118.2 VENDOR PRICING POLICIES, Joel Baron 118.3 PROGRESS REPORT ON THE AQUEDUCT BENCHMARK LIST, Michele Crump
Hannah King, SUNY HSC Library at Syracuse, KINGH@VAX.CS.HSCSYR.EDU.
During the past decade, librarians have sharply criticized subscription pricing policies followed by publishers. Vendors tried to take a neutral stand, sometimes playing the role of intermediaries between two opposing camps. Often they complained that they were being squeezed dry of profit between librarians cancelling titles and publishers decreasing vendor dis- counts. Librarians largely ignored vendor subscription pricing policies. The amount vendor policies contributed to the continuing escalation of subscription rates remains, therefore, unknown. Vendors blamed publishers when librarians complained about invoicing poli- cies which resulted in numerous supplemental bills over the subscription year. They also implicitly threatened disruption of delivery if renewals were delayed until firm prices were set. When librarians questioned ex- change rate policies, vendors simply agreed their policies were not com- pletely clear. When librarians questioned service charges, vendors main- tained that service charges were determined by some proprietary formula that included variables such as collection size and percentage of foreign titles. Such variables, vendors insist, make comparison across libraries futile. Each serials librarian thus continues to negotiate from a knowledge base built largely from the information vendor sales agents provide. To save time, librarians continue to base decisions involving thousands of dollars on the salesperson's pitch out of loyalty, respect, and habit. I first became doubtful of vendor supplied information when I compared price lists for the same titles supplied by 2 different vendors. I found evidence that our library may have paid higher prices for most of the ti- tles on the lists. Our library received a refund of $500 accompanied by a disclaimer by the vendor. The disclaimer attributed price differences to exchange rates in effect at the time the publishers were paid. Next, I learned that the reason another library was paying such a low serv- ice charge on their subscriptions was that the library had discovered it had been overcharged fairly substantially over the past several years. Then I found out through a publisher's special offer that the library was actually paying a 25% service charge on its subscription to _Occupational Health and Safety_. The cover price was $91.00, we were billed $114.00 plus a 3% service charge. I complained to our vendor that we had been over- charged. The vendor disagreed, stating that $114 was the price listed on the "vendor list price" and vendors had to charge according to the "vendor list price." I checked back with the publisher, Stevens Publishing. According to Stev- ens, "the difference between the authorized agent price and the basic rate is the amount of the agent's commission." I checked with a number of other libraries using a variety of vendors. All but one was paying the "author- ized agent price." All vendors I contacted were adamant that the "vendor list price" was the only price list they followed. Seventeen titles were on the Stevens' list. After comparing cover price with invoiced price for a large proportion of my titles, I found that at least 8% (about 80 titles) were billed at a higher price than the cover price. Raven Press added $2.50 to each sub- scription price for shipping and handling. Determining cover prices for foreign titles was almost impossible without knowing the date the vendor had placed the order. Further, identifying exactly what the library had paid for a particular title was just as difficult given numerous supplemen- tal billings and credit memos. Librarians do not really know whether the library is being charged the correct price for a journal subscription. I am responsible for close to a half million dollars for serials. And yet, if asked for an accounting, I would need to reveal that I depend solely on the vendor's word regarding prices. In effect, librarians are now forced to treat vendor invoices as if they were error free. Few purchasing agents pay invoices amounting to thou- sands of dollars without first verifying that the charges are correct. I recommend that librarians begin to demand more from subscription vendors. Certainly the cover price should be considered the "correct price," the "publisher price," or the "retail price" of a subscription. Certainly, all vendors should be expected, legally, to identify titles which incur a high- er charge when they are ordered through a vendor. Vendors must insist that publishers identify any titles whose rates are increased to allow the vend- or a higher discount. Finally, "vendor list prices" should not be consid- ered the authority in questions about pricing discrepancies. The vendors all assured me that Stevens Publishing has a "non-standard" pricing policy. However, none have agreed that, in the event a library finds out that it has been charged a higher price than the cover price, the library should receive a refund.118.2 VENDOR PRICING POLICIES
Joel Baron, Vice President, The Faxon Company, BARON@faxon.com.
