First the myth. Philip Altbach wrote in “Hidden cost of open access” in the Times Higher Education Supplement 5 June 2008 
Profit, competition and excess have spawned the open-access movement. […] But there are several problems with it. Chief among them is that peer review is eliminated […]
Essentially, open access means there is no objective way of measuring research quality. If the traditional journals and their peer-review systems are no longer operating, anarchy rules. Researchers will have no accurate way of assessing quality in a scholarly publication.
That “open access” is synonymous to “non-peer reviewed freely published online work” is a myth. That learned academics believe such myths is disturbing. Peter Suber, a crusader for Open Access, has responded well in his article “Another prominent misstatement about OA and peer review” .
Open access journals are peer reviewed. They have not yet been embraced by academics not because of lack of peer review but more because of non-peer “recognition” of them. Publication of research in such journals is not yet “recognized”, for whatever reasons, as first class. This should imminently change in the future if not by any academic recognition out of economic necessity being created by the current trend of closed access journal publishers.
That brings us to the topic of this post. The major peril of “closed access” and the urgency of open access. First, sample this from a recent Nick Gill’s article 
Last month the Institute of Mathematical Sciences, Chennai (IMSc) launched its new open-access repository. The repository provides open access to research articles written by members of the Institute. Anyone who has an Internet connection can access the server and can read articles about physics, mathematics and theoretical computer science written by members of IMSc.
[…] journal prices have, in recent years, gone through the roof and many journals are now so expensive that access is restricted to universities with extremely deep pockets.[…]
The IMSc repository is part of a growing backlash from academics around the world who are angry at this state of affairs. They are seeking new and different ways to wrest back knowledge from the corporations and to open up access for all.
Check also the costs involved and who makes money on whose efforts (quoting from Nick’s article)
[…] Consider the situation at IMSc, Chennai. The total annual budget for IMSc is around Rs 13.3 crore, of which Rs 2.55 crore is spent subscribing to academic journals. Around 55% of this Rs 2.55 crore is paid to the two largest publishing companies – Reed-Elsevier and Springer – for the privilege of receiving a selection of the journals that they publish. In other words, more than 10% of the total budget for IMSc (more than the entire budget for faculty salaries) is paid directly to these two multi-national companies.[…]
One more sample on costs. Not long ago Fred Dylla, executive director and CEO of the American Institute of Physics, while responding to a query about the pricing of journal articles writes (see reference 4, and check at the bottom of the article linked for Dylla’s response)
It does seem inappropriate to pay $19 for a one-page download of an 18-year-old article. But one has to dig below the surface to understand the economics of scientific journal publishing […] Producing a high-quality, peer-reviewed archival journal such as AJP involves significant costs, including those for a reliable online platform that has made AJP and other member-society journals available to a much wider audience than did the former print-only subscriptions. AIP has also made major investments to digitize and make available electronically journal issues […] Those real costs are recovered, by and large, through institutional subscriptions paid by libraries and research institutions. The cost of producing one typical article is between $1500 and $3000. Considering the average journal subscriber base, a $20 price for a nonsubscriber to download an article is not out of line.
There is an imminent danger of all new knowledge getting locked up and released into the public domain only when the middlemen publishers get rich enough. Released only when the knowledge itself is reasonably old and loose their cutting edge, especially for the economically tender third world.
Academicians generate knowledge by receiving funding for their research from government or private agencies. If it is published in peer reviewed journals (and not get locked up in patents), then academicians can impart this knowledge to others in due course, only for a meager fee (their salary). If the duty of every academic is to generate such new knowledge (by doing research) and impart it (by teaching), it certainly is also the duty of the academic to make that knowledge available for free for everyone interested. There is absolutely no role for any rich middlemen here to decide when the knowledge should be made available to everyone.
If this situation of sky-rocketing journal costs continue, there may not be many even in academics who will be ready to (or can afford to) read what is printed in “exclusive” journals. A good way to render academic publishing obsolete [see 8], but, not before making a few publishers stinking rich.
Read my earlier essay on what is open access publishing  for some ideas on how to counter some of these issues. Some further suggestions are:
1) All premier institutes of India must have an online open access archive of ALL papers published by their faculty and staff and scientists. This is a tall task but an absolute must. Anyone who has an internet access should be able to browse and download any of these articles for free. Doing this is not a big hassle. There are already open source software available for this activity. And server space and bandwidth are the only cost, which is pittance in the yearly academic budget.
