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Environmental
Scan of Pricing Models for Online Content
Prepared by Albert W. Darimont
OnDisC Project
November 2001
©OnDisC Alliance 2001
1.
Executive Summary
2. Introduction
3. E-Business
Models
4. E-resources
in Today's Academic Libraries
5. Library
E-business
6. E-journals
7. Subject
Based Gateways
8. Content
Aggregators
9. Non-profit,
subsidized
10. Content
Providers
11. Conclusion
12. References
E-journals
A major reason for considering electronic journals
in libraries is to address the problem of inflationary
subscription fees of some journal titles, which
in recent years have increased tremendously
in cost. It has been proposed that once a journal
is digitized the duplication and delivery component
of distribution cost will make a significant
reduction in the overall cost of the journal.
This cost saving has not been convincingly demonstrated
however. Users generally will expect extra value
in an electronic version of a journal such as
the ability to make electronic highlights or
hot links to referenced papers to make it worth
their while to learn the new interface. The
extra cost of adding these new electronic features
often out weighs the savings accrued from electronic
delivery of the journal. Users will also be
reluctant to invest the time and effort to learn
a new electronic journal system if there is
not a critical mass of available content to
make it worth their while. This problem is also
present in the distribution of music online;
users who are used to user a single, simple
interface such as Napster to download music
will be reluctant to learn a different system
for each of the major record labels.
One beneficial aspect of digitizing
journals is the ability to dis-aggregate journal
issues and allow libraries different pricing
models for purchasing individual papers.
One model of a non-commercial electronic journal
generates fees by charging the authors of a
paper a publication fee instead of charging
users a subscription fee to offset the costs
publication costs editorial work, proof-reading,
distribution. This model addresses the fact
that current internet users that expect free
content will be reluctant to pay for an electronic
journal, and also avoids the extra costs associated
with subscription (maintaining accounts and
restricting access).
Traditional journal pricing, where an annual
subscription fee is charged per title creates
a low-risk market for publishers. The user base
is wide, and money is paid up front. In an electronic
environment, journal articles can be un-bundled
and sold either on-demand, or repackaged in
bundles better suited to individual libraries
or departments.
Publishers sometimes bundle all of their titles
and sell a site license to the entire collection.
This is analogous to bundling a set of journal
articles into one issue of a title; money is
paid in advance, and weaker articles (or journal
titles) are subsidized by stronger articles
(titles).
Electronic publication allows flexibility in
the bundling of individual articles, and in
the prices charged for them. For example, different
prices may be charged for the same article depending
on who accesses it staff, undergraduate or graduate
student or at different times of the year –
articles may be more expensive near exam time
(thereby penalizing last minute studying).
The PEAK [9] (Pricing Electronic Access to Knowledge)
project at the University of Michigan in conjunction
with Elsevier explored three different pricing
models for electronic journals. One model was
the traditional subscription model where a library
pre-pays for a number of journal titles. A second
model involved a generalized subscription in
which a library purchased a bundle of 120 article
“coupons”, from a large set of journal titles,
which are used as users request articles. In
a third model libraries paid a set price per
article without having to commit to either a
traditional subscription or a pre-purchase of
a bundle of articles.
Initial findings of the PEAK project found that
the two non-traditional models found great acceptance
among the participating libraries. The authors
also found that there is a non-monetary user
time and effort cost associated with accessing
journal articles in the metered-use distributed
models that affects their overall usage pattern.
In addition, it was found that there was a substantial
learning curve for users extending for almost
a year before users were using the service heavily.
The authors noted that a potential long term
unwanted consequence of adopting the non-traditional
models would impact the publication of less
popular articles, which in the traditional model
are subsidized by the more popular articles
in a journal title.
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