at £200k for academic institutions |
| Academic Institutions | Total | 0.0 | -3.8 (-3.8) | -6.0 (-6.0) | -8.2 (-8.2) | -10.5 (-10.6) |
| Others | Author-side payments | 5.5 | 4.5 (-1) | 4.0 (-1.5) | 3.4 (-2.1) | 2.9 (-2.6) |
| Others | Subscriptions and other revenues | -9.5 | -9.5 (0) | -9.5 (0) | -9.5 (0) | -9.5 (0) |
| Others | Access Provision | -2.1 | -2.1 (0) | -2.1 (0) | -2.1 (0) | -2.1 (0) |
| Others | Transition Costs | 0.8 | Constant at £800k for Others | Constant at £800k for Others | Constant at £800k for Others | Constant at £800k for Others |
| Others | Total | -5.2 | -6.2 (-1) | -6.8 (-1.5) | -7.3 (-2.1) | -7.9 (-2.6) |
| Annual Total | Annual Total | -5.2 | -10.0 (-4.8) | -12.8 (-7.6) | -15.6 (-10.3) | -18.3 (-13.1) |
| 20-year NPV Net Total | 20-year NPV Net Total | -76.9 | -147.8 (-70.9) | -188.3 (-111.4) | -228.8 (-151.9) | -269.3 (-192.4) |
Key points to note are as follows:
Assumptions:
Table 0.8: Results of additional sensitivity (figures in £m)
| | Cost Category | Central Case | Sensitivity |
| Academic Institutions | Author-side payments | 22.0 | 53.7 (+31.7) |
| Academic Institutions | Subscriptions | -18.7 | -22.6 (-3.9) |
| Academic Institutions | Access Provision | -3.5 | -4.2 (-0.7) |
| Academic Institutions | Transition costs | 0.2 | Constant at £200k for ac. institutions |
| Academic Institutions | Total | 0.0 | 27.1 (+27.1) |
| Others | Author-side payments | 5.5 | 13.4 (+7.9) |
| Others | Subscriptions and other revenues | -9.5 | -11.0 (-1.5) |
| Others | Access Provision | -2.1 | -2.5 (-0.4) |
| Others | Transition costs | 0.8 | Constant at £800k for Others |
| Others | Total | -5.2 | 0.7 (+5.9) |
| Annual Total | Annual Total | -5.2 | 27.8 |
| | Cost Category | Central Case | Sensitivity |
| | | | (+33.0) |
| 20-year NPV Net Total | | -76.9 | 409.1 (+486.0) |
Notes:
* In central case, Academic Institutions are cash neutral.
* May be rounding errors
* ↑ Both of these figures are taken from ‘International Comparative Performance of the UK Research Base’, A report prepared for the Department of Business, Innovation and Skills (BIS), Appendix F: Supplementary Data, page 26.
* ↑ Estimates from Björk 2010.
* ↑ The discount rate of 3.5% (real) is taken from the HM Treasury Green Book. This differs from the 6.8% used in the OR Report which was a real rate of 6.8% and chosen to remain consistent with Houghton (2009).
* ↑ Note, some values may not add due to rounding.
* ↑ Other revenue includes: Pay per view, reprints, memberships fees & individual subscriptions, and advertising.
* ↑ Other revenue includes: Pay per view, reprints, memberships fees & individual subscriptions, and advertising.