PLOS' New "CAP Model" for OA

Embracing recurring revenues adds complexity, but timing may be off

Yesterday, PLOS announced a new model for generating revenues for two of its journals. With “community action publishing” or CAP, PLOS hopes to launch a “new phase of Open Access designed for selectivity.” It’s a model PLOS has been working to develop for more than a year, and one which adds complexity — either much-needed or potentially costly — to an organization that has been staging a slow turnaround over the past few years.

Initially limited to PLOS’ two oldest journals — PLOS Medicine and PLOS Biology — the model introduces recurring revenues into the organization, something CEO Alison Mudditt has acknowledged has been lacking. This vulnerability may have contributed to budget deficits from 2015 through 2018, especially as PLOS ONE was depleted substantially by effective competitors.

PLOS Medicine and PLOS Biology have been generally thought of as money-losers, subsidized by the profits thrown off by the less-selective PLOS ONE. The announcement seems to confirm this:

. . . we’ve used a cross-subsidy model to keep APCs of our most selective journals lower than their true publishing cost. [CAP] will more equitably remove barriers to publication by covering journal costs, capping margins, and redistributing revenues beyond the target back to community members.

The funding of OA has been beset by conflicts of interest and the weaknesses inherent to non-recurring revenue models for decades now. Other attempts at recurring revenues have been made previously, most memorably by PeerJ.

This attempt to inject recurring revenues into an APC-driven publisher comes the same week as Springer Nature’s IPO once again was delayed or abandoned, making this the second time in just a few years. I think this keeps happening because they have no major growth plans for their recurring revenues and because Holtzbrinck has kept their technology crown jewel, Digital Science, out of the deal. Exogenous factors also are not helping.

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With the CAP model, PLOS seeks to spread the costs of publishing across the authorship of an article, rather than making the corresponding author the sole conduit for payment. This approach might incentivize more institutions to participate in paying the flat annual fees the model proposes, making almost any research paper a sales lead sheet. This is nothing new generally, as nearly every scholarly publisher with institutional sales — and even arXiv, which purportedly used IP address information to inform its initial forays into fundraising — leverages institutional authorship data to generated leads for their sales process.

CAP posits a single annual flat fee per institution. PLOS will be tiering these fees based on the size of the institution or consortia, and Mudditt said these prices will be published for all to see.

Revenue surpluses beyond those needed to cover the direct and indirect costs for the two journals (plus a 10% margin) will be used to reduce prices in subsequent years across the board. This could make for a bumpy ride over time, as the universe of research institutions is finite and price reductions may lead to alternating increases to offset occasional misses on the low end.

Unlike other OA models I’ve encountered, there’s nothing with CAP that immediately makes me want to hop up and down and point at the flaws. But it’s not perfect, and still suffers from the tendency of “author pays” models to reward higher volume publications. Here are a few notable aspects:

  1. CAP could give PLOS some recurring revenues. By including corresponding and contributing authors, the number of institutions affected by a publication in PLOS Medicine or PLOS Biology multiplies. If the pricing is right, sales could go smoothly. My back-of-the-envelope estimate is that PLOS needs to generate ~$750K via CAP to make this work. Recurring revenues diversify the risk profile both across a customer base and across time. Recurring revenues are like reservoirs, which let you withstand droughts more easily. In an uncertain world, a reservoir of money you draw from monthly is nice to have.

  2. CAP may blunt the conflict of interest inherent to “author pays.” By moving payments to a blend of institutions via author affiliations, and invoking a recurring revenue model not tied so directly to any particular publication event — more like debiting an account than asking for a payment — there is less of a direct quid pro quo for publication of a paper. However, the model does not entirely eliminate the temptation to dip into a pot of money by publishing a paper that’s on the margins, and publication trends for PLOS Medicine and PLOS Biology will be worth tracking. Do they bloat further after CAP? There is still the opportunity to loosen editorial standards to generate revenues with CAP, but the problem is a bit more nuanced with the CAP model.