Faxon welcomes the opportunity to respond to Hannah King's article on vend- or pricing policies. First, I want to make it clear that we speak only on behalf of Faxon. Our policies are our policies; what other agents do is their business and we neither speak on their behalf, nor do we apologize for any of their actions. Faxon's margins have been squeezed sharply over the past five years. Some publishers have increased their discounts during that period, and others have reduced their discount percentages; on average, publisher discount percentages have declined significantly. Simultaneously, many agents have begun competing on the basis of service charge percent only, and that has driven service charges down. We have, however, never sought to gain more profitability by charging prices that are higher than the publisher's stat- ed price. Faxon's service charge computation is a function of two basic factors: first is the level of service required by a client (online connections, check-in services, extensive reporting, etc.); second are the average dol- lars of publisher discount we earn on a given client's orders. If our share of a client's collection gives us the higher priced, high discount titles, and if the client's service requirements are "average," odds are there will be only a minimal -- if any -- service charge percent added. On the other hand, a $50 title from a publisher who gives no discount could yield a hefty service charge *percent*, although one that would be relatively small in dollars (i.e., a 30% service charge on a $50 title would yield only $15.00). Now on to Faxon's policy relative to supporting publisher prices. This is very simple to answer: We charge the price the publisher sets. Prices are communicated to us via catalog, price list, letters, faxes, etc. Faxon maintains files of these documents for three years, and, in the past, cor- porate clients have sent in auditors to verify prices. We have never had a problem. In fact, any client can come to Faxon and verify prices them- selves. Whatever the publisher states as the list price is the price Faxon puts into its computer. Due to foreign currency rates, sometimes, there are slight differences in what a publisher states as list price in a catalog, and what they call list price in the published issue of a journal, however, by and large, the prices are identical. By far the vast majority of the major publishers make their price lists available not only to agents, but to libraries as well. Since these prices are so easily verifiable, it would make no sense for an agent to charge a price higher than the published price. A client would spot that immediate- ly. Faxon, in fact, tries to guide clients to lower prices whenever possible (member subscription rates, or combination rates, for example). But in all cases, we charge the publisher's price. Now let's deal with foreign exchange. Some non-US publishers quote prices in US dollars; some quote in their local currency but fix a conversion rate; and others simply quote the price in local currency and Faxon has to take care of figuring out exchange. It tends to be the latter that causes the greatest confusion. Faxon carries the local currency price in its computer. That price stays fixed for the year. Every Friday, however, we plug in the exchange rate as of that day. We do it on Friday because we tend to run orders over the weekend. When Faxon bills one of these titles to its clients, we bill the converted price that is in effect at the moment of billing. We adjust that price via a supplemental invoice as of the day we actually order the title from the publisher: that is the moment the liability is created within Faxon, so that is the price that is charged the client. Last, I'd like to address the issue of prices that are higher through a vendor than directly from the publisher. (My premise in this part of the discussion is that we are talking about journals rather than magazines, which can have many rates.) Yes, with some 20,000 publishers and 100,000 active titles there are most assuredly some publishers who follow practices such as the one referred to in Ms King's article. Most publishers, however, especially the major ones, have clear pricing communications, and, in fact, strive for unambivalent statements. The "agency pricing" referred to is probably a rare event, and not one that agents may even be aware of. In short, if one picks one's agents carefully, asking probing questions during the contract negotiations, and always keeping the discussions open, these sorts of issues just shouldn't come up during the year. Please con- tact me directly if you would like any further clarification.118.3 PROGRESS REPORT ON THE AQUEDUCT BENCHMARK LIST
Michele Crump, University of Florida, MCRUMP@nervm.nerdc.ufl.edu.
I am writing this progress report on the Aqueduct Benchmark list to relate
preliminary findings this data gathering activity has uncovered. For about
two years I have been assembling serials pricing information, starting with
1992 prices of primarily STM (science, technology, medicine) titles, to
create a benchmark list of "100 journal titles for comparison of prices
paid to various subscription agents and directly to the publishers" as
promised in the Aqueduct Agenda. This project has taken much longer to
compile and analyze than expected and in gathering the information the
participants now agree this activity will be an ongoing endeavor. The ac-
tivity is a proactive one and gives the participants the opportunity to
review payment activity and vendor practices on a title-by-title basis.
