Are the ACM’s profits supporting its mission yet?
Last year, as UBC got involved in ACM Open negotiations, I got curious about ACM financials. As I dug into them, I didn’t like what I saw, and wrote a blog post and then a CACM Opinion piece. The ACM honoured me with a response article, which includes lots more data and a contrary perspective on the ACM’s $250,000,000 in assets and $10,000,000/yr in profit. The response also made an interesting claim:
In terms of DL subscription revenue alone, the ACM is projecting a loss of $6M to $8M in 2026 when the DL goes fully open. The five-year projection is for a loss of $25M to $30M.
I was very interested in this claim. In making it, they have activated the trap card of falsifiability.
I’m quite happy that the ACM is moving to an open access model, and want that to be financially viable. But, as I said last year,
I do not think it is in the public or professional interest, nor does it advance art, science, engineering, and so on, to charge unnecessarily high publication and conference fees, taken out of public, research, and educational funding, and to hold that surplus income as an increasingly large pile of assets.
So I was keen to pay attention to this claim about the need for that surplus, and its use in supporting ACM Open.
Well I’ve got to reading the new ACM 2023 and 2024 publication finance report, and the new FY2023 IRS data, and attention I am paying. So… is the ACM losing money in the switch to ACM Open, and is its hundreds of millions in profit over the past decades helping it achieve its mission?
TLDR: Na. The ACM remains profitable and its net assets have continued to grow by tens of millions of dollars a year. And IMO, some of their rhetoric is even more worrying than that.
First, some context.
As in my prior article, I will rely heavily on the IRS 990 filings. Since my previous article, FY2023 has become available. This data provides a good overview of the considerable income from all sources, such as conferences, gifts, ads, investments, and membership fees, and all expenses. However, the IRS reporting uses a different financial year and different categorization of income and expenses than the ACM uses internally.
ACM have also recently published the 2023 and 2024 finance report, which I will pull from. These data are incomplete: they only report the finances for the publishing arm of the business, sorry, enterprise, sorry, non-profit mission that is the ACM. However, it includes more fine-grained information than the IRS data.
The differences between these two sources could result in apparent contradictions that are in fact totally benign. I won’t dwell on this. Both sources tell interesting stories, both separately, and together.
Okay! Let’s look at income.
Notable facts and figures about income from the ACM finance report:
- ACM DL subscriptions dropped from $11,500,000 to $3,900,000, representing a loss of revenue of about ($7,600,000). However, this is totally expected, since the ACM DL subscriptions are being phased out in favour of ACM Open.
- ACM Open revenue climbed from $7,700,000 to $15,300,000, representing an increase in revenue of about… $7,600,000. Fancy that.
- In total, publication revenue increased $200,000 from 2023 to 2024, from about $25,000,000 to $25,200,000.
- In total, revenue has increased about 1% per year from 2019—2024.
So, ACM Open doesn’t seem to be harming revenue much at all. And, as a result, science has become much more accessible! Well done ACM! That’s how you serve the public and member interests!
Revenue growth at 1% seems problematic, since it’s below inflation, and below the increase in expenses. But, that’s partly by design: the ACM has frozen prices during the transition to ACM Open. So the fact that revenue is growing despite the transition to ACM Open cannibalizing other sources of revenue, providing free services to previously paying customers, and not increasing prices to keep up with inflation, suggests that actually ACM Open is… overpriced?
The finance report couches this in other term that I completely disagree with. They start with the claim that:
it’s reasonable to ask why income growth has been so slow?
And go on to assure the reader that these restrictions on income growth are temporary and, not to fear, income will begin to grow again soon!
But you know what: no, no it’s not reasonable to ask why income growth has been slow. That was the entire point of my original article. The mission of the ACM is not to grow income—to make a profit—but to serve the public and professional interest. The ACM should not be aiming to make a profit, and yet it’s clear that they both DO make a massive profit, and believe it is part of their mission to do so.
Let’s zoom out and look at the IRS data. In FY2022, the ACM made $12,000,000 in profit, while in FY2023 they made $380,000 (which is an interesting outlier I’ll return to). Their total assets are up from to $211,500,000 to $264,000,000; I use total rather than net, because a major liability is deferred revenue, which is not a liability in the same way as other debts.
So the ACM does not appear to be on track for a $25,000,000 to $30,000,000 loss, and is still certainly not using their hoard to support its mission. ACM Open does not seem to be harming revenue, or profit much, even with its temporarily limited price increases.
But.. what about that drop to $380,000 in profit, from an average of $11,000,000 per year for many years?
Let’s look at that more carefully. This drop seems to come from two places:
- Revenue, but importantly not program service revenue (i.e., from ACM Open) fell a bit.
- Expenses, but not publication expenses, increased a lot.
As we’ve seen, revenue from DL subscription and ACM Open balanced out. All program service revenue (which includes conferences, publications, memberships, and advertising) increased from $69,000,000 in FY2022 to $74,000,000; it’s way up. Membership fees and advertising revenue is down, a bit. Conference revenue is up, from $39,000,000 to $43,200,000, although so are conference expenses. Contributions, which includes gifts and grants, have remained essentially the same at $8,000,000 in FY2021, $10,000,000 in FY2022, and $8,000,000 in FY2023. Investment income is down a lot, but possibily due to an outlier in 2022. Between investment income and investment sales, it was about $7,000,000 in FY2021, $12,000,000 in FY2022, and only $5,000,000 in FY2023. So income is pretty stable, but down.
