Beware Publishers Bearing Gifts

Why the ‘Big Deal’ is a Bad Deal for Universities

DAVID BALLDAVID BALL

Bournemouth UniversityBournemouth University

(Chair, Procurement for (Chair, Procurement for Libraries)Libraries)

dball@bournemouth.ac.ukdball@bournemouth.ac.uk

Beware Publishers IATUL 2003 2

SummarySummary

Value chain Value chain – Creation, publication, aggregation, Creation, publication, aggregation,

access, useaccess, use– Where the money goesWhere the money goes

Economics of electronic publishingEconomics of electronic publishing The Big Deal - advantages, dangersThe Big Deal - advantages, dangers A way forward?A way forward?

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AcknowledgementAcknowledgement

Business Models for Distribution, Business Models for Distribution, Archiving and Use of Electronic Archiving and Use of Electronic

Information:Information:

Towards a Value Chain Perspective:Towards a Value Chain Perspective:

A Study for ECUP+A Study for ECUP+

Mark Bide, 1998Mark Bide, 1998

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The Value Chain: ConceptsThe Value Chain: Concepts

AuthorityAuthority

BrandingBranding

MonopolyMonopoly

Product-to-service shiftProduct-to-service shift

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The Value Chain: CreationThe Value Chain: Creation

Author or compilerAuthor or compiler Employed by publishers or Employed by publishers or

independent agentsindependent agents Creator confers authorityCreator confers authority Author as monopolistAuthor as monopolist

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The Value Chain: The Value Chain: PublicationPublication

Selection and editing of Selection and editing of information into consumable forminformation into consumable form

Authority - from imprint e.g. OUPAuthority - from imprint e.g. OUP from brand/title e.g. from brand/title e.g. British Medical British Medical

JournalJournal Monopoly transferred from creatorMonopoly transferred from creator

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The Value Chain: The Value Chain: Publication - Publication - electronicelectronic

Authority diluted?Authority diluted? Physical realisation deferred to end Physical realisation deferred to end

of chain - at point of useof chain - at point of use Libraries buy access - a service not Libraries buy access - a service not

a producta product

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The Value Chain: The Value Chain: AggregationAggregation

Bringing together in a coherent Bringing together in a coherent collection disparate information collection disparate information sourcessources

Libraries confer authority by virtue of Libraries confer authority by virtue of selectionselection

Libraries are in control of budgets by Libraries are in control of budgets by selecting individual titlesselecting individual titles

Traditional near monopoly for librariesTraditional near monopoly for libraries

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The Value Chain: The Value Chain: Aggregation Aggregation - electronic- electronic

No physical productNo physical product Aggregation role moves elsewhere Aggregation role moves elsewhere

- to publisher or intermediary- to publisher or intermediary Library monopoly lostLibrary monopoly lost

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The Value Chain: AccessThe Value Chain: Access

Core library activityCore library activity Near monopoly for printedNear monopoly for printed AuthorityAuthority

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The Value Chain: AccessThe Value Chain: Access - electronic - electronic

Library monopoly lost - network Library monopoly lost - network connectivityconnectivity

Authority of intellectual access/ Authority of intellectual access/ organisationorganisation

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The Value Chain: UseThe Value Chain: Use

Even with printed materials a Even with printed materials a service not a productservice not a product

Measuring usageMeasuring usage Measuring value for moneyMeasuring value for money

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The Value Chain: UseThe Value Chain: Use - electronic - electronic

First physical realisation First physical realisation Accurate measurement of usageAccurate measurement of usage Value for money?Value for money?

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Where Does the Money Where Does the Money Go?Go?

Popular fiction – to the authorPopular fiction – to the author Academic works – to the publisherAcademic works – to the publisher S&P Top 500 (1997)S&P Top 500 (1997)

– Reed/Elsevier 27Reed/Elsevier 27thth highest net profit highest net profit marginmargin

– Wolters/Kluwer 18Wolters/Kluwer 18thth highest return on highest return on equityequity

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Why Are Academic Publishers Why Are Academic Publishers Rewarded?Rewarded?

Not for disseminationNot for dissemination– Easy electronic alternativesEasy electronic alternatives– Intermediaries very poorly rewardedIntermediaries very poorly rewarded– Serials agents’ margin 6-7%Serials agents’ margin 6-7%

For validationFor validation– Creating the scholarly recordCreating the scholarly record– Peer review, quality assurancePeer review, quality assurance

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Distorting FactorsDistorting Factors

High indirect rewards of publication – High indirect rewards of publication – for academics; for institutionsfor academics; for institutions– Academic sector has vested interest in Academic sector has vested interest in

commercial scholarly publishingcommercial scholarly publishing No direct payment by user – price does No direct payment by user – price does

not affect demandnot affect demand– Academics never place a value on Academics never place a value on

publication or usepublication or use Result – unchecked inflationResult – unchecked inflation

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The Power of Consortia?The Power of Consortia?

