Glenn S. McGuigan and Robert D. Russell, The Business of Academic Publishing: A Strategic Analysis of the Academic Journal Publishing Industry and its Impact on the Future of Scholarly Publishing, Electronic Journal of Academic and Special Librarianship, Winter 2008. (Thanks to Michael Nielsen.) Abstract:

Academic libraries cannot pay the regularly escalating subscription prices for scholarly journals. These libraries face a crisis that has continued for many years revealing a commercial system that supports a business model that has become unsustainable. This paper examines the “serials crisis,� as it has come to be known, and the economics of the academic journal publishing industry. By identifying trends within the industry, an analysis of the industry is undertaken using elements of the five forces framework developed by Michael Porter. Prescriptions are offered concerning what can be done and what should be done to address this problem.

From the body:

… A more radical initiative for the academic libraries would be to strongly support the open access (OA) movement for disseminating scholarly works via the internet. …

The expansion of online OA publishing for academic journals could have enormous long term consequences for the academic publishing industry. Just as the emergence of WIKIs [sic] and blogs greatly expanded opportunities for social and political commentary, the production and distribution of scientific knowledge could be greatly enhanced by the emergence of online OA journals. Not only would publication of scholarly articles be facilitated, but opportunities for serving on editorial boards would also be greatly expanded. The broader opportunities for publishing and editorial review offered by OA journals could contribute to the end of the Babylonian priesthoods that characterize the editorial review boards of too many of the most prestigious academic journals and lead to a flowering of innovation and knowledge creation among academic researchers.

The expansion OA publishing would have the advantage of facilitating the emergence of smaller, more specialized academic journals. As has been discussed, these journals are often squeezed out of library budgets by the burgeoning costs of the larger journals published by for-profit firms. OA publishing offers a low cost alternative for producing specialized journals as well as providing easy access to potential readers anywhere in the world.

The proliferation of online OA journals in combination with aggressive consortia licensing would significantly alter the current business model of academic journal publishing. The creation of OA electronic journals is a form of entry into the academic publishing industry. By multiplying the number of journals available not under the control of for-profit publishers, OA publishing would increase competition within the industry as well as increase the bargaining power of academic libraries and faculty authors. As the use of e-journals becomes more accepted, traditional publishers would most likely be forced to change their role. Rather than acting as oligopolists that profit by controlling access to a small number of prestigious journals, they may be forced to act as agents of the libraries, negotiating with journal providers and packaging e-journals as requested by the libraries. The publishers would retain a degree of bargaining power based on their control of the larger, more prestigious journals. Their power, however, would be lessened by the unbundling of the electronic and bound journals as well as the increased opportunity of faculty to publish in alternative electronic journals.

In order for the new business model to work, four conditions must be present: (1) academic libraries must be prepared to make the leap to primarily online sources for much of their current serials collection; (2) faculty must accept the new online journals as valid sources for new knowledge as well as credible outlets for their own scholarly work; (3) the new electronic journals must implement a credible review process and form high quality editorial review boards, and; (4) colleges and universities must accept the new electronic journals as valid in their promotion and tenure process. Although the technology exists to make online OA journals a reality, the cultural changes in the value system of the professoriate and academic administrators required to change the business model of academic publishing may prove to be a difficult challenge. …