RE: universities experiment with paying OA fees

[<Toby.GREEN@oecd.org>]

Adam,

Thanks for your posting and for introducing me to your platform. 
I've looked at the Lessig books. It's a nice, clean interface. I 
like the clip feature. I didn't like that I can only print off 
pages one-by-one - this would be very tedious if I wanted to read 
a chapter on the train home tonight.

I disagree with your view that selling subscriptions is 
increasingly inefficient. In my experience, it is quite the 
reverse. Selling books by the one, whether in print or online, is 
inefficient.

Think about the costs involved in deciding to buy a book on a 
one-by-one basis and then the transaction costs involved in 
making the purchase. According to ALA data from around 2000, the 
administrative cost of buying a single printed book is around 
$50. I guess it might be a little lower for a digital copy today, 
for the sake of argument let's say it is half - that's still $25 
per book. The administrative cost of subscribing to a multi-issue 
print journal was around $75 c.2000, it's probably lower for 
online-only journals, but for the sake of argument, let's stick 
with $75.

Let's say I've got ten books. On a one-by-one basis how many 
would I really sell to a library? Two, three? Maybe five? If the 
books sell for $50 each then my potential income from the library 
might be five times fifty (250) less trade discount and my 
one-by-one marketing and admin costs. The library has spent $375 
(5x50)+(5X25).

Now let's think from the publisher's viewpoint. If I can reduce 
my trade discount to subscription terms (we all know they are 
lower than bookseller terms) and if I can reduce my marketing and 
admin costs by bundling my books together, I can pass some of 
these savings onto the librarian in the form of a lower, bundle, 
subscription price. How about all ten books for $250? The total 
cost to the librarian is now 250 + 75 = $325. This is a $50 
saving on buying five books on a one-by-one basis and they've got 
twice as many books. My net income is going to be higher because 
I've reduced my transaction and admin costs. So we're both 
happier. I've also provided a better service to the librarian's 
reader community because they now have access to all ten books. 
Half my authors will be happier because all ten books are now 
being exposed to potential readers at that library.

This model works when a library needs a good number of all the 
titles published - in this example, when they need half the 
books. If they only need one or two titles, then they're better 
off buying by-the-one. For this reason, we offer librarians the 
choice of bundles of books and books by-the-one. Of course, if I 
can lower my costs still further, then I can make the point at 
which it's better value to subscribe to a bundle lower.

The numbers point to one clear conclusion: it is better value for 
both librarians and publishers to offer bundles of books on 
subscription. It is also better for readers (more stuff to choose 
from) and authors (more potential readers with access). I don't 
know what this says about the 'value and quality of individual 
copyrights' but I think it says a lot about the value a publisher 
can add to the process of making authors' works accessible to as 
many readers as possible in a cost-efficient and sustainable 
manner. I also know that we're just as stringent about quality as 
we were before we went digital - the last thing we want to do is 
to spend money publishing a book which no-one wants to read 
because if we publish titles no-one reads the librarians will 
stop subscribing.

This isn't a business model just for the big publishers and 
aggregators. We publish 250 books annually which makes us 
mid-sized, I guess. We offer a bundle with all 250, but also 
smaller, thematic, bundles - some with just ten books. We've got 
more than a thousand libraries subscribing to our book bundles 
and the number is growing nicely. The bigger boys might be having 
trouble getting their deals to 'stick' but I bet that's because 
they haven't got the value proposition right (i.e. they're asking 
for too much money). But this doesn't invalidate the inherent 
efficiency of bundling over a one-by-one business model for 
librarians, publishers, readers and authors.

Toby Green
OECD Publishing

-----Original Message-----
From: owner-liblicense-l@lists.yale.edu
[mailto:owner-liblicense-l@lists.yale.edu] On Behalf Of Adam Hodgkin
Sent: 19 June, 2008 2:06 AM
To: liblicense-l@lists.yale.edu
Subject: Re: universities experiment with paying OA fees

Why should the advantages of scale always accrue to the big 
battalions? The big publisher's, big aggregator's, model for 
selling subscriptions is increasingly inefficient. There have 
been problems in making 'big deals' stick recently. One suspects 
that the consortia negotiated sizable price reductions. The value 
and quality of individual copyrights is lost within these bulk 
transactions and ultimately that makes for slack and inefficient 
decisions by publishers and editors (and librarians).

The Exact Editions platform allows publishers to create their own 
lists of licensable digital editions on a very modest upfront 
investment (our costs are largely covered by a low commission on 
sales). We started this digital licensing to institutions 
(educational and other institutions are subscribing) with some of 
our consumer magazine partners. And it works:

http://www.exacteditions.com/exact/login.do?username=shop.en.inst

We have just launched e-commerce services for two small 
publishers:

http://www.exacteditions.com/sawdays
http://www.exacteditions.com/debretts

.... add "/library" to those urls and you will find the prices
that those publishers are charging for institutional access.

And would be keen to help small/medium academic publishers to get 
their books on-line digital resources, in a framework in which 
each book is licensable on its own to individuals or 
institutions.

If you are not familiar with the exacteditions platform, some 
free Lessig titles to sample:

https://www.exacteditions.com/exact/login.do?username=trial.lessig

Of course, we hope/expect that our platform will become a big and 
influential network through which small publishers can gain some 
of the advantages of scale which accrue to the big aggregators. 
But the emphasis with our system is on buliding the brand and the 
commercial identity of the individual publisher, small though she 
may be. The publishers should control and manage their own 
pricing and subscription decisions and data. There is no reason 
why this has to be abdicated to intermediaries. The future of 
publishing lies with small, innovative, fashion conscious, 
quirky, quality-minde publishers and it always has done. Some of 
them will become big!

Adam Hodgkin
adam.hodgkin@exacteditions.com
http://exacteditions.blogspot.com/


On 18 Jun 2008, at 00:24, David Prosser wrote:

> Sandy
>
> I did say that I wasn't going to convince you!  OK, so what's
> the answer? The current subscription-based models won't work
> long-term for small and society publishers as all the comments
> you make about consolidation and the power of the large players
> definitely apply here (they can tie-in budgets in big,
> multi-year deals and they have massive sales forces).  So, if
> OA does not offer a survival strategy, then what?  Too often in
> the debate we here about why OA won't work, but little about
> what the alternative is.  Let's have the model that will allow
> small and society publisher to thrive in the world market.
>
> I'm not suggesting that the OA route is going to be easy for
> small and society publishers, but I still argue that for some
> it will be the best strategy for long-term survival.  It allows
> them to compete on what they do best, it scales with increases
> in research funding, and it doesn't require large-scale sales
> infrastructures.  Transition will be difficult, but nothing
> compared to the difficulties of not transitioning!
> Subscription budgets are not going to suddenly increase and I
> don't think that we can expect a world-wide ban on commercial
> journal publishers. More of the same means a slow (if they're
> lucky!) squeezing-out of the smaller publishers.
>
> (A quick word on comparisons to brick-and-mortar businesses -
> the barriers to entry in the scholarly communications market
> have never been so low. Intellectual capital is much more
> important than financial capital in launching a journal.  This
> makes scholarly publishing very different from bookshops,
> restaurants, and supermarkets.)
>
> By the way, I would love to have a look around Princeton - is
> that an invitation?
>
> David