Revenge of the Librarians: Journal Prices Under Siege

May 01, 2002

May 2002 Issue

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BEST PRACTICES SERIES

Not since Melvil Dewey came up with his now-ubiquitous Decimal System have librarians faced such a challenge to their status quo. The dawning of the information age, with all its consequences, has transformed the job of the "keeper" more than Dewey could ever have known, as librarians are now as apt to negotiate electronic content licenses and administer server configurations as to wade the stacks. In all, the electronic impact on libraries has been for the good. But there are unhappy whispers circulating between the periodical stacks. And if you listen closely, you can hear the beginning of a response to the so-called "journal-pricing crisis."

The Crisis At Hand
By all accounts, academic journal subscriptions have skyrocketed in price over the past 15 years, forcing academic librarians into a quandary as they grapple with limited budgets and soaring costs. And the advent of online publishing has only added to libraries' dilemma. A study conducted by Association of Research Libraries concluded that "libraries are spending more and getting less" as serials spending climbed 207% between 1986 and 1999, despite a six percent decline in the number of print titles. Meanwhile, the total number of ejournals has ballooned nearly six hundred fold.

In response, libraries have increasingly banded together in consortia to pool their purchasing power and strengthen their negotiating position with publishers over print and ejournal prices. There is nothing new, of course, in library consortia—Melvil Dewey himself formed the first one of note, the American Library Association, in 1876. Today's trend, though, has produced a laundry list of acronym-heavy initiatives bent on addressing the economic issues involved in online publication and creating alternative channels of distribution for scholarly writing.

Battling the System
One of the most vocal consortia has been the International Coalition of Library Consortia (ICOLC), which has extended what it calls an "olive branch" to the publishing community in the form of a Statement of Current Perspective and Preferred Practices for the Selection and Purchase of Electronic Information. The Statement declares that "Academic libraries are but one of several key players in a large, complex scholarly communications system that is becoming dysfunctional."

According to the ICOLC, "current pricing models for electronic information, which are developing during a period of experimentation, are not sustainable. Academic libraries, with their diminishing fiscal resources, will rapidly be unable to afford the pricing strategies for electronic information currently advocated by information providers."

Publishers' current pricing strategies are largely based on the "print plus" model, meaning the electronic version of a journal is only offered bundled with the hardcopy version, at a premium for the two. Libraries dislike this model, feeling they should have the option to purchase the online version alone, provided, as the ICOLC states, "the base price for the electronic content is no more than 80% of the price for the electronic-plus-print (thereby reflecting the savings that the non-supply of print copies can bring)."

Increasingly, other consortia are flexing their muscles as well. In the U.K., the National Electronic Site License Initiative (NESLI) is committed to unbundling print journals from ejournals. According to NESLI, "What is most noticeable about the majority of pricing policies is that very few publishers offer electronic-only access— libraries are still expected to maintain print-based subscriptions with the 'added bonus' of electronic access. NESLI hopes to reverse this situation and enable libraries to purchase electronic journals totally separate from print subscriptions at a lower price than the print equivalent."

More aggressive approaches to the impasse are being initiated by organizations, such as The Scholarly Publishing and Academic Resources Coalition (SPARC), an initiative of 180 member library organizations from around the globe which is underwriting new low-cost alternative journals meant to compete head-on with the high-cost commercial publications. Though accounting for only a small number of titles currently, SPARC has big plans for forcing down prices at the source. While the jury is still out, and not expected back anytime soon, there is some indication that SPARC titles have already had an impact on the smattering of commercial titles with which they compete.

Going a step further, the Open Archives Initiative (OAI), centered at Cornell University, "is working to create the technical foundation for a worldwide repository of research papers, available at no charge to scientists." By promoting common metadata standards, OAI wants to make it easier to search across a vast network of author's self-archived articles or "eprints". A widely adopted set of metadata standards, it argues, will be the force multiplier required for a network of self-archived, "free" scholarly literature to gain critical mass. Not unlike Linux in the operating system market, OAI carries a torch for believers that a major change is coming in the evolution of the STM food chain.

Wary of the momentum on this front, publishers have formed a sort of consortium of their own. CrossRef, a "collaborative reference linking service" in which 102 major scholarly publishers participate, offers researchers the ability to click on a citation in an online journal, and be directly linked to the location of the cited article. Subscribers are generally authenticated for direct full-text access, and non-subscribers see a free abstract and information on how to access the full text. Like OAI, CrossRef has seen the wisdom in broad uniformity, embracing technology metadata standards for its own 4 million-plus article database.

