ISSN: 1046-3410 NEWSLETTER ON SERIALS PRICING ISSUES NO 248 -- June 15, 2000 Editor: Marcia Tuttle Guest Editor: James Mouw CONTENTS 248.1 FROM THE EDITOR, Marcia Tuttle 248.2 FROM THE GUEST EDITOR, James Mouw 248.3 BEATING PUBLISHER PRICE DISCRIMINATION, Richard W. Meyer248.1 FROM THE EDITOR
All I want to say is "Thank you, Jim!" and "Thank you subscribers for sticking with us during my Spring Fever."
248.2 FROM THE GUEST EDITOR
James Mouw, mouw@midway.uchicago.edu
I am thrilled to have been asked to guest edit the next few issues of the Newsletter. As a member of the editorial board it has been my pleasure to give input into various issues when our advice was sought and to guide the publication in a general way. As an author for other publications I have seen the work of editors from the other side of the fence, now I will see what the work of editors is really like!
Marcia has sent me a small backlog of submissions from the last several months, and there will be several issues in quick succession as I work through those messages.
Please continue to send along items of interest -- things you run across in your professional reading, comments on things read in the Newsletter, or especially our own contributions. Your submissions are what keep the Newsletter alive.
This issue contains a single very interesting article. Submitted by Richard Meyer, it is a lengthy abstract of a Mellon Foundation study on pricing that he has completed. The complete 85 page report, titled "Beating Publisher Price Discrimination," is available from the author on a prepaid basis. Richard has supplied the following order information:
248.3 BEATING PUBLISHER PRICE DISCRIMINATION Richard W. Meyer, Trinity University, San Antonio Texas, rmeyer@express-news.net
[Received March 24, 2000]
Experiments using data collected from a small consortium of liberal arts colleges provide a model for cost sharing and for statistical measurement of price discrimination on a title-by title basis. Funding of $1.2 million from the Andrew W. Mellon Foundation in 1996 provided hardware, software and licenses to indexes and electronic journals for twelve liberal arts colleges called the Associated Colleges of the South (ACS). Data was gathered from institutional invoices for library subscriptions at all twelve colleges for a three year period. One experiment looked at the potential for cost control in libraries, which could be provided by common access to an aggregated collection of electronic periodicals offered to students in lieu of subscriptions to print periodicals.
A second experiment established a model using econometric techniques to determine the difference between publisher list prices and statistically predicted prices based on comparison of titles within a large cross disciplinary selection. This study also evaluated the likelihood of electronic availability to inhibit the ability of publishers to continue to increase prices of scholarly publications. The highlights of the cost and econometric analyses are summarized below.
The analysis described here explored the potential for cost control in libraries provided by common access to a collection of electronic periodicals made available over the Internet as a substitute for subscriptions to print periodicals. Further econometric analysis on data gathered during the cost study evaluated the likelihood of electronic access to inhibit the ability of publishers to continue to increase prices in scholarly publishing and to establish the financial benefits of collective access to electronic journals.
At the outset of the study, three sets of goals were pulled together to generate six appropriate objectives. The goals of the ACS libraries were to improve the quality of access to current information and to make the most efficient use of resources. The goal of the ACS college administrators was cost containment. The goals of the Andrew W. Mellon Foundation were to look for means to relieve economic pressure from periodical inflation and to find ways to innovate new technologies to do so.
These goals drove development of six objectives for the project: 1) improve the hardware available within the libraries for electronic access; 2) provide online access to important undergraduate periodical indexes; 3) Provide online access to core undergraduate periodicals in full text; 4) Provide campus-wide access through Internet browsers for each campus; 5) determine the financial impact on the ACS libraries of substituting online access to full text journals for print; and 6) test the impact of electronic availability on pricing practices of publishers and their monopoly power.
The first four objectives were met quickly during early implementation by upgrading network access in the libraries and installing personal computers in the reference areas. Online access to UMI's ABI/Inform and Periodical Abstracts along with the OCLC base package were provided along with their full text counterparts. These databases provided approximately 1,400 online full text subscriptions at the outset. In the third year of the study, six H. W. Wilson indexes with full text were licensed to augment the UMI databases.
Determining the financial impact on the ACS libraries of attempting to substitute the UMI full text products for print subscriptions required data gathering over three and one-half years. As a group, the 12 participants held 13,408 periodical and 548 index subscriptions, which cost $2,492,646 in 1996. These subscriptions included 8,659 duplicates, which cost $1,440,935 in 1996. Substitution of the UMI products offered opportunity to cancel 2,820 periodicals and 252 indexes to achieve savings of $234,397 in 1996. Potential savings equaled $703,191 for three years.
