Information economics seem to be playing out exactly as expected. The price of a good is reverting to its cost of production--near $0 for copying bytes. You can't stop the rock.
In Information Rules, Shapiro & Varian argue that if you're selling an information product, all that you can charge for is the value that you add on top of the information, such as convenience, freshness, etc. It's best to assume the information itself is free.
When you're making a new movie, the production of the master copy can cost millions of dollars. Same thing with software products, songs, and digital photos. However, making a digital copy after that is very cheap.
Therefore, it's better to say that the marginal production cost moves towards zero instead of the total production cost, which would include the master copy cost.
Well then, the price of a good is nowhere near reverting to its cost of production, which is obviously far higher than the cost of the Nth copy of that good.
Huh? If you're selling an information product, then you can charge for the information. I.e. if the information you produced/collected is better, better organized or more convenient than what you and I can find searching hours on the internet. That has value, a lot of value, and you can, and should charge for it.
The problem with academic publishers is that they don't do any of the above. The information isn't even really theirs! That's why their product is essentially worthless...
This argument proves too much. Music and app stores seem to be doing fine selling files for more than the cost of copying the bytes. Also, consider Bitcoin.
Most music can be found for free on pirate sites and YouTube (but I repeat myself). The Music and app stores are providing convenience, not the actual bits.
I imagine many would also like to show support towards the author of the paper. But the money paid for the paper pretty much only goes to the publisher.
Weirdly, sometimes the author has to pay the publisher to get published. And then the publisher again gets money from people buying the paper! All in the name of getting published in a 'respectable' journal.
Yep. It's trivial to download the preview files on Bandcamp - view source, look for the URLs starting popplers5.bandcamp.com - but nobody does, because you'd have to be a bit of a dick. And Bandcamp takes only 15% at most, the rest is passed straight to the artist/label.
Pretty much all markets sell convenience. Buying something at one place and time and selling it in another that's more convenient to the buyer is what traders do.
And yes, alternatives exist. But companies are selling the bits for more than the cost of production and millions of people are buying it, despite cheaper competition. This seems to be sustainable. So the original argument about economics and what markets will bear is false.
And the point is that using a free search engine is cheaper AND more convenient than reading through a journal. Like, would you subscribe to a poorly curated version of HN and Reddit instead of just going to the source?
The argument was that this is inevitable due to basic economics 101 ideas about perfect competition. A specific argument was made about prices needing to be set near the cost of distribution.
The point of bringing up video, movies, and books is to show that it's not that inevitable and markets don't have to work that way. Netflix subscriptions pay for a lot more than download bandwidth. Similarly with Kindle.
So it depends on the specifics of the market. Currently, academic publishers are not meeting that community's needs very well (understatement), so it's ripe for disruption. Competing with Amazon, iTunes, and Spotify is a lot harder.
My guess is that eventually a better service will come along, colleges will be willing to fund it (at far cheaper than today's prices for journals), and many people will stop using SciHub. But, as with the music industry, that may take a while; it doesn't happen automatically.
I think video and music are only good examples to the first approximation. Video for example requires a vast infrastructure to deliver. That's not something that each filmmaker can do on their own. Music is a little easier, but discoverability is still a problem, and if your song becomes popular, good look keeping your host from dying as everyone streams it. Besides, music is a little more difficult to index than papers.
Scientific papers are far easier. The demand even for the most popular ones is likely a lot less than the demand for a semi popular song. It's is easy to self host them. It's also easy to categorize and tag them. And that makes them easy to index. I am going to venture a guess that all scientific papers ever written (stuff that would be published in a journal, not necessarily all the accompanying data), could probably fit on your phone's storage. A kick ass engine to search it could be an app you download. Oh and for the most part there are no licenses to negotiate. You just publish.
So while the only way to get a new scientific paper in front of a large audience of your peers was to print 10k copies of it in a journal and mail the journals, publishers provided value. Now they do not.
Oh and Spotify is not a counter example. If you could have access to app scientific papers in the world ever published as soon as they are published, but it cost you $10/month we wouldn't be talking about this. It's still too expensive, but in relative terms cheap enough that nobody would give a crap. Subscribing to multiple publications to get a small subset is silly. Imagine if instead of Spotify you had to subscribe to each label's streaming service. Would you?
I think we actually agree that it depends on the specifics of the market. Otherwise you wouldn't be bringing up all these additional facts about how academic publishing works compared to other markets. The specifics matter - that's my point.
Don't people tend to prefer services where the marginal cost of digital goods is ~0, or perhaps somewhere around the value of an ad impression? I.e. Patreon, spotify premium or netflix, but also free services like youtube and soundcloud or free apps with ads.
The value of bitcoin is actually that high above its production/maintenance cost because of the growing value of cryptographically-guaranteed currency - that said, I gather the act of copying bytes across the congested bitcoin network is particularly costly.
Well, the idea was that they sorted the wheat from the chaff, published only the good stuff, and therefore saved you time. I'm not sure how effective they currently are at providing this service, though.
In Information Rules, Shapiro & Varian argue that if you're selling an information product, all that you can charge for is the value that you add on top of the information, such as convenience, freshness, etc. It's best to assume the information itself is free.