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  You are here: Macquarie University Library >> About the Library >> Conferences >> Building Sustainable Solutions

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Building Sustainable Solutions: the Library Viewpoint

Neil McLean
Macquarie University
mclean@library.mq.edu.au

Introduction

This paper summarises the main issues arising out of presentations at a seminar entitled: Sustainability in the Scholarly Information Market Place: the Search for Digital Library Business Models, held on 2 May 2000 at the National Maritime Museum, Darling Harbour, Sydney. The seminar was hosted by Macquarie University and sponsored by Elsevier Science. There was a general assumption, accepted by all the presenters, that is it imperative that libraries and publishers work together to find sustainable business solutions for the creation and dissemination of scholarly information. The seminar explored a range of issues which need to be addressed in meeting this challenge and this paper attempts to capture these issues using broad thematic headings.

Repositioning Within the Scholarly Information Industry

The most dominant theme arising out of the seminar was the acceptance that both libraries and publishers need to reposition themselves, if they are to prosper in the electronic information services environment. This is not any easy task because of the following factors:

• both libraries and publishers remain locked into traditional print service paradigms, because many customers still insist on having access to hardcopy journal issues
• the cost of maintaining both print and electronic service paradigms means that resources are severely stretched and there is a resultant chronic under-investment in developing a sustainable electronic service environment
• both libraries and publishers have been slow to understand the economics underpinning their respective operating environments and to understand the economic interdependence among the various parts of the scholarly information industry
• the scholarly information industry is small by global standards and is not likely, therefore, to attract large additional sources of capital investment to create new distribution systems
• the concept of value has been eroded because libraries have acted as a captive market, through the provision of a so-called "free" service to its customers.

For the past decade libraries have tended to blame publishers for rapacious pricing policies and publishers have watched with alarm the cost-cutting exercises which have been common in higher education sectors in most developed countries. This tendency to blame others is a common symptom in industries undergoing the throes of restructuring and it is encouraging to note a growing consensus between libraries and publishers that they can, and should, work together to create a sustainable market future for the creation and dissemination of scholarly information and knowledge.

Customer Expectations

With the advent of the Internet/Web, customer expectations have undergone a revolution. The speed of distribution is the key to these changing expectations; customers now expect to be able to retrieve information quickly, irrespective of when they actually need to make use of it. Libraries traditionally have not been governed by the speed-of-distribution imperative and the new challenge demands close attention, both in terms of strategies and resource alignment.

As several speakers noted at the seminar, the customer now wishes to have unencumbered access to information. In addition, several recent studies have shown that convenience appears to be more important than quality in this Web-dominated information environment. These factors in themselves present serious challenges to librarians and publishers, who have both been traditionally committed to quality in terms of information and knowledge provision. Finding a balance between speed of distribution, convenience and quality of content is likely to become the key strategic driver over the next few years.

In systems terms, it is now common place to assume that users require:

• remote access
• a minimal number of interfaces
• personalisation or individualisation of search strategies
• breadth of retrieval.

It is evident, however, that little is known about how researchers actually operate in this somewhat hidden world of electronic information seeking and there is considerable scope for further studies aimed at understanding how customers in the various disciplines actually find information and use it.

The Scholarly Information Industry

As John Cox(1)pointed out in his opening address, the rationale for the traditional scholarly print journal has changed little over the past couple of centuries. The key characteristics of authorship, authenticity and quality have been, and remain, constant underpinnings for the scholarly information industry. It is important to note Odlyosko's (2)observation, however, that whilst the traditional journal has not changed there have been rapid changes in the means of communication within the global scholarly community. This has created a growing tension between the inherent control mechanisms of the publishing enterprise and the speed of distribution phenomenon.

These tensions inevitably raise new questions of value, which must be addressed by both librarians and publishers. As John Cox(1)observed, the key challenge is to continue to provide authority and integrity in terms of content, to provide "uncluttered" access and to find the necessary financial revenue to sustain the service cycle.

John Houghton(3)pointed out in his presentation, however, that there appear to be no easy means of rectifying the present perceived shortcomings, when viewed from an economic perspective. He asserted that it is a highly dysfunctional market and that it is a very small market in global terms. The key feature of this dysfunction is the low price elasticity of demand, which means that price increases do not appear to have any direct impact on demand. He also introduced the notion of "branding" and its relationship to perceived value. Perhaps his most important point was that little would change unless there were price signals to users. Some librarians interpreted this as implying that users should be charged for the use of services and there was a general consensus that this would be a regressive step in a market where dissemination was considered the principal aim of the business.

Organising the Virtual Collection

There is increasing evidence that the assumptions and practices inherent in print collection management do not readily translate to the electronic information services environment.

Given the somewhat unnerving experience at Macquarie University (4)of finding that the library print collection of Elsevier journals bears little relationship to the actual use, as measured through the ScienceDirect service, it follows that academic libraries face a significant challenge in terms of redefining and organising virtual journal collections. There are several major problems to be overcome in meeting this challenge, namely:

• the enormous range of products and services offered by publishers and aggregators, many of which provide overlapping, but incomplete services in particular disciplines.
• the difficulties in knowing in advance how any particular group of users will utilise a particular full text electronic service
• the service context varies according to the disciplines
• the dangers in experimenting with too many changes in service offerings
• the task of redefining the relationship between bibliographic and full text databases
• the potential confusion engendered by having too many interfaces and access management protocols
• the balancing of finite financial resources across a wide, but relatively unstable, range of services
• the difficulties of attaining the optimal degree of service aggregation and of organising the means by which this can be achieved.

There are no easy answers to any of these challenges and no satisfactory conceptual or practical frameworks for developing such virtual collections. For the time being, it is likely to remain a rather pragmatic exercise, where experimentation will sometimes be in conflict with a need to provide a level of stability in terms of satisfying customer expectations.

The Development of Institutional Business Models

The challenges inherent in developing virtual collections point to the need for the development of business models which can assist in the transition from the print to the electronic environment and that demonstrate sustainable digital library solutions.

The recent article by Montgomery and Sparks(5)makes a brave attempt, based on the Drexel experience, to construct a means of analysing changes in staffing and other cost variables in the transition from print to electronic journals. Their framework was based on the analysis by library functional department, which was divided as follows: Infrastructure/Systems & Space, Administration/Management (including journal access fees), Technical Services, Circulation/Access, Reserve, Document Delivery and Information Services. These were then linked to listings of activities and compared in terms of "Electronic Format" and "Print Format" with a resultant calculation of "Net Impact".

Their approach is both sensible and pragmatic and it will come as no surprise that their conclusion on the transition to electronic access was that the overall financial investment was greater but the unit costs were demonstrably lower.

This interesting methodology deserves to be tested and refined in the context of other libraries who are determined to make this transition from print to electronic journals because it will not only assist in the realignment of resources but it will help also to place a value on specific activities and the resultant impacts.

Copyright or Contract

John Cox(1)made the salient point that there is no equivalent to the existing copyright regimes in the digital environment. There is a need, therefore, to rethink the contractual nature of agreements between publishers and libraries in a service environment that is ubiquitous by nature, where remote access introduces many new variables and where consortia have become the dominant purchasing agents.

He pointed out that librarians have to rethink their service context and redefine their rights. This is no easy task because librarians still send conflicting signals to publishers which is exemplified in this recent summary in a U.K. news report(6). It stated that libraries appear to want:

• ability to buy the print and electronic editions separately
• electronic-only costing no more than, and preferably less than, print (90-100% of print price seems to be the norm for most publishers)
• combined print-and-electronic package costing not much, if anything, more than print only - preferably "free" (110-125% appears to be the range for most publishers). If the additional cost is high, they will not take it.
• no obligation to buy a "package" consisting of all a publishers journals
• ability to buy subject-based "packages", regardless of publisher
• no obligation to access journals via the publisher's (or any particular intermediary's) own front-end
• no username and password authentication (unless individual customers want personalised services such as Table of Contents alerting or saved searches)
• no obligation to retain previous years' print subscriptions
• no commitment to multi-year deals (yet libraries still want price caps on future years' price increases).

These demands indicate a market in a state of transition and it is incumbent on librarians and publishers to reach agreement on licensing arrangements that will allow an orderly evolution through contract rather than copyright law.

John Cox(1)pointed to recent initiatives in the U.K. and the U.S. where model licenses were being developed based on addressing the following variables:

Defining "users". The inclusion of "walk-in" users (including alumni) and remote users is a novel idea for some publishers

Availability before print. Is it simultaneous, before or after the printed edition?

Continuing access. One of the two business models covered provides continuing access to volumes bought and paid for, though the title has been subsequently cancelled.

Archiving. What exactly do we mean? The licences set out a commitment by the publisher to make appropriate arrangements for long term preservation.

Usage data.

Course packs. The licenses provide two alternatives: permitting the use of the electronic files as a source for course pack material; and prohibiting such use without further permission.

Electronic reserve. This is treated in the same way as course packs.

Supplying copies to other libraries. There is uncertainty about the application of current copyright law on fair use and library privilege to electronic files.

The primary benefit from adopting this model licensing approach is that it injects a level of discipline into a market, where both sides are uncertain of the ground rules.

Archiving

The responsibility for archiving has taken on new dimensions in the digital environment. John Cox(1)correctly pointed out the important distinction between preservation and continuing access and he observed that these two distinct functions often become confused in the current debate. Over the centuries libraries have in fact taken responsibility for both these functions in varying degrees. In the digital environment, however, the responsibility for both functions is unclear.

John Cox(1)asserted that publishers are beginning to take responsibility for archiving, as it relates to continuing access, although it was not clear that it was in their economic interest to do so. Given the law of diminishing returns on usage relating to older publications, particularly in the Sciences, some level of aggregation may be necessary in the market with third parties making a business out of the provision of continuing access.

With regard to preservation, he speculated that it was probably a library responsibility and that it may well be a role for national libraries, national utilities or large scale consortia. He reminded the audience that there were still considerable difficulties facing the preservationists in terms of managing digital information in perpetuity. Issues such as the definitive version, the first version, maintaining hyperlinks and controlling name and version as well document integrity, all need to be addressed as part of the long term strategic planning process.

The Evolution of Access Management

Most academic libraries are pre-occupied with the challenge of providing effective access management mechanisms in order to link users as seamlessly as possible to an array of networked services. It is a complex issue to which there are no easy solutions. The complexity arises because there are, as yet, no recognised methodologies for providing the basic service descriptions and the accompanying technical descriptions to support the required levels of interoperability in a distributed networked service environment. The recently commissioned study by the Coalition for Innovation in Scholarly Communication (CISC), funded by the Australian Vice-Chancellors Committee (AVCC), may shed some light on this difficult subject as it attempts to map the technological infrastructure needed to support the provision of electronic information services in the higher education sector. The study is confronting a number of key issues including:

• the relationship between institutional access management capability and collaborative infrastructure developments
• the role of national utilities in supporting institutional initiatives
• the relationship between authentication, authorisation and access management in both the service and technical context
• the allocation of responsibilities between libraries and information service providers for providing access management mechanisms.

In addressing these issues, there is the need to bear in mind the nexus between effective service delivery and the degree of technical integration required in terms of infrastructure service. Sustainability in this context will inevitably involve a series of 'trade-offs between libraries and publishers, local versus collaborative solutions and centralised versus distributed service provision.

Financial Sustainability

It is becoming increasingly evident that the rapid transformation of the library service environment through the application of information and communication technologies has raised a series of financial and business challenges, which are not yet resolved.

Of principal concern is the lack of progress in understanding the relationship between costing, pricing and value in terms of electronic information service provision. This is most evident in the necessity to use the print based subscription service as the primary means of assigning pricing for full text electronic information services.

Libraries and publishers must share a common sense of failure in this matter, because they have both been party to an interdependent relationship which was predicated on the libraries providing so-called "free" access to their respective user communities. Publishers have been able to put their prices up by an annual 10%, because libraries felt obliged to purchase these journals, albeit in decreasing numbers. Being such a closed market, the relationship between costing and pricing became blurred with little recognition by either party of the implications for future electronic provision.

The situation, as exemplified by the Macquarie case study with Elsevier ScienceDirect, is that the costing and pricing issues probably bear little relationship to the actual value of the service being provided. Clearly many print subscriptions have been bought over the years which were for prestige value rather than actual use value and this is not a sustainable practice in the electronic information service environment.

As Philip Kent(8)pointed out, the move to models based on transactional volume payment over a wide portfolio of journals is viewed with trepidation by many librarians because they feel they will be held "hostages to fortune" by the information service providers. All the evidence suggests, however, that new and innovative pricing models are required and it is in the interest of both libraries and publishers to join together in developing sustainable business models which benefit both parties and which provide the level of information access now expected by academic communities.

Developing Pricing Models

One of the most encouraging outcomes of the seminar was the level of agreement between Neil Posner(9), John Cox(1)and Philip Kent(8)on the basic issues to be addressed in developing pricing models. There was agreement that sustainable pricing models are based on the following assumptions named:

• cost savings are unlikely but unit costs will be reduced dramatically
• a balance is required between providing the widest possible access and establishing financial viability
• there should be a strong connection between price and perceived value
• predictable budget exposure is essential together with built-in flexibility to accommodate changing requirements
• user pays appears to inhibit usage very significantly.

As Neil Posner pointed out there are still major points of difficulty when it comes to negotiation with libraries, including:

• different historical starting points in terms of institutional development
• different sources of funding turnover and expenditure patterns within institutions
• many forms of multi-site agreements in terms of print subscriptions
• differing forms of purchasing arrangements including institutional, consortial, centralised and decentralised
• vastly differing usage patterns.

Given the complexities inherent in these variables, it is very difficult for publishers to develop coherent pricing models that accommodate the transition from the print to the digital environment.

John Cox(1)defined a number of different pricing models, some or all of which may become applicable in the scholarly information services market. He categorised these different models as follows:

• Prepayment for access at the article level, as Elsevier has been testing with the University of Michigan in its PEAK project.
• Packaging pricing by discipline or sub-discipline; this may be single publisher offerings, or aggregations of multi-publisher materials.
• Transactional, or pay-by-the-drink, models similar to document delivery. This will become more important as users of secondary databases locate items they need, and want to buy them while online.
• The database, or cable-TV, model, where the subscription provides access to a core collection of titles, including back volumes, for a set period - usually a year - at the end of which access is denied unless the subscription is renewed.
• Micro pricing, in which a payment will become due every time an item of information is accessed. The item might be a diagram, table or paragraph, and access might be downloading, printing or simply viewing for more than a set period of time, but the unit price per access will be low.

The combination of standard licensing agreements and innovative pricing models is the key to survival for both libraries and publishers and the challenge is to find a disciplined means of facilitating this process. The surge in the popularity of consortial arrangements on a global basis is probably indicative of a collective resolve by libraries to rely on skilled negotiators to work through these complex pricing issues. It probably indicates also, a belief that collective purchasing power can offer economies of scale in terms of service provision.

Conclusion

The most encouraging outcome of the seminar was the growing awareness that publishers and librarians could work together with a common purpose in finding sustainable service solutions for the digital environment in spite of the fact that discontinuity would continue to be a feature of the market for some time to come.

There was general agreement on the following management imperatives:

• innovation was essential
• some element of risk taking was necessary in reaching service agreements
• new flexible pricing models were necessary.

There was also a cautious belief that Australia, as a relatively small and somewhat isolated market, could provide a good testbed for the introduction of new service and business models.

References

1. Cox, John, Scholarly Communication in the Third Millennium: Making Sense of Economic Technological and Management Challenges.
http://www.library.mq.edu.au/about/conferences/sustainability/scholarly.html

2. For the most recent statement of Odlyzko's views see Odlyzko, Andrew. The Rapid Evolution of Scholarly Communication, Preliminary version, March 19, 2000.
http://www.si.umich.edu/PEAK-2000/odlyzko.pdf

3. Houghton, John, The Economics of Scholarly Communication: a Progress Report on a Coalition for Innovation in Scholarly Communication Commissioned Study.
http://www.library.mq.edu.au/about/conferences/sustainability/economics.html

4. For details of the Macquarie University experience see McLean, Neil, The Transition from Print to Electronic Journals: a Case Study.
http://www.library.mq.edu.au/about/conferences/sustainability/transition.html

5. Montgomery, Carol Hansen and Sparks, JoAnne, Framework for Assessing the Impact of an Electronