On January 6th, 2011, police at the Massachusetts Institute of Technology arrested 24-year-old activist and programmer Aaron Swartz for breaking-and-entering. He had hooked up a computer to the MIT network to harvest paywalled academic journal articles from the online repository JSTOR. He was later indicted by the federal government for data theft.

Two years after his arrest at MIT, Swartz committed suicide. He was posthumously awarded the American Library Association’s James Madison Award, which is awarded “to honor individuals or groups who have championed, protected and promoted public access to government information and the public’s right to know at the national level.”

In November 2015, a New York District Court granted a temporary injunction against websites that provide pirated access to paywalled journal articles. Their domains were suspended, provoking a game of whack-a-mole as the sites attempt to live on at new web addresses. One such site, Sci-Hub, has been active since 2011, hosting tens of millions of journal articles, often retrieved using credentials donated by academics whose institution has subscription access.

The injunction that took down Sci-Hub’s original domain was at the request of the publisher Elsevier. In 2014 Elsevier’s research publishing business earned a profit margin of 37% on revenues of around 3 billion USD.

The kind of articles that Swartz was downloading and Sci-Hub is crawling are big business. Their publishers sell journal subscriptions to university libraries for tens of thousands of dollars. If you personally would like to purchase an article from the journal Nature, for example, it will cost you $32. And there’s a strange thing: the rate of increase in journal prices has outpaced inflation many times over, even as the whole business moves online.

Who is in the right? Are the pirates freeing information for the greater good? Or are they depriving the owners of information their just compensation? Who should have the right to control access to information?


The relationship between an academic and Big Journal is, naturally, an imbalanced one. Academics who are engaged in research are judged predominantly on their record of publishing articles in the most prestigious journals, and having those articles cited by other researchers. At both ends the researcher is at the mercy of the publisher. If the “prestigious” journals are published by one of the big for-profit companies, then the writer of the article will have to either sign the copyright away to get the article accepted, or pay several thousand dollars for it to be made available to everyone. The reader had better hope for an institutional subscription, or else she will be left forking over hundreds of dollars to get up to speed on the latest literature.

And on whose labor are the profits from research publishing earned? It is to a large degree the labor of the researchers themselves. Academics and private researchers not only submit their work to journals, but also devote many hours to performing peer review and editing, part of the standard professional obligations of their vocation. Whatever else journal operators contribute, their operation relies inescapably on this free or underpaid labor from the researchers seeking to further their own careers and their field’s body of knowledge.

In short, for-profit publishers in academia have a particularly pure kind of market power. Upstream and downstream are captive audiences, trapped in a loveless embrace with an industry that grows fat on the labor of the researchers who depend on it. They are the only legal purveyor of the currency of academic research. Unless the mysterious “prestige” transfers to journals or repositories that are free to access or carry a lower cost (as it has, incidentally, in some fields of study), this is the state of affairs.

The Shoulders of Giants

And yet maybe all is as it should be. As surely as there are benefits to reading and writing this stuff—progress, enlightenment, discovery, knowledge—there are costs. Storing and delivering information can be tricky. Less tricky now, maybe, than when printing and binding a single book took hard labor and eye-watering expense, but still certainly not trivial. When we try to conceive of the right ownership model for information, we must think of both sides of the coin.

What makes this complicated is that information is capable of delivering huge positive externalities that can percolate far and wide, even across generations. When we read, and reflect, and write, we build on what has come before. Your act of processing the information contributes to the grand project, a giant snowball of thinking, long may it continue. The rich, sometimes unexpected spillovers of knowledge are the dividend of learning.

The benefits could be quite local. Maybe you read an interesting article, and you talk about it with a colleague. The knowledge multiplies. The benefits could just as well be far reaching. A discovery today, written down and preserved, may well contribute to generations of incremental progress. When we try to account for the costs and benefits of the use of information, of its transformation into knowledge, the benefits multiply and live on.

The ideal use of information accounts for all of these costs and benefits, including those that stretch beyond the producer or user, through society and into the future. But what infrastructure will allow us to achieve this holistic gold standard of social value?

Standard economic theory predicts that when there are positive externalities, a commodity will be produced and used less than we might like. The rational choice model predicts that an individual considers the costs and benefits to herself when making a decision. With positive externalities, the social benefit of her action is higher than her own private benefit, and so she stops sooner than society would prefer.

