JSTOR: where does your money go?

Writing some comments elsewhere about the recent events involving JSTOR, I commented something along the lines of – well, they’re a nonprofit organization unlike most journal publishers. Then, it occured to me, they say that but they’re remarkably reticient. What sort of nonprofit? Where does their money go? After all, the fees paid by member organizations can’t all go on servers; either there’s an endowment being built up to support the work (which would actually be a pretty smart move), or the publishers aren’t doing badly out of it.

So, let us dig a little. Who are JSTOR? How does their money flow work? Their site tells us:

JSTOR is part of ITHAKA, a not-for-profit organization helping the academic community use digital technologies to preserve the scholarly record and to advance research and teaching in sustainable ways.
©2000-2011 ITHAKA. All Rights Reserved. JSTOR®, the JSTOR logo, and ITHAKA® are registered trademarks of ITHAKA.

Okay, so, we have a name. Their About pages don’t give much more information; no details on who exactly this “non-profit organization” is. No annual report, of course, god forbid. They do give a contact address, in New York – on Fifth Avenue, in fact, very fancy – and so the obvious guess is that they’re a New York corporation.

And, lo and behold, they are. “Ithaka Harbors, Inc.”. They changed their name when the two amalgamated in 2009. The older iteration of Ithaka can be found as a Delaware corporation operating in New York. Confusingly, JSTOR remained in existence, absorbed Ithaka, and changed its name.

A little more digging turns up the current Form 990 for the merged organization (and some older ones for JSTOR alone) here. It does indeed seem to have 501(c)(3) tax-exempt status, though they’re not very helpful about letting us find the paperwork.

Well, we have it now. JSTOR/Ithaka turned over sixty million dollars in 2009, and employed 211 people. The 2007 & 08 reports both give around $45m in turnover; let’s look at 2008, to strip out the effect of the amalgamation so that we’re only looking at the “JSTOR division”.

To briefly explain the charging, first, when an organisation joins JSTOR it pays an upfront capital sum (the ACF) and then an annual subscription (AAF); the general idea is that the ACF pays for the cost of building the archive and the AAF pays for the actual day-to-day service. Poking around the various fees pages suggests the ACF varies wildly by institution and by which content you’re taking, but an average of double the annual fee seems plausible.

The income breakdown, from a total of $43.5m – $8.6m in Archive Capital Fees, $30.3m in Annual Access Fees, $1.8m in Service Revenue. “Service revenue” is unclear. Buried down in section 11, meanwhile, is the intriguing “miscellaneous revenue”; $133k in publishers fees, $35k in remote session fees, $145k in pay-per-view. Other revenue was then covered by a loss of a third of a million, which is later explained as a currency loss – presumably the vagaries of foreign exchange in a volatile year.

The next section lists expenses of “FEES AND PUBLISHERS PAYMENTS”, $8,358,557, of which $8,242,126 is attributable to program costs rather than management overhead. Journal scanning amounts for about three million – though this is low, it was eleven million in 27 and five in 2009 – with another five million on administrative costs & travel, three million on IT, eleven and a half million on salaries and staff costs. A million went to “old” Ithaka in grants, a million was written off as depreciation, a million on “occupancy” (rent?), and then some small bits of change like conference costs. Overall, an eight-million dollar surplus, but the next year was a deficit; the fluctuations of scanning charges probably come into play here.

The payroll covers 113 staff, of whom 12 seem to be listed as officers, directors, etc. The senior staff average a salary of ~$155k, with the ED paid $300k, while the other staff average about $67k.

So, some interesting points.

  • The figure of $145k for individual articles is definitely interesting – only 0.35% of JSTOR’s revenue came from pay-per-view cases? This is vastly lower than I expected; quite possibly the prices are so high (and JSTOR access so common, academically) that very few people are willing to pay and unable to circumvent it via a friend. The estimate quoted is $19/article as an average – so perhaps only seven and a half thousand articles over the year?
  • Scanning averages about six million dollars a year in 2007-9. The Archive Capital Fee averages about eight and a half. There’s a bit of a mismatch here, but it could be they compare more closely over a longer timeframe, or that this is building a surplus for future work. They’re reasonably close, at least.
  • Comparing the ACF to the AAF, estimating one to be twice the other for any given institution, we can get a proxy for what proportion of income is new – it looks like ~15% in 2008/9. There’s a corresponding growth in overall income (it’s masked by a sharp drop in investment income, which is only $2.5m in 2008, a third of what it was in 2007) which would seem to bear out this figure.

So, overall…

The once-off capital fees charged by JSTOR look reasonable for the ongoing costs of actually digitising the documents. After that, about 30% of the annual fee is payments to the publishers, with the other 70% going on overhead. Of that overhead, 10% is directly running the servers, almost 40% staffing, and the remaining 20% various administrative costs; I am no expert in the field, but the salaries paid do seem quite high (and Manhattan offices aren’t cheap, either).

So if your library pays a $10,000 ongoing subscription, that’s effectively $3,000 direct to the publishers, $1,000 on servers, and $6,000 on people to feed and water those servers (or manage those people, etc.). It would be very interesting to know how those publisher payments break down – but, equally, it would be interesting to know how much of that 60% is actually essential for running the service.

Archives for the 21st Century

Mike Peel of WMUK points out the new governmental policy on public archives. A couple of interesting figures to highlight:

  • There are about 300 publicly funded archives; half local government, a quarter universities, then museums etc making up the remaining third.
  • Per-capita funding for archive services by local government varies by a factor of twenty-two between the best and least funded regions. (In absolute terms, which is a bit less meaningful due to sharp population distinctions, it’s a factor of forty)
  • Less than 50% of material is described in online catalogues; less than 1% is accessible via digitisation programs. (I suspect the missing word there is vastly less than 1%…) [p. 14]
  • The National Archives provides 170 digital documents for every one used in a reading room, and given the overall figures (112m) that suggests a reading-room usage of 650,000 per year. [p.18]

One figure that would have been very helpful would be an estimate – even an order-of-magnitude ballpark estimate – as to the economic value of public archives. Section 2 talks at some length about the tangible benefits of archives, and indeed mentions economic benefits twice alongside things such as supporting public decision-making or academic research, but the whole section is quite vague and devoid of numbers to quantify what those economic benefits are.

Whatever the plan that follows this report turns out to be, it’ll imply government spending in some way or another; to help make the case for supporting these services properly we need to be able to say – archives are [potentially] worth fifty million to the country a year, or a hundred million, or whatever number it might be. People make these numbers for libraries, for museums, for school playing fields… it shouldn’t be too difficult for the sector to say, upfront, this is what we’re worth to you, treat us accordingly.

(It may seem a bit blunt – but, well, arguing for more public funding without hard numbers is like going unarmed to a duel. You may go through all the motions, but unless your opponent is very scrupulous, you’ll lose)