The UMI, OCLC and Wilson products cost $590,585 for the three years of the project. The potential savings of $703,191 offset by these costs would have yielded a net savings of $112,606. Had the Wilson products not been added, the net savings would have been $188,603. These products also provided significant additional resources in addition to the expected savings. Besides the availability of the indexes online, each campus received access to several additional indexes from OCLC along with the full text of hundreds of journal titles not previously taken.
The actual experience of the libraries regarding cancellations and adjustments under the project varied. Most of the institutions added print subscriptions during the project. Only two schools made overt attempts to cancel print subscriptions in favor of dependence on the UMI products. Most of the librarians discovered that pedagogically the electronic aggregations do not represent the same level of quality and stability as core print collections.
Data gathered on combined expenditure, circulation, interlibrary loan and document delivery statistics for participants revealed some interesting trend lines, particularly the displacement of traditional circulation by access to online electronic full text. >From 1995/96 through 1998/99, the libraries experienced an average decline of circulation of print resources by 23 percent. At the same time, delivery of electronic articles exploded from 160,000 articles to 445,000 articles for these years. The data gathered understated this transition, since the libraries were unable to obtain statistics on the amount of electronic full text delivered from Wilson and some other vendors.
Results of the econometric study to test the pricing practices of publishers and their monopoly power, suggests that traditional publishers will tend to retain their market clout as they shift to offering electronic counterparts to their publications. The model tested for the likelihood of publishers to retain monopoly power by using an ordinary least squares analysis (OLS). The model regressed the price charged to institutions, and the difference in price charged to institutions versus individuals, on twenty-three variables. The variables which held up in the analysis held constant for production costs, source of publication, discipline areas and the availability of the titles in electronic format.
The model was based on earlier work by other economists. The results extend and corroborate those studies. The OLS tests were unable to account for three variables: the total number of subscriptions sold for each title (circulation), economies of scope (number of titles published by given publishers) and quality of the journals. However, none of these variables proved critical to the outcome. Circulation figures were largely unavailable for foreign titles, but in a test where they were available, they tended not to add power to the model. Journal quality across a group of disciplines appears to be an issue of comparing apples to oranges.
The model used 859 observations covering three years of journal data. The results include statistically significant corroboration of librarians' experience and a powerful new model for price comparisons. The results within this dataset show that 1) exchange rate risk (the likelihood of dollar value loss against foreign currency) does not help explain high prices for foreign based publications for the period of the project; 2) journals cost significantly more when published in the sciences or if they are published in Europe; 3) commercial publications tend to be more highly priced than society, government, foundation, or university press publications; 4) raising the price to individuals tends to shift use from personal subscriptions to library subscriptions; and 5) titles with electronic counterparts tend to be higher priced than those without electronic versions.
The model also provides a robust tool to compare prices among the subscriptions within any given library or consortium and to predict those which are statistically significantly overpriced. A comparison of actual institutional price to model predicted prices reveals that commercial publishers are not the only ones that appear to overprice titles by a statistically significant amount. This model works equally well using a dummy variable for advertising and substituting the number of total pages for the number of article pages. It therefore represents a viable management tool for selection.
The study also exposes several other issues. Campuses face a plagiarism issue that appears larger than might be expected. Online full text is ideally suited to cut-and-paste papers and students prefer ASCII text 3 to 1 over images of text. Collections of online journals are declining in quality or escalating in price. Librarians appear to recognize the exceptions such as Project Muse. Online access increases the complexities involved in seeking, evaluating and using information, so libraries need to adjust their operations by developing stronger instructional programs and improving their licensing skills. Lack of overlap in collections probably reflects individual campus cultures, including the specific interests of the teaching faculty. This lack is a symptom of the cultural issues that made it difficult for the librarians to agree on indexes and full text products in common. The experience of the librarians during the project suggests that for the purposes of sharing library resources there are better alternatives, since most of the libraries have been able to license access to electronic resources at better prices through state and regional consortia. Campuses face continued increases in prices for traditional and electronic resources, but statistical modeling offers opportunity for controlling some costs.
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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 University of North Carolina at Chapel
Hill.
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The Newsletter on Serials Pricing Issues (ISSN: 1046-3410) is
published by the editor through Academic Technology and Networks at
the University of North Carolina at Chapel Hill, as news is
available. Editor: Marcia Tuttle, Email: marcia_tuttle@unc.edu;
Telephone: 919 929-3513. Editorial Board: Keith Courtney (Taylor
and Francis), Fred Friend (University College London), Birdie
MacLennan (University of Vermont), Michael Markwith (Swets
Subscription Services), James Mouw (University of Chicago), Heather
Steele (Blackwell's Periodicals Division), David Stern (Yale
University), and Scott Wicks (Cornell University).
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