Who took my bottleneck?


In yet another example of how the Internet has deeply eroded the value of the distribution bottlenecks that defines the bedrock of most publishing firm buisness models Freedom to Tinker reports that the editorial board of the Journal of Algorithums has resigned over rapidly escalating pricing.

Eszter Hargittai over at Crooked Timber points out Knuth’s letter which provides a wonderful overview of the dynamics of this transformation from the point of view of one side of the channel. In this example the content producers are a small enough group that they can organize this kind of revolt. In the music industry the revolt is more organic; though Apple’s having fun helping.

One thing that Knuth points out is that as the publishing industry has concentrated they have been furiously raising prices for high end journals. If I was a publisher of a high end journal I’d view my days as numbered. The business model is a deadman walking. So, what to do?

That puzzle reminds my of Axelrod’s book on the prisoner’s delimia. One element of Knuth’s letter I found particularly telling was the nostolgia for a how the authors, publishers, and libraries where once fellow travelers in a grand enterprise. As the industry has consolidated that’s evaporated. Axelrod showed that in a repeated series of games cooperation (with tit-for-tat) is the best strategy. Except.

Except in the last few rounds: as soon as the players know the game is about to wrap up the cooperation breaksdown. This end of game breakdown of cooperation is what I see happening in the high end journal market. The publishers are attempting to capture the maximum revenue their monopoly on the channel can deliver. Every man for himself. This is not dissimalar to my model of why the media companies are suing their customers.

These are last gasp strategies, born of desperation. For the channel operator they are subtle calculations. Doing this accelerates the destruction of the channel, but if the channel’s destruction is assured then it’s just a matter of timing how to get the maximum income out of the game before it’s over. These subtle calculations are made simpler for the “rationally” managed firm; which typically doesn’t understand the value of longterm cooperation. Knuth points out that Springer Verlag charges the most for journals, sometimes managing to charge almost two dollars a page. I’d argue that the indicates they are the most rationally, aka autistically, managed publisher.

It will be interesting to see if the Libraries find a way to join the revolt. Library Napster?

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