The Price of Knowledge

In a recent paper, published in Information Economics and Policy, I modeled how well different regimes for the ownership of information do in the presence of positive externalities for information. First I consider a world in which information is just “out there,” and anyone who wants to access it must pay some fixed amount in time, inconvenience, or money to access it.

Unsurprisingly, the positive externality justifies a subsidy for information: “society” should artificially lower the cost of information to the individual. This encourages more use of information, bringing the individual’s incentives closer to the social incentive for more knowledge, more harnessing of the cumulative positive externality. A policy of subsidizing information is hardly outlandish: this policy is the essence of public libraries and archives.

But information is not just “out there.” In many cases it is controlled by a strategic entity, which sets the terms of access to further its own goals, whatever they may be. So I consider in particular three regimes: for-profit proprietary ownership by a monopolist (akin to the standard journal), zero profit ownership (either enforced by competitive ownership of information, or ownership by a not-for-profit monopolist), and open access (where articles can be accessed at zero cost by anyone at any time).

Which regime performs best? It depends on the cost of delivering information. None of the three regimes are perfect. When prices or subscription fees are controlled by either a for-profit or zero-profit owner, information is overpriced and underused. Both regimes must recoup their reward in the here and now, and so neither is capable of accounting for the spillover effect of information.

Open access has the opposite problem. It is excellent at generating and accounting for spillover externalities, since unrestricted information is used maximally often. Instead it is incapable of accounting for the costs of storing and delivering information. Information is underpriced and overused: it is accessed and used not merely until the benefits no longer justify the costs, but until the benefits are exhausted to nothing.

The Internet and the Journals

But the internet has given us a new world. For so many industries, the story of the internet has been the story of tumbling costs of delivery. The music and movie industries have been upended by a new world in which their product is uncoupled from the physical world, newly able to be transmitted and reproduced at trivial cost.

And so it is with academic writing. The cost of storing and distributing information have tumbled. Balancing the social costs and benefits of information use has become lopsided. The benefits still accrue, and the spillovers endure, but the costs are evaporating before our eyes. The benefits are everything.

As costs tend toward zero, the zero-profit and open access regimes get closer and closer to delivering the socially efficient amount of use of information. In the zero-profit case, this is because the costs that must be recovered in the owner’s pricing decision are now gone. In the open access case, it is because open access was never considering costs at all!

For-profit ownership, by contrast, gets further and further from the socially efficient use of information. The incentives of the for-profit owner are informed by demand, not by costs. Falling costs accrue to this owner as extra profit; her decision of how much information use to induce is unchanged. In a world of low costs, the for-profit model is significantly worse at harnessing the positive externalities in the use of information than either of the other regimes.

There is plenty of evidence consistent with the predictions of my model. Commercial publishers predictably charge higher prices for their journals than professional societies, but, tellingly, the price gap between commercial publishers and university presses increased during the spread of internet technology. Open access yields more downloading and reading of academic research. And not surprisingly: the “missing” consumers left frozen out by high and escalating prices are those in the most marginalized academic communities, those in regions of the world or at institutions that cannot afford site subscriptions. The global community of researchers becomes, then, a patchwork of unequal access and opportunity.

Information For All

The old world of for-profit ownership of academic research is no longer tenable. Exorbitant profits earned on the back of unpaid, professionally non-optional labor by researchers; a stifling of the social spillovers in the pursuit of knowledge; the injustice of researchers divided into the privileged who can afford to participate fully and those left scrambling on the sidelines.

Maybe once such affronts could be justified by a calm accounting, an acknowledgement that storing and disseminating knowledge was hard and costly. Then the right thing corresponded to what was delivered by the profit motive. But economic theory says: no longer.

Competition in the ownership of information, control by not-for-profit societies and organizations, and open access policies: these are the socially valuable and just ways now. Academics must insist on them. It is not enough for for-profit journals to adopt open access and recoup their lost profits from authors and their home institutions. Prestige must flow by collective will or professional organization to not-for-profit and open access journals or research repositories such as arXiv.org that do not follow the old ways. Policy must continue to push research organizations and funding bodies to open access, following examples such as that set by the National Institutes of Health.

It has long been a noble ideal that human knowledge belongs to us all. Technology may now take that ideal to new heights. We should let it.

Featured image courtesy of Library of Congress.              

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