Now expenses.
Again, I’ll start with the publications finance report. The expenses section is weird, but I’ll start with the reported facts and figures.
Notable facts and figures about expenses:
- In total, publication expenses fell from $29,200,000 to $28,800,000 from 2023 to 2024, saving $400,000.
- Digital library expenses, particularly infrastructure expenses, increased from $6,800,000 to $7,900,000, by about $1,100,000.
- Anything related to print publication fell, enough to offset all that DL expense and then some.
- In total, expenses rose about 4.4% per year from 2019 to 2024.
Notably, publication expenses are still greater than publication revenue. This has been the case for some time, but the profits from conferences offsets that difference. Recall the ACM is still reporting a profit, and a substantial growth in assets.
The expenses also report some… bizarre… claims. The two claims are:
overall expenses have continued to increase, with the most significant increase of 27.91% occurring between 2023 and 2024, when the program grew from 29,691 articles in 2023 to 37,978 articles in 2024.
Over the longer period from 2019–2024, expenses grew at a rate of 13.66% per year.
These claims are.. nonsense. The expenses clearly didn’t grow 27.91% from 2023 to 2024, and nor by 13.66% per year, which obviously contradicts the earlier (correct) claim that they grew by about 4.4% per year. I believe they’re meant to say that the number of articles published increased by 27.91% from 2023 to 2024, and 13.66% per year. That at least matches the number of articles reported in the sentence. I can only assume the claims are typos. I’ve reached out to the director of publications, who has said my interpretation is likely correct and that they will fact-check this, but it has been some weeks and I want to finish writing this post.
The IRS data on expenses basically supports the data in the finance report. A nontrivial amount of the increases was on DL expenses. This is reflected in the IRS data as “information technology” expenses, which are up to $7,000,000, from $5,700,000 in FY2022. Publication also does seem to be getting slightly more expensive. Publication production and services at up to $6,700,000, from $5,300,000. But, that is not nearly enough to make up for the $12,000,000 drop in profit.
Conferences appear to be a big expense. Conference expenses are up to $41,700,000, from $36,700,000 But conference revenue has grown to match, and still subsidizes other parts of the business.
Lots of little things went up: employee salaries, travel expenses, occupancy, amounts paid to independent contractors such as Conference Publishing. So, yeah expenses are going up, and without increasing revenue, and with a bad year for investments, the ACM didn’t make quite as much in profit as usual. (Although investments still appreciated by $10,000,000, that’s not counted as revenue since the gain hasn’t been realized yet.)
What’s more interesting is to try to understand WHY these expenses are going up. Sure occupany, employee salaries, conferences—those are a bit out of the ACM’s control. The ACM believes it can reduce publication expesnes:
ACM had expenses of $28,854,059, and while we anticipate being able to reduce this figure over the next few years
So hopefully those are growing pains.
But one place where expenses are increasing is very telling.
In its own words, the ACM believes income growth is part of its mission, and is spending money to increase future revenue. A non-trivial amount of the increase in expenses is on the digital library, but not for anything that benefits the public or members interests: on product differentiation to grow profit.
ACM has invested heavily … and embarked on a large-scale initiative to launch both Basic and Premium versions of the DL platform with robust features, functionality, and value-added content in 2026 [including] advanced search tools, such as AI assisted search; and research insights, such as usage metrics, citation trends, institutional and author profile pages, and altmetrics.
For any researcher, student, practitioner, or educator working in this domain, access to the Premium version of the ACM Digital Library should be considered essential.
ACM will work hard to identify new value-added products and services for the researcher, practitioner, and educator communities,
This is absurd and insulting. We don’t need to spend money on AI assisted search, supporting an ethically dubious industry and bubble to get slop full of bullshit (in the technical sense) in our search engine, especially if we need to control costs. That approach has made search engines increasingly useless. We don’t need more stupid, useless metrics for bureaucrats to optimize at the expenses of real value. All of this is make work; all of this is bullshit jobs.
Sure, ACM Open prices might need to go up over time to keep up with costs, maintain the digital library, etc. I understand the need to have a robust network infrastructure to serve all our papers and archive them indefinitely. But some these costs are self inflicted, and the ACM has openly declared a goal of profit seeking product development that has nothing to do with its mission.
Sooo … is the ACM losing money on ACM Open? No. Revenue loss from DL subscriptions are matched by ACM Open revenue increases. The ACM still appears to be extremely profitable overall. Unless things have gone completely off the rails since FY2023, the ACM is still profitable and now has a hoard of ~$280,000,000 (projected). If you consider publications in isolation, yes, ACM Open is losing money, but is more efficient than DL subscriptions—it lost about ($3,600,000) in 2024, compared to a loss of ($4,200,000) in 2023. Personally, I think it’s a little disingenuinous to completely ignore conference revenue when considering publications; the profit from conferences almost entirely covers the loss on publications.
Is the ACM spending down its hoard? Obviously not. It continues to grow, and at essentially the same pace as before.
Is the ACM using its profit to support its mission? Well. I’ll give them one thing: with the price freeze in place despite increasing costs, the ACM has cut into its profit, mostly to support its mission. But it also spent a huge chunk on for-profit behaviour, developing new nonsense products and setting an explicit goal of increasing profits. The ACM is profiting, and making it a goal to profit, at the expense of its members and/or the public it is meant to serve.