2) A common web server connecting all of the premier institutes should be installed. This would be an intra premier institutes server, which can be connected to from other universities and institutes in India via protected access. Once such a server is installed (with a common IP), all costly journal subscription should be bought only once for the country (ignore the hyperbole), that too, only online access for this server. Every institute in India should be able to access this server for a nominal fee, which goes to a corpus for subscribing to these journals.
If successful, this cuts down subscription costs drastically for all of our institutions and accessing the journals is still legal (observe we are not providing free access to everyone for the journal sites). When we do video conferencing overseas, I doubt why this venture of connecting all the premier institutes within India should not be possible.
3) If the action plan in 1) and 2) can be synchronized and enacted in the next few years, we have a basic framework for dealing with this middlemen publisher generated closed access of knowledge. While the actual journals can be subscribed to – without actually having to boycott them, thereby putting the possible international recognition of the research of our scientists in jeopardy – their content generated by Indian scientists can be made available for free to all of us with internet access.
4) The above is obviously a short term solution. Publishers could counter this with still hiked up prices for their journals, which are bound to sell less in number anyway. A better long term solution could be a new business model that is inclusive of the publisher and the author and the reader. But I am an idealist who hate to think academics is business or knowledge is money. A true seeker of knowledge abhors a commercial use for the knowledge sought (and found). I have an ancestry in this view, starting at least from Euclid. Point is, I can suggest new business models, but I don’t want to. Like Women’s lib or Greenpeace who at times take an extreme stance so that at least some middle ground is reached in the issues they fight for, I would like to see all research and academic publishing “open access” and is available for free or made available for free (at least enough hard and soft copies) for everyone.
5) So the obvious contextual suggestion would be to start more peer reviewed open access journals in every subject area. I have written about the pros and cons  of this already. A related venture would be for every premier Indian institute to start their, open access, peer reviewed, research journals.
Having only online access open access journals obviously reduces cost of publishing [6 – link noted by Eric ]. Reference , the Times Higher Education article, reports that a move to electronic-only publishing would bring a fall of about £1 billion (12 per cent) in global costs.
6) Peer review process is done for free even today. It has been cultivated to be seen as the moral duty of a researcher in maintaining the objectivity of produced research – the hall mark of scientific study. In reference , it states
the worldwide unpaid cost of peer review at £1.9 billion a year, and estimates that the UK is among the most altruistic of nations, racking up the equivalent in unpaid time of £165 million a year.
This brings another option to the table for open access journals. It could be argued that let the publishers pay some cut to the peer reviewers from their profit. This would immediately back-fire. The publishers would pay the reviewers and send the check to the buyers – again academic institutions – by raising their journals cost. Instead of doing this the peer reviewers (who are also researchers) or the institutions they belong to could demand free journal access to all the journals that send peer review request to them. This free access could be renewed annually depending on the annual review requests received per institution. This option gives the incentive for the closed access journals to remain freely accessible to institutions that contribute to their profit. It also gives the authors and peer reviewers in accessing the journals for free and ensure so, by accepting peer reviewing requests. In addition, the institutions are able to cut down their annual journal subscription costs to such closed access journals.
7) The funds saved by cutting down on subscription costs of closed access journals can be diverted to conduct more international research conferences every year by the premier institutes. The publications in these conferences can be subjected to rigorous peer review akin to a good journal. This allows more quality research to be exchanged in such conferences. The proceedings from such conferences can be considered equivalent to journal publications for the scientists, which gives them a reason to publish their research locally than to always seek closed access journals for their recognition. More importantly, these proceedings should be open access and made available for free at leas online.
Related article: Open Access Publishing
1. Philip Altbach, Hidden cost of open access Link [http://www.timeshighereducation.co.uk/story.asp?sectioncode=26&storycode=402257&c=1]
2. Peter Suber, Another prominent misstatement about OA and peer review
4. Fred Dylla's comments [http://ptonline.aip.org/journals/doc/PHTOAD-ft/vol_61/iss_2/8_1.shtml]
5. Open Access Publishing Link [http://www.arunnnarasimhan.info/open-access-publishing.html]
6. Article Source Link [http://www.timeshighereducation.co.uk/story.asp?sectioncode=26&storycode=402189&c=1]
7. Eric's note Link [http://blog.beerkens.info/index.php/2008/05/peer-reviewing-as-a-hidden-subsidy/]