Taken as a whole, the library initiatives have slowed, though not entirely stemmed, the pricing tide. But before we take the publishers to task for robbing libraries blind, we need to understand the strange economics of the STM market.

The Strange Economics of Journals
The print-plus pricing model espouses two separate fee schedules precisely because there are currently two separate cost structures to maintain—due to the high fixed costs (or "first run "costs, in the industry lingo) of putting out a hardcopy journal. Offering electronic-only pricing would, theoretically, erode print subscriptions without reducing the cost base. In effect, from a revenue standpoint, publishers would merely be moving money from one pocket to the other, but paying for two pairs of pants.

Until the day, if it comes, that journals are published entirely online—without a print counterpart—these fixed-cost issues will remain a factor in epricing. In the meantime, the transition will be expensive for everyone. Researchers, long accustomed to free access to library holdings, now face the unmentionable prospect of distinguishing between inherently free library services and a new set of "premium" services that are supported by an entirely different cost structure. But it goes without saying that publishers, responsible to shareholders, can scarcely lower prices out of compassion alone.

"The problem" says John Cox, a UK-based consultant specializing in online publishing, "is how to construct a business model that supports these sorts of initiatives, and how to make the transition from predominantly print-based publishing to the provision of online services."

Those Who Can Pay Will Pay
A major obstacle to this transition is the counterintuitive twist on the traditional supply and demand equation presented by the STM markets itself. Because there is a core of prestigious research institutions willing and able to pay the ever-increasing prices for must-have journals (either out of true need or simply to maintain their premiere status), there is an established revenue base increasingly tasked with supporting the costs and margins of the publishers.

As a result, fewer and fewer libraries are indeed picking up more and more of the tab, leading to a vicious circle of budget constraints, cancelled subscriptions and higher prices. This partly explains how journal subscription prices have actually increased in the face of flagging demand: the market dynamics are such that premiere research libraries will pay the higher prices to maintain their elite position.

One of the key metrics in all of this is cost per use. The ICOLC Statement declares, "Pricing models for e-information must result in a significant reduction in the per use (or "unit cost") of information. The savings accrued through the production of electronic information should, over time, be passed from the provider to the customer."

The struggle to improve cost per use has librarians putting on their creative thinking caps. Says Cox: "A model that attracts increasing attention is based on population: full-time equivalents, or FTEs, which are defined as full-time enrollments in education, or number of employees in corporate, government, and professional libraries. Oxford University Press uses such a model for the Oxford English Dictionary, and, more recently, for Journal of the National Cancer Institute, which has become JNCI Cancer Spectrum online. The American Association of Immunology has adopted a similar FTE-based scheme."

A unique twist on the FTE model is underway in Iceland, where a nationwide consortium of libraries has approached the cost per use equation from an enlightened perspective. By negotiating with publishers not only on price, but even more so on reach, Iceland struck a first-of-its-kind agreement that gives every citizen of Iceland free access—from home, school, or work—to more than 2,000 ejournals from six major STM publishers [See Sidebar]. By expanding its user base rather than unbundling pricing, Iceland hopes to lower its cost per use while extending its charge.

Still, the FTE approach may not be enough of an elixir, given the fact that the vast majority of library budgets (up to three-quarters by some estimates) are spent on the administrative expenses of dealing with print journals. Assuming ejournals become ubiquitous, and print journals decline, those expenses would go away, which would effectively serve to free more budget dollars to pay existing journal prices. That is, internal library costs can still be slashed without sacrificing publishing margins for electronic product.

But the biggest problem of all is an issue of branding. Most academics are simply more interested in the tangible rewards (tenure track, promotions, awards, and grants) that come with publication in a prestigious journal than they are in helping the cause of the libraries by taking part in unproven initiatives (like SPARC and OAI). The "publish or perish" axiom might well be restated, "publish in a prestigious journal or perish".

This, then, is the crux of the problem. The best idea put forth so far by academia to counter the branding issue has been the concept of copyright retention by the author. If, the thinking goes, authors retain the copyrights to their works, then they remain free to publish in both prestigious journals and open archives. Knowing this would threaten their business so publishers are, of course, unwilling to oblige.

The Eterinal Conflict
With some tough talk and a handful of aggressive initiatives, libraries have put publishers on the defensive. But the measures taken thus far are merely peripheral to the larger equation. Absent a correcting market mechanism, prices will naturally tend toward a balance between true demand ("must have" libraries) and true supply (prestige publications). Since Harvard, Yale, and Stanford will never compromise on coverage, only an emergence of credible distribution alternatives that entice authors to publish elsewhere will alter the balance. That mechanism will have to resolve the thorny issue of copyright ownership against the price hike-enabling effect of academia's rewards system.