The base list used to form the benchmark list came from Louisiana State
University's list of their 200 most expensive titles. The base list the
participants are using dropped to 89 titles after a long review process in
which several libraries verified ownership of the titles.
Nineteen libraries from 13 institutions report payment information about
the titles they own from the base list. The 19 libraries participating
include: 4 Health Science/Medical Libraries; 4 Science libraries; and the
remaining 11 are university libraries with significant science collections.
Thirty-one vendors/subscription agents are represented in the data; that
number includes publishers as vendors when libraries order direct from the
publishers.
PRICE LIST AND SPREADSHEET
The participants use a publishers' price list of the 89 titles to verify
the volumes and payments they are reporting. This list contains: Title;
Publisher; ISSN; Publisher catalog list price (1992; 1993; 1994-planned);
Volume number and date. Some of the 1992 and 1993 title prices on the list
were recorded in Dutch gilders, British pounds, and Swiss francs. Those
titles requiring conversion were published by Elsevier, Kluwer, and Perga-
mon. Ron Akie of the Faxon Company provided the set exchange rates these
publishers used throughout the 1992 and 1993 renewal period. This made the
conversion process a lot easier as far as recording the publishers' list
price was concerned. As stated earlier, the publishers' price list will be
updated to include the volume numbers and prices for each consecutive year
of data we add to the benchmark.
The participants use an Excel spreadsheet for recording data on each title
they own out of the 89 on the publishers' price list. The spreadsheet in-
cludes: Title and volume; Vendor; Library's payment/Invoice date; Service
charge; Added charge/Invoice date; Service charge for the added charge;
Credit received/Credit invoice date; Comments area for early payment cred-
it, cancellations, and/or partial orders.
In compiling the data from the 19 participants for each year reported, I
added a few more categories to the spreadsheet to facilitate comparison and
analysis of the assembled data of the 89 titles. The final report for each
year starting with 1992 payments includes: the TOTAL cost before service
charge is added, that is the list price "plus" added charge "minus" credit;
publisher price; percentage difference of the TOTAL and the publishers'
price; total service charge -- the participants agreed to report the serv-
ice charge separately and in some cases when the charge was not recorded as
a separate item on the invoice the library figured from an overall service
charge percentage rate; final TOTAL which sums all the charges each library
paid for a title.
REVIEW PROCESS AND DISCREPANCIES
The 1992 data do show basic trends, but more significant trends should
become apparent as we add data for 1993 and 1994. From the first sweep
through the titles we can identify vendor billing practices and begin to
frame questions about exchange rate setting practices.
I have reviewed the 1992 data four times and it still is not "clean" --
that is, the discrepancies in payment reports for some of the titles from a
few libraries have not been explained to my satisfaction. In some cases, I
have asked libraries to report data again, particularly if I thought the
data they provided may be figures for the wrong volume and/or year. When I
received reports back telling me that the original data are correct then I
have asked to see the invoice. Currently participants are reviewing the
compilation of the 1992 data. They are reviewing the data they reported in
conjunction with data reported from the other participating libraries. Any
corrections they may have they will report to me so I can update the "moth-
er database." Additional data for 1993 and 1994 payments will be added and
reviewed as received from the participants.
Some of the problems or maybe all the inconsistencies I have encountered
are due to exchange rate settings. A basic analysis of how libraries are
invoiced from vendors shows:
1. Invoiced in US dollars -- processing these invoices should be routine.
2. Invoiced in Foreign currency and US dollars -- processing these invoices
should also be routine because most libraries prefer to make payments in US
dollars. Subscription agents usually indicate the exchange rate used on the
invoice and any conversion of the amounts should match the US dollar fig-
ure.
3. Invoiced in Foreign currency only -- Libraries may use the Wall Street
journal exchange rates of the date on the invoice or more likely the rate
on the day the invoice is paid/processed.
To fully understand what is happening with the billing, the participating
libraries have told me the subscription agent's policies on exchange rates
because practices do vary. In some instances, the price is set for the
entire renewal period. In others, the exchange rate floats, meaning librar-
ies could be charged different prices depending on what the exchange rate
happened to be on the date the library was invoiced.