  3. CAP may encourage these journals be more selective. The CAP model has the potential to do what PLOS hopes — adequately fund selective journals. PLOS Biology and PLOS Medicine have been intellectually successful journals, but not financially successful ones. There are some trends to indicate that they’ve been expanding their publication parameters over the last few years (see below). The CAP model will help PLOS know earlier if they have what it will take to make these journals financially successful, and once they do, let the selectivity begin. Recurring revenues become quite predictable over time, are generally stable, and put money in the bank so you’re not always chasing it, unlike non-recurring revenues. Those dynamics better support selective editorial practices.

  4. CAP mitigates the power of single funders. By distributing costs across an authorship panel, the sway of any single funder is potentially mitigated. If the CAP model were adopted more broadly, funder-based publication systems would stand out as being the rather radical things they are.

  5. CAP doesn’t extort institutions like the “subscribe-to-open” OA model, but incentivizes their participation positively. By making a discounting promise that Mudditt said would be “as transparent as possible,” and assuming overall success in uptake, librarians and university administrators could find the empowerment offered here encouraging. And, unlike “subscribe to open,” which feels like an extortion model — pay or we close things down — CAP is a more positive and aligned model without an obvious inherent threat in its stance to the market.

The CAP models appears to be part of a larger picture of organizational rejuvenation for PLOS, which seems to have righted its ship financially, despite PLOS ONE’s travails, with Mudditt declaring yesterday on Twitter:

PLOS has been cutting costs, with many high salaries from their 2018 Form 990 either terminated that year or subsequently. Other cost-cutting won’t be visible until their 2019 Form 990 is made public in the next 6-8 weeks.

In the press release, we do get a little more insight into the costs of PLOS Biology and PLOS Medicine:

Based on PLOS’ 2018 Form 990 disclosures, these two journals’ expenses ($3.42M) would have accounted for ~9% of PLOS’ overall expenses of $37.9M. So far in 2020, these two journals account for 2.5% of the papers PLOS has published, so their editorial processes are comparatively expensive. Mudditt said PLOS Biology is closer to breakeven than PLOS Medicine.

Both journals have been growing over the past few years, which may speak to some editorial response to financial pressures. (Both journals’ editors are PLOS staff members.) Since 2017, output for PLOS Biology has more than doubled (140 research papers in 2017 vs. 293 in 2019), and output for PLOS Medicine has increased substantially as well (166 research papers in 2017 vs. 230 in 2019).

These increases in production may be taking a toll on impact, helping revenues in the short-term while risking them in the long-term as other journals with rising impact factors become more attractive venues.

PLOS has been raising prices as they’ve been increasing outputs in these journals, instituting a price increase in 2018, and with small price increases since then. These APC price increases will continue to deliver benefits in the “CAP era,” as CAP may be mainly a non-European initiative. Mudditt noted in our conversation that Europe as a market is quite devoted to the APC, so variant models don’t work there. And while PLOS struck a deal with CDL that was termed “transformative” for the sake of optics more than anything else, it was likely a one-off.

So, even with the CAP model in place, PLOS will still be collecting APCs, and more “transformative” deals are unlikely.

The role of funders like Wellcome and Gates is also a gray area, Mudditt said. PLOS is in discussions with both of these major OA funders, but how contributions from funders would work relative to the CAP model isn’t yet clear, and whether these would be dependably recurring is a question.

The timing of the CAP model may be problematic for PLOS. Institutional budgets are tight, and 2021 may see university budgets become more untenable. Library expenditures are not far from the bullseye for cuts. Will PLOS be able to compete with transformative deals, site licensing renewals, and budget cuts to deliver hundreds of thousands in new revenues in 2021? Mudditt said a lot of market research was done with institutions, but if that was mostly done pre-Covid, it may not be as relevant as it once was. And asking librarians about their 2021 budgets only tells you so much — even the librarians may not hear the machete headed toward their budgets.

The PLOS CAP model is interesting, but it is complex, and complexity is expensive. Juggling APCs in Europe, and CAP in the US and most of the rest of the world, for two journals that are already comparatively expensive to run will be no easy feat — and will need more than a little luck — if the CAP model is to work.


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