John Cox AssociatesInternational Publishing ConsultancyRookwood, Bradden, Towcester, Northants NN12 8ED, United KingdomTel: +44 (0) 1327 860949 Fax: +44 (0) 1327 861184 Web: www.johncoxassociates.comSSP Pre-ConferenceWednesday 28 May 2003Pricing and value in electronic literature: validating pricing policy in a complexmarketA. INTRODUCTION TO THE ONLINE LIBRARY MARKET! One third of the worlds libraries are in North America, another third in Europe, and the remainder spread around the rest of the world. US share may be as high as 60%.! 46% of the overall library budget is staff; other operating costs 13%. 41% on materials, of which 63% is spent on serials – 26% of total library expenditure. Libraries spend $1.50 on staff and operating costs for every $1.00 spent on materials.! 122 ARL libraries spent over 16% of their acquisition budgets on e-resources in 2001; proportion increasing at 30+%. Total electronic serials expenditure $120 million in 2001.! Spectacular growth in library consortia actively purchasing electronic content: 102 to over 160 in three years. Most serve academic and medical libraries; many are “multi-sectoral”, including school, college and public libraries as well as academic. Some large corporate and government library systems function like consortia.! Five years’ evidence to demonstrate that usage of online content is both broader and more intensive than either publishers or librarians expected.! Online publishing is a service business: sales channels are more direct; linking means working together.! Trading partners now are more varied and more numerous: subscription agents, OCLC and new intermediaries.
B. PRICING MODELS FOR ONLINE SERIAL PUBLICATIONS! There is an infinite variety of pricing models, all discarding the inflexibility of the single title subscription price.! Prior year plus a premium: the APPEAL licence created by Academic Press. It works for publishers in the “Big Deal” and is used by the major commercial houses. It is favoured by many consortia.! Variations on the title subscription price, using the print subscription price as a basis on which further services can be provided, or online at a discount. Note the practice of providing additional titles online provided that existing subscriptions are maintained. This approach retains flexibility of choice for the library, and price breaks based on volume.! Simultaneous users – traditional pricing for databases. It is an attempt to relate price to an assumed level of usage. It allows the library (or consortium) flexibility in gauging demand for the product and upgrading or downgrading its user levels as required.! Population based models – based on full time enrolments in education, or number of employees in corporate, government and professional libraries.! Pricing by institutional ‘size’, using Carnegie Classification (USA) or JISC Charging Bands (UK). But these are restricted to those two countries.! Usage-based pricing. The early anecdotal evidence from OhioLINK is that usage is spread right across the whole list covered by the online license. But it is fraught with difficulties of definition (but see COUNTER) and is not yet accepted by libraries.! Package pricing that varies by type of customer, e.g. Project MUSE, OUP’s pricing for OED and ANB, The Ingenta/PCG ConsortiaLINK pricing scheme.• There has been criticism of some of these models – notably of the FTE model and of ‘one-price- fits-all’ – as inappropriate outside the English-speaking world, where student profiles and teaching methods are different, and where English is not the principal language.• Listserv postings have spoken highly of the simultaneous user model, while criticising the population-based, or FTE. For consortia, they are unlikely to displace “prior year plus a premium” pricing.• Pricing collections requires a model based on the aggregate subscription price of the constituent titles, with an attractive level of discount. Of those publishers that have tried this approach, the effective discount appears to be 20-30% off the aggregate subscription price, but this will depend on the subject and the list of journals.C. DIFFERENT PRICES FOR DIFFERENT MARKET SEGMENTS! Publishers have been doing it for years, for institutions, individuals, society members or by geographical region.! But online publishing extends the reach of content, and extends the reach of the product or service to markets that simply would have been unable or unwilling to buy scholarly material in print.! Differentiating between academic and corporate markets; there is a trend by large publishers to charge a platform fee or access fee in addition to the journal prices.! The value of a journal will vary by type of institution. The marginal cost of reaching secondary markets in 4 and 2-year colleges, in public libraries or schools, is less than the incremental income gained by a modest premium applied to existing subscriptions, e.g. – Project MUSE, OUP’s pricing for the Oxford English Dictionary.! Differentiating by service levels. The functionality of the online product is important. Some publishers have adopted different prices for basic and enhanced service and/or usage rights.! The marginal cost of providing additional access online to customers that would never have been able to afford print journal subscriptions is low. So it can work on a geographical basis, to enfranchise academic and professional readers in less developed countries.
