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Can FREE Make Money?

November 2, 2010

Oh-Yes-its-FREE---iStock

An earlier post here reproduced a PEW survey data showing 90% of the general public being comfortable with FREE news content. In the STM publishing arena, the results of the famous Ithaka Faculty Survey 2009, released in April 2010, indicated 40% of the 3,025 respondents to consider gold OA “very important” although the open access option of a journal as the publishing venue was of lowest priority compared to half a dozen other things. In line with the evolving FREE concept, a couple of highly respected STM journals (Nucleic Acids Research and Journal of Clinical Investigations) already made the move to gold OA. So it would be interesting to see if the FREE content providers balance their books; let us see a few examples:

YouTube – I earlier wrote about my YouTube viewing experience. In a report last month analysts expected the Google-owned site to bring in around $450 million in revenue this year and earn a profit. This will be a turnaround year for the video content distributor since Google acquired it for $1.65 billion in 2006. YouTube is now a well rewarding place for advertising (without being a major irritant to the viewers).

Newspapers – Like a lot of people I enjoy the pleasure of having FREE access to the New York Times but suspect it is going to go away some time in the future. As paid newspaper subscriptions are showing a rapid decline (and here) free community newspapers are gaining ground and they are becoming profitable – few years ago no one would have imagined community news sites making millions.

STM journals – PLoS’ profitably is now well known and is reflected in the fact that gold open access is gaining ground. In a randomized study of published literature in 2009 available on ISI and Scopus databases, it was recently estimated that 2/3rd of the open access literature is in dedicated gold open access journals. Discipline wise the gold open access literature constitutes a significant percentage of the published literature in 2009: 14% each for Medicine and Biology, 5.5% for Chemistry and 3% for Physics and Astronomy. Open access journals from Copernicus Publishers are also being profitable. According to one Executive Editor of ACP, the journal and its 15 sister publications by EGU (mostly young), with a combined output of about 2000 articles per year, currently have a turnover of 2 million euros per year.

Since making the move to gold OA, Nucleic Acids Research (NAR) and Journal of Clinical Investigations (JCI) are doing well both academically and financially. It was reported that in 2008, NAR ‘achieve[d] a financial surplus similar to that achieved under its former subscription model’ while JCI’s ‘revenue from publication charges is coming closer to covering the cost of publishing’. Both NAR and JCI currently have impressive impact factors – 7.479 and 15.387 resp.

The STM journals mentioned above all follow the author-pays model charging the authors an APC (article processing charge) and one question is: is that the only viable alternative to the subscription model. Most, if not all, of the non-STM online content providers rely on ad revenue. Internet advertising revenue currently shows a double digit growth with total revenue of over 12 billion dollars during the first half of 2010 and the future appears all bright.

Free video content hosting companies now even have royalty sharing models (like Hulu) where content can be shown online with an occasional commercial, with royalties to the rights holder. Since winning the court battle against Viacom, YouTube/Google seems to be adopting the royalty-sharing model as well. As YouTube’s head of user experience explained in a recent TED presentation this appears to be an idea worth spreading.

There certainly are ways to make money while providing content FREE.

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