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Re: universities experiment with paying OA fees
Toby has this exactly right. Kudos. Note the central economic
issue: lowering the administrative cost of effecting a sale.
Joe Esposito
----- Original Message -----
From: Toby.GREEN@oecd.org
To: liblicense-l@lists.yale.edu
Sent: Thursday, June 19, 2008 3:29 PM
Subject: RE: universities experiment with paying OA fees
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 =3D $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