D. THE ROLE OF COST-PER-USE IN PRICING E-CONTENT! Measuring use and assessing what constitutes ‘value for money’ in scholarly journal publishing is difficult. For the publisher, this may be a simple arithmetical calculation of the price charged divided by the number of uses made of the journal. For the library, there are indirect costs of space, staff and other overhead to add to the direct cost to the acquisitions budget of the title concerned.! A well-used expensive journal is better value for money than a low-priced title that is not read: Journal Publisher US$ cost No of uses $ / use Brain Research Bulletin ANKHO [now Elsevier] 2,385 187 12.75 Hospital Medicine Mark Allen Publishing 398 6 66.33 Advances in Clinical Chemistry Academic Press [now Elsevier] 98 3 32.67 International Journal of Neuroscience Gordon & Breach [now Taylor & Francis] 5,922 183 32.36 Archives of Physiology and Biochemistry Swets & Zeitlinger 496 18 27.56 Brain Behaviour and Evolution Karger 1,389 52 26.71 Journal of Neuroscience Research Wiley-Liss 5,095 483 10.56 Brain Research Elsevier 14,669 1,777 8.25! Emerald and Institute of Physics Publishing: average cost per use in 2002 of each publisher: Publisher Number of articles available Total downloads Price per article Average price per use January December average USD $ USD $ IOPP 32,091 39,934 36,012 3,062,502 6.14 5.46 Emerald 117,226 154,882 136,054 3,093,655 4.79 4.58! Anecdotal evidence: savings in binding costs by discontinuing print, reduction in the need for space, access not dependent on library opening hours or location; staff redeployed on professional duties by discontinuing the manual check-in, re-shelving, repairs and processing inter-library loan requests.! The Drexel Study of the organizational and operational cost impact of the migration to electronic journals by Montgomery and King contrasts unit cost per use of print and electronic: Journal Type Subscription Cost per Recorded Subscription Operational Total Cost Cost Title Use Cost / Use  Cost / Use  per Use  Electronic Journals Individual Subscriptions $ 73,000 $432 23,000 $ 3.20 $ 0.45 $ 4.00 Publishers Packages $304,000 $134 134,000 $ 2.25 $ 0.45 $ 3.00 Multi-publisher Packages $ 27,000 $ 60 20,000 $ 1.35 $ 0.45 $ 2.00 Total $404,000 $147 177,000 $ 2.30 $ 0.45 $ 2.75 Print Journals Current Journals $ 38,000 $100 15,000 $ 2.50 $ 6.00 $ 8.50 Bound Journals N/A N/A 8,800 N/A $30.00 $30.00 Total $ 38,000 $100 24,000 $ 2.50 $15.00 $17.50! Library operating costs - # $30 for bound print titles – where 80 per cent is attributable to the space they occupy # $6.00 for current print subscriptions # $0.45 per use for electronic journalsE. PRICING MODELS FOR EBOOKS! The eBook marketplace is set to expand according to market research firms – but there are no reliable statistics.! Microsoft, Adobe and Palm are dominating the technology side of the market.! Desktop/laptop computers predominate in institutional library and business markets.
! A market for PDAs is emerging in medicine, which has not yet been replicated in other professional markets.! There are two major factors that are driving eBook development: the increasing availability of e-publishing or document conversion services, and the emergence of eBook standards - ONIX Publication codes (EDItEUR) and the Open eBook Publication Structure.! Types of eBook: market differentiation: # reference works, both in aggregated databases and some publishers’ online publishing, due to the suitability of this type of content for combining with journal content, and # teaching and learning material (i.e. textbooks) available on custom-publishing sites from leading textbook houses.! Two market segments are emerging; libraries can hold more content and save on shelf space by acquiring eBooks from aggregators or from publishers, including reference works and monographs, and individuals buying chapters or pages on a pay-per-view basis. The medical market is developing more rapidly than any other professional market.! The textbook market is being affected significantly by custom publishing sites operated by the major textbook companies.! Different business models for different types of eBook content are evolving. Some types of content are being sold in two or more ways: # Reference Works are treated as ‘subscribe to’ products. Pricing appears to be converging on a subscription model that either varies by type of customer and population, or is based on simultaneous users. # Non-STM teaching and learning titles are offered as custom eBooks and courseware on a per- page pay-per-view basis. Pricing is usually per page, within a range of 10-12c per page. # Monographs are being sold in aggregated collections and on eBook sites operated by individual publishers. Pricing is related to the individual print price per title, discounted by 15- 20%. eBook rental is also tried, e.g. a 7-day rental at 20% of the eBook price.! Aggregators are important in the library market. New aggregators adding functional efficiency and value are emerging.! There are free eBook projects. Alternative eBook publishing ventures are mainly in their infancy and do not appear to threaten established publishing practice or business.F. IMPORTANT REFERENCES! Scientific Publishing: Knowledge is Power: Morgan Stanley Equity Research Europe, London, 2002: http://www.econ.ucsb.edu/~tedb/Journals/morganstanley.pdf! ARL Statistics 2000-01, Association of Research Libraries, Washington DC (www.arl.org/stats/arlstat/01pub)! Montgomery C. H. and King, D. W., Comparing Library and User Related Costs of Print and Electronic Journal Collections – A First Step Towards a Comprehensive Analysis, D-Lib Magazine 8:10, 2002! www.projectcounter.orgFurther information and specific advice can be commissioned from:John Cox AssociatesRookwood, Bradden, Towcester, Northants NN12 8ED, United KingdomTel: +44 (0) 1327 860949 Fax: +44 (0) 1327 861184 Web: www.johncoxassociates.com