Given the increasing call to arms on the part of the libraries, and the fact that publishers' traditional value-adding services (editing, peer review, printing, and distribution) are becoming less of a value added, publishers too must position themselves for the uncertain future. CrossRef is a good start, but only a start. "The traditional culture of the publisher as a manufacturer of products has to be modified", Cox says. "Online publishers have to provide services 24 hours a day, 7 days a week. As their products are enhanced by linking mechanisms to other publishers' material, many traditional publishing ideas and processes need to be re-examined."

If his 1889 address at the Second International Library Conference was any indication, neither the motivations of the publishers nor the libraries' response would be new to Melvil Dewey. "The eternal conflict…is on," Dewey said then. "The librarian must be the librarian militant before he can be the librarian triumphant. At the end of another century… our descendants will look back with wonder to find that we have so long been satisfied to leave the control of the all-pervading, all-influencing newspaper in the hands of people who have behind them no motive better than 'the almighty dollar.'"

SIDEBAR: An Icelandic Saga
Between the parched calfskin covers of the medieval manuscripts on display at the Arni Magnusson Institute in Reykjavik can be found some of the world's oldest existing content. Handwritten in the Old Norse tongue still familiar to Icelandic speakers today, the Icelandic Sagas—a collection of historical fictions that recount the adventures of Iceland's 9th Century Viking settlers—are considered a literary Stonehenge by scholars who credit them as the genesis of the modern novel.

It is at once fitting and remarkable that ancient treasures of world literature are being retrofitted to a new medium in an enterprise worthy of their venturous Viking heritage. Just across town from the Magnusson Institute, at the National and University Library, a four-year project to digitize and make the Sagas available via the Internet is now complete. The SagaNet, created in partnership with Cornell University (home of the Fiske Collection of medieval works), is comprised of nearly a half-million digitized manuscript pages, and was made possible largely by a $600,000 grant from The Andrew W. Mellon Foundation and another $700,000 in grants from Iceland's Ministry of Culture and Education, the Icelandic Research Council, and private industry.

But the SagaNet is just one part of a larger plan to build an Icelandic National Digital Library. Intent on bridging what little digital divide actually exists in Iceland, the Ministry of Culture, Education and Science directed in 2000 that "all Icelanders must have access to information technology so that the nation will continue to form a single whole and not be divided into two groups, one with access to information and the other without such access."

As such, the project's Steering Committee announced what it hailed as a "groundbreaking agreement" with Lisse-based subscription agent Swets Blackwell, under which every single Icelander will be given access—from school, work, home, or at any of the country's 356 libraries—to more than 2,000 ejournals from six major STM publishers: Elsevier Science, Blackwell Publishing, S. Karger Publishers, Kluwer Academic Publishers, and Springer.

Demographically, Iceland is uniquely suited to the logistical challenge of such an undertaking. Its tiny size (population 283,000), isolated geography (bordering the Arctic Circle), and top-of-the-class demographics (100% literacy, 80% Internet access), make Iceland an ideal testing ground for a national digital library. The clincher, as far as the publishers were concerned, was the fact that with only five IP providers, keeping tabs on the national ejournal licenses will be extremely manageable.

As a business model, the Iceland/Swets deal not only provides a case study in the emergence of digital libraries, but also strikes at the very heart of the so-called "journal pricing crisis" plaguing STM publishers and academic libraries alike. Rather than arguing to unbundle print from electronic pricing, the Steering Committee formed a consortia of all 356 libraries in the country and talked the user base up to include everyone, thereby positioning itself for more private funding from an all-inclusive corporate base of support. That is to say, they approached the price per user equation not merely from the numerator (lower price), but from the denominator (more users).

As part of the ongoing tinkering toward a sustainable business model for ejournal publishing, the Iceland/Swets agreement carries a worthwhile lesson that other libraries and publishers would do well to consider. With its dual background under the aegis of the National and University Library, Iceland's National Digital Library must manage the dual mission of providing access to research and expanding the reach of Icelandic cultural heritage. To keep the grant money rolling in, and those calfskin manuscripts in zeroes and ones—and to bridge any real or perceived digital divide—Iceland is both exploiting it's cultural heritage niche (through SagaNet) and expanding its reach through the creation of a National Digital Library.

"If successful," predicted Thomas Hickerson, director of Cornell's Division of Rare and Manuscript Collections, "SagaNet will be a model to test the economic viability of national digital libraries with international audiences and to illustrate the potential that these technologies offer for changing the processes and costs of research."