The Public Library of Science (PLOS) reported a loss of 1.7 Million $US in 2016, according to their latest financial disclosure, which was released late last week.

The loss for the San Francisco-based non-profit publisher was not unexpected. In 2015, the publisher barely broke even, netting around half a million US dollars after expenses, down from nearly $5 Million in 2014 and over $10 Million in 2013.

As PLOS relies almost entirely on article processing charges (APCs) for its revenue, a steep reduction of more than six-thousand research papers in PLOS ONE alone (Fig 1) deprived the publisher of a large portion of its annual revenue.

Chief Financial Officer, Richard Hewitt, explained PLOS’ loss in context of the overall success of the open access publication model:

The success of Open Access and increased competition in the publishing landscape brings inherent challenges for PLOS, including decreased submission and publication volumes, revenue and expenses.

From the above figure, it should be very apparent that Hewitt is not talking about all PLOS journals. The financial success of the entire organization is built upon the surpluses derived from a single journal, PLOS ONE, designed to run cheaply and create huge surpluses through scale. In 2008, Declan Butler from Nature referred to PLOS ONE as their “cash cow.”

PLOS is not a financially diversified company. It is almost entirely dependent upon a single revenue model (the APC) from a single journal (PLOS ONE). This makes the publisher highly vulnerable to market changes and competition with larger, more diversified publishers.

Joerg Heber, PLOS ONE‘s Editor-in-Chief, attributed his journal’s shrinkage to a reduction in manuscript submissions along with a lower acceptance rate, which now stands around 50%. Journals that have implemented a similar editorial model are likely drawing manuscripts away from PLOS ONE, noted Heber in an interview with Retraction Watch last March. Earlier this year, Scientific Reports, which is published by Springer Nature, overtook PLOS ONE as the world’s largest megajournal. In the first ten months of 2017, Scientific Reports has already surpassed research article output from last year, while PLOS ONE is down by 7% (Fig 2).

PLOS is not a financially diversified company. It is almost entirely dependent upon a single revenue model (the APC) from a single journal (PLOS ONE). This makes the publisher highly vulnerable to market changes and competition with larger, more diversified publishers.

After several high surplus years, a relatively small 2016 deficit will not sink PLOS. However, the trend over the past five years does not look encouraging, and 2017 looks no better.

While I am not a financial analyst, there were other details in PLOS’ 2016 Financial Overview that were surprising. First, while PLOS continues to build its own submission platform (Aperta), only one of its smaller journals (PLOS Biology) is currently using it. More importantly, Hewitt writes that “the spending associated with this investment [Aperta] has been capitalized due to the multi-year nature of its anticipated future use,” which sounds like he was able to minimize the reported losses in 2016 by moving costs forward to future balance sheets.

Secondly, PLOS spent much more in salaries in 2016 (22M) than it did at its peak of 2013 (18M), despite publishing 27% fewer papers. This may reflect how easy it is was to hire staff when income was plentiful and how difficult it has become to shed them when money starts drying up.

PLOS continues to build its own bespoke submission and publishing platform, both of which have the potential to reduce longterm operating costs. In the meantime, the organization may have to start planning for a more diversified future that relies less on APCs from a single journal. Maybe it has already.