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Evolving E-Journal Business Modelsand Pricing Update

SSP – 2005 Annual MeetingPre-meeting Seminar

June 1, 2005

Dan TonkeryVice President Business Development

EBSCO Information Services

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Look at the E-Journal Landscape

• 15,716 titles in electronic format• 30 plus Host services

• 341 publishers with e-format offerings• 3509 titles available with Pay for View

• Subscription agents supplying over $1 billion in E-Content sales to librarians

• Consortium sales also major sales channel

• Publisher direct sales???• We all have come a long way since 1996!

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Common Elements of Most Business Models

• Some form of license is required– Terms and conditions vary greatly

• Individual and institutional rates still offered• Free or low cost access to the Developing World• Flexible options are available

– Print plus free online (25.8% of EBSCO subscriptions)– Print plus paid online – combination rate (9.0%)– Online plus print at steep discount– Online only (5.6% of EBSCO subscriptions)– Single site and multi-site licenses – custom priced– Consortium deals - custom priced

• Opt-i n

– Big deal

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Factors Included in Institutional Pricing

• Preservation of current revenue by most publishers• Single installation vs multi-site or global• Length of deals is three years with optional years• Normally, limits on cancellation – publishers seeking

revenue protection• Fixed annual price increases for length of contract• Price set by some form of user population analysis

– Full time equivalents – with price bands/tiers• Small, medium, large

• Classification schemes for Academic/Libraries– Carnegie Classification of Institutions– NEJM – self produced tier system

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Sample Carnegie Classification Scheme

List of Institutions by Carnegie Classification, Control, and State

The 2000 Carnegie Classification groups using more recent data.Doctoral/Research Universities --ExtensiveDoctoral/Research Universities --Intensive

Master’s Colleges and Universities IMaster's Colleges and Universities II

Baccalaureate Colleges—Liberal ArtsBaccalaureate Colleges—General

Baccalaureate/Associate's CollegesAssociate's Colleges

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Sample Carnegie Classification Scheme

Specialized InstitutionsTheological seminaries and other specialized faith-related institutions

Medical schools and medical centersOther separate health profession schools

Schools of engineering and technologySchools of business and management

Schools of art, music, and designSchools of law

Teachers collegesOther specialized institutions

Tribal Colleges and Universities

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It all starts with the License! Terms & Conditions.

Access options for institutional customers• Single vs multiple site options – Global• Back volume access rights

– Rolling back file vs set-terms– What happens if current subscription is cancelled– Separate back-files purchase or subscription

• Roaming Access – off campus access• Interlibrary loan and electronic reserves are

controlled items• Shared access to non-subscribed titles in consortia• Pricing is set by FTE, Platform fees, access rights

– Set in license agreement

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Fundamental Business Rules for the Publisher

I. Maintain the level of revenue your print subscriptions provided to pay for supporting two formats.

II. Recover the costs of creating electronic versions and ongoing staff and development costs

III. Devise a flexible sort of business model to meet your financial goals.

IV. Be able to explain your model

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What are the business models for e -journals content in the future?

Libraries like to have:- Flexibility – selection and collection coverage- Predictability – for budgeting- Widest possible access for their user community- Reliable usage statistics- Decrease in cost over print expenditures

Publishers would like to continue:- Maintain current or see better levels of profitability- Reduce print dependence- Libraries to find more funding for library acquisitions - See some relationship between usage and price

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What are the emerging business models?*• National license

– Allows universal access and single national payment

• PPV converting to subscription– Non-core titles available on PPV with cap on expenditures.

Publisher sets up premium rate that converts to subscription

• PPV with pre-purchase– PPV with pre-purchase of blocks of PDF downloads

• Core & peripheral– Core titles by subscription with peripheral covered by PPV

• Open access – author pays e.g. OUP

• Open access – hybrid model e.g. Springer* Based on JISC Study published 6 April 2005

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Summary of Business Models for E-Content• No single model will meet the needs of publishers and

libraries• No model can make up for reduced funding or cut backs in

acquisition funding• Both libraries and publishers want models that offer

predictability. Predictable costs for libraries and revenue streams for publishers

• Open access models need a period of experimentation. Too early to measure impact.

• Shifting the cost of subscriptions or e-content to faculty will not help libraries in the long run.

• Publishers want to see some relationship between usage and price

• Librarians want flexibility in terms of selection, cancellation and access rights

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Subscription Agent Advice to Publishers• Develop or follow simplified license agreement with clear

terms and conditions• When changing business model, communicate to agent,

libraries and end users early in the process• When changing hosts, don’t make extra work for libraries

i.e. re-registration• Keep your price increases realistic!

– Extra papers and/or extra issues don’t justify price increase

• Keep your pricing models as simple to understand as possible– 26 tiers are too much

• Target June-July for communicating changes to libraries and agents

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References

Business Models for Journal Content. Report prepared for Joint Information Systems Committee, 6 April 2005, United Kingdom.

www.nesli2.ac.uk/jwg -studies.htm

Excellent survey of where we are going in the future.