Most effective when there is Most effective when there is competition – booksellers/serials agentscompetition – booksellers/serials agents

7 UK HE regional consortia7 UK HE regional consortia– Books/serials contracts over $100m p.a.Books/serials contracts over $100m p.a.– Large discounts on booksLarge discounts on books– High-quality service + innovationsHigh-quality service + innovations

Diminished by: monopoly suppliers, Diminished by: monopoly suppliers, looking-glass economics, product-to-looking-glass economics, product-to-service shiftservice shift

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Looking-Glass Economics of Looking-Glass Economics of the Must-Have Journalthe Must-Have Journal

Hard-copy price cut by 50%Hard-copy price cut by 50%– Some 2Some 2ndnd copies sold copies sold– Some new subscribersSome new subscribers– But But notnot 100% more 100% more

Generally libraries will spend Generally libraries will spend savings on other journalssavings on other journals

Result: lost profitability, decreased Result: lost profitability, decreased market sharemarket share

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Looking-Glass Economics of Looking-Glass Economics of the Must-Have Journal/2the Must-Have Journal/2

Hard-copy price is doubledHard-copy price is doubled– Some subscriptions lostSome subscriptions lost– But not 50% - a must-have titleBut not 50% - a must-have title

OtherOther titles will be cut titles will be cut Result: increased profitability, Result: increased profitability,

increased market shareincreased market share

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The Must-Have PublisherThe Must-Have Publisher

Same logic holds for e-journalsSame logic holds for e-journals It does not make commercial It does not make commercial

sense for publishers to discount to sense for publishers to discount to consortiaconsortia

Hence additional content instead Hence additional content instead of lower prices – the Big Dealof lower prices – the Big Deal

Hence must-have publishersHence must-have publishers

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Product-to-Service ShiftProduct-to-Service Shift

Hard-copy content is unchanging, Hard-copy content is unchanging, for all, for everfor all, for ever

Access to e-content is:Access to e-content is:– Time-limitedTime-limited– Archival rights?Archival rights?– Content changes?Content changes?– Restricted access rightsRestricted access rights

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The Big Deal - What is it?The Big Deal - What is it?

Access to all of a publisher’s Access to all of a publisher’s current titles, with some back-filescurrent titles, with some back-files

3-5 year licence3-5 year licence Based on previous print Based on previous print

subscriptions?subscriptions? Annual inflation increasesAnnual inflation increases No-cancellation clauses?No-cancellation clauses?

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The Big Deal - AdvantagesThe Big Deal - Advantages

Users - get more contentUsers - get more content Libraries - predict inflation; save on Libraries - predict inflation; save on

document delivery document delivery budgets Publishers - stable incomePublishers - stable income

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The Big Deal - More The Big Deal - More Content?Content?

Sweet-shop syndromeSweet-shop syndrome North Carolina Science Direct statistics:North Carolina Science Direct statistics:

– 28% of titles = 75% of downloads28% of titles = 75% of downloads– 34% of titles have 5 downloads or less34% of titles have 5 downloads or less– 57% of titles - 40% of usage in 1 month57% of titles - 40% of usage in 1 month

Emerald study (Ingenta Institute):Emerald study (Ingenta Institute):– 47% of users view 1 title of 11847% of users view 1 title of 118– 40% of users view 2-5 titles40% of users view 2-5 titles– 44% of subscribers view 1 subject (of 10)44% of subscribers view 1 subject (of 10)

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The Big Deal - DangersThe Big Deal - Dangers

Death of collection management?Death of collection management?– Subscription decisions at Subscription decisions at publisherpublisher level level – Can we not subscribe?Can we not subscribe?

Non-big deal subscriptions sufferNon-big deal subscriptions suffer Higher impact factors because of Higher impact factors because of

availability - undermine other journalsavailability - undermine other journals Publisher’s monopoly is intensified; Publisher’s monopoly is intensified;

national big deals exacerbate furthernational big deals exacerbate further

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A Way Forward?A Way Forward?

Specify what you want, determine your Specify what you want, determine your budget/price, then go to marketbudget/price, then go to market

Need strength of a consortium Need strength of a consortium Consultation, specification, tender, Consultation, specification, tender,

contract managementcontract management Retain budgetary control by selectionRetain budgetary control by selection Create favourable business modelsCreate favourable business models Support alternative publishingSupport alternative publishing

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The Little Porridge PotThe Little Porridge Pot

A good servant but a bad masterA good servant but a bad master The lesson is to retain control, not The lesson is to retain control, not

to let our servants control usto let our servants control us