Other payment discrepancies appear in data from libraries making early
payment arrangements with subscription agents. These libraries made a pay-
ment in a lump sum early in the renewal period and the vendor set the ex-
change rate from the date on the library's early payment check. When an
early payment situation appeared in the data, I recorded the publisher's
price from the invoice as the initial payment then entered the "early pay-
ment discount" amount not as a credit, but rather as a "minus" in the serv-
ice charge area. This way we can compare the price each library was charged
for a title without considering the lucrative agreements struck with the
subscription agent.
It is apparent when looking at the data that some subscription agents fix
an exchange rate so that in a given period of time all libraries are billed
the same amount. In some cases the subscription agent has fixed the rate on
the day it creates the invoice.
The 1992 data show that firm pricing practices were not in place as many
libraries received supplemental invoices with additional charge or credits.
Even with these supplemental invoices, the payment totals show that librar-
ies are for the most part paying the same price for titles when they use
the same subscription agent and even when they use different agents. I
suspect that this finding will continue when 1993 and 1994 data are record-
ed and analyzed. We should see less supplemental payment action with subse-
quent years as subscription agents and publishers incorporate the firm
price requests of libraries into their business practices.
CONCLUSION
This kind of survey can only enlarge our understanding of serials and sub-
scription agents' practices as we expose the variety of added charges and
other extraneous factors added to the base list price of a title. We will
be better equipped to detect excessive price increases and exchange rate
abuse by subscription agents and publishers. In short the benchmark data
should become the ever-vigilant tracking tool that points out cancellation
trends, uncovers invoice processing errors on the part of the library and/
or agent, monitors vendor consolidation and redirect movement, and finally
observes firm pricing practices of publishers and subscription agents. As
a tool it should increase in value as we add each year of payment informa-
tion. This benchmark list may remain a project in progress, but the infor-
mation it reveals will help us make more informed and financially benefi-
cial decisions on serial purchases.
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ Statements of fact and opinion appearing in the _Newsletter on Serials Pricing Issues_ are made on the responsibility of the authors alone, and do not imply the endorsement of the editor, the editorial board, or the Uni- versity of North Carolina at Chapel Hill. +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ Readers of the NEWSLETTER ON SERIALS PRICING ISSUES are encouraged to share the information in the newsletter by electronic or paper methods. We would appreciate credit if you quote from the newsletter. +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ The NEWSLETTER ON SERIALS PRICING ISSUES (ISSN: 1046-3410) is published by the editor through the Office of Information Technology at the University of North Carolina at Chapel Hill, as news is available. Editor: Marcia Tuttle, Internet: tuttle@gibbs.oit.unc.edu; Paper mail: Serials Department, CB #3938 Davis Library, University of North Carolina at Chapel Hill, Chapel Hill NC 27514-8890; Telephone: 919 962-1067; FAX: 919 962-4450. Editorial Board: Deana Astle (Clemson University), Christian Boissonnas (Cornell University), Jerry Curtis (Springer Verlag New York), Janet Fisher (MIT Press), Fred Friend (University College, London), Charles Hamaker (Louisi- ana State University), Daniel Jones (University of Texas Health Science Center), James Mouw (University of Chicago), and Heather Steele (Black- well's Periodicals Division). The Newsletter is available on the Internet, Blackwell's CONNECT, and Readmore's ROSS. EBSCO customers may receive the Newsletter in paper format. To subscribe to the newsletter send a message to LISTSERV@GIBBS.OIT.UNC.EDU saying SUBSCRIBE PRICES [YOUR NAME]. Be sure to send that message to the listserver and not to Prices. You must include your name. To unsubscribe (no name required in message), you must send the message from the e-mail address by which you are subscribed. If you have problems, please contact the editor. Back issues of the Newsletter are available electronically. To get a list of available issues send a message to LISTSERV@GIBBS.OIT.UNC.EDU saying INDEX PRICES. To retrieve a specific issue, the message should read: GET PRICES PRICES.xx (where "xx" is the number of the issue). +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++