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Environmental
Scan of Pricing Models for Online Content
Report II
Business Models for Object Repositories
Prepared by Albert W. Darimont
http://www.darimont.ca
OnDisC Project
April 2002© OnDisC 2002
0. Executive
Summary
1. Background
2. Learning
Object Repositories
3. Business
Models - Value chain
4. Funding
Models
5. Discussion
6. Conclusions
7. Bibliography
8. Web
Site References (Webliography)
3 Business
Models - Value chain
Ultimately business models are evaluated in the
market place and it makes sense to review existing
successful business models for applicability to
one's own situation. A detailed report, Business
Models for Distribution, Archiving and Use of Electronic
Information: Towards a Value Chain Perspective by
Mark Bide & Associates which deals with the
business models for traditional and electronic libraries
was obtained by the author for this kind of real-world
review. It is worth examining this report in detail
for two reasons. First it gives insight into a general
business model template that is suited for the delivery
of information, digital or otherwise from a content
author to an end user and as such can be used to
understand the issues and relationships that a new
distribution system such as OnDisC. In addition,
it can give specific insight into the type of business
model that OnDisC may find itself a part of, if
libraries end up being the organizations that contract
with OnDisC to provide access to digital content.
The next sections discuss the content in the Bide
& Associates report.
3.1 Players in a Traditional
Publisher-Library Value Chain
3.1.1 Intermediaries
Library intermediaries (book jobbers, subscription
agents, etc.) provide the services to the library
relating to acquisition, cataloguing, and in some
cases to aggregation (by allowing a librarian to
browse intermediary holdings etc. thereby assisting
in collection development decisions). Library intermediaries
also provide a valuable distribution function for
both publishers and libraries in that they allow
a many to one to many relationship, which is much
simpler and less costly than if many publishers
had to deal individually with many libraries.
3.1.2 Publishers
Publishers provide a number of value added activities
including: those associated with the publishing
process - selection of appropriate projects, quality
control, obtaining the right to publish, aggregating
like works into series or serial publication, and
investment or financing content creation; those
associated with the development process - content
development and design, content formatting and quality
assurance; those associated with access - manufacturing,
customer service, distribution; and finally those
with marketing - fitness of content for market,
awareness, branding and authority.
3.1.3 Content Creator
Content creator – creates the primary raw material
which supports the entire value chain. At times,
the name of an author can be a powerful brand name,
but regardless of that particular additional value,
creators need the value added by the entire chain
to give a composite or aggregated value to a work
that an end user will accept and pay for.
3.1.4 Libraries
Libraries provide a number of value added activities
including: aggregating content in one physical location;
those associated with storage of content - archiving
and preservation; those associated with providing
access to the content including awareness, discovery,
user training, access control; those associated
with branding and authority - selection (collection
development) and quality control; and finally providing
ambience for end users.
3.2 Other players
3.2.1 Rights Management Societies
They collect photocopying revenue from libraries
and distribute them to rights holders in a somewhat
crudely accurate manner. The main value they add
to the chain is providing a many to one to many
relationship between users and owners replacing
an unmanageable many to many relationship that would
exist otherwise.
3.2.2 Abstracting and Indexing Services
These secondary publishers perform a special role
as aggregators of meta-information and play an important
part in the discovery and awareness of material
by end users.
3.2.3 Document Delivery Services
These services provide documents to library
users on a just-in-time basis and act to extend
the aggregation of material beyond that which a
single library is able to provide. The idea of replacing
the standard just-in-case collection development
strategy with one based on an extensive document
delivery service is an ongoing consideration among
library professionals. One library in the UK at
Cranfield University has moved in that direction
by cancelling all journal subscriptions and satisfying
all information needs through document delivery.
Doing so does entail risks, including disintermediation
of the library as end users handle their information
needs directly with the document delivery services,
and in the potential for uneconomic use of the institutions
funds.
3.3 Payment Flows in
a Publisher - Library Value Chain
3.3.1 Payment to the Library
The end user in most library situations does not
make direct payments; rather the user pays indirectly
with tax money. Users do make direct payments on
occasion through library fines on overdue material.
3.3.2
Payment
by the Library - Acquisitions
A portion of library funding is used for the acquisition
of tangible products through the supply chain, with
the charging mechanism based on the receipt of the
physical objects. In the case of monographs, a single
purchase is made for single work. Serials are purchased
through ongoing subscriptions. The amount of use
of the object is not a factor in the price charged,
however the library may decide to purchase additional
copies of a particular object if demand for it is
high.
3.3.3
Payment
to the Library Intermediary
The costs of library intermediaries are offset by
a combination of charges against customers for handling
the delivery, claiming and financial transactions
involved in serials subscriptions and discounts
offered by publishers for buying books in volume.
3.3.4
Payment
to the Publisher
Library Intermediaries pass on the bulk of the fees
they receive from libraries to the publishers, who
set prices for the books based on their costs and
what the marketplace in general will bear.
3.3.5
Payment
to the Author
Finally, the publisher makes payments to the author
as a condition of the publisher having acquired
the rights of the author to publish his/her work.
In some cases, the author receives royalty compensation
that increases payments in proportion to the success
of the work. In other cases, the author receives
a flat fee based on a work for hire basis, or as
an employee salary. The marketplace also works in
these transactions to some extent with successful
authors being able to command higher fees or salaries.
3.4
Value
Added in Electronic Distribution
3.4.1 Aggregation
The value of aggregation remains the same in delivering
electronic content but the storage of the material
is fundamentally different as it can be take place
at any point in a distributed network and still
be available to end users at a particular point
in that network. Storage costs for electronic media
are somewhat lower than the physical structures
required to hold tangible media.
There are difficulties in archiving and preserving
electronic material that will add to the overall
long-term costs of storage. As technology advances,
current data will have to "refreshed"
and "migrated" to new platforms, and new
media rich forms of documents will further exacerbate
this, each constituent of which (video, audio, text,
etc.) may have its own updating requirements. One
model for outsourcing the archiving of electronic
media is that of JSTOR a company discussed in the
Phase I report.
3.4.2
Access
The Information Technology (IT) infrastructure needed
to access electronic media is broadly analogous
to the physical building and shelves required to
provide content aggregation under the traditional
print model. This implies a shift from spending
to provide aggregation towards spending to provide
access.
The point of access, or portal, to the aggregated
content will be a very important part in the value
chain of content delivery. A common, perhaps standardized
and effective, user interface may be delivered by
third parties who will be able to provide the many
to one to relationship between different content
suppliers that may be required to standardized access.
The discovery of electronic resources may be enhanced
by adding full text searching capabilities to metadata,
and by using other tools such as recommended reading
lists (Amazon). In an environment where information
content is being supplied at ever increasing rates,
the value of meta data which can lead to the discovery
and awareness of that content becomes as important
in the value chain as the content itself.
Another aspect of access to electronic content is
the reliable location of it on the network. Citations
lists in electronic journal articles and books may
be valuable discovery tools, but are not very useful
if a particular link to a valued reference does
not work. The Digital Object Identifier is an attempt
to provide robust reliable locator for published
and valuable content on the World Wide Web.
User training is a value added function provided
by libraries in helping users gain access to electronic
material and one that is not likely to go away anytime
soon.
Access control is much more important in an electronic
delivery environment since free access to anyone
would destroy the revenue model that the system
depends on. Value will be added in those systems
that aggregate access control and avoid situations
requiring users to navigate multiple levels of access.
3.4.3
Marketing
Brand value is a very important part of the value
chain in information dissemination. Branding elements
includes things like: the author's name; the author's
affiliate; the publisher's corporate brand; a citation
in another work; a recommendation from a colleague.
A user filters and combines these brand elements
to give an overall view of the authority, and hence
value of the information in question. Without branding
a user would have only their own judgment to depend
upon to make choices about information selection.
In an environment of prolific publishing, branding
is an essential value added function and may in
fact be the source of greatest value in the chain.
Table 1 - Primary Value Added
Comparison
| Primary
Value Added |
Secondary
Value Added |
Institutional
User
|
OnDisC
|
OnDisC
Member
|
Other
|
| Aggregation |
| |
Storage |
|
|
X
|
|
| |
Archiving/ preservation |
|
|
X
|
|
| Access |
|
|
IT Infrastructure |
X
|
|
|
|
| |
Gateway |
|
X
|
|
|
| |
User interface |
|
X
|
|
|
|
|
Discovery tools |
|
X
|
|
|
|
|
Meta-information |
|
|
X
|
|
|
|
Location |
|
X
|
|
|
|
|
User training |
X
|
|
|
|
| |
Access control |
X
|
|
|
|
| Publication |
| |
Selection |
|
|
X
|
|
| |
Rights acquisition |
|
|
X
|
|
| |
Content formatting |
|
|
X
|
|
| |
Content development |
|
|
X
|
|
| Marketing |
| |
Awareness |
|
X
|
|
|
| |
Branding and authenticity |
|
|
X
|
|
| Administration |
| |
Payment cycle |
|
X
|
|
|
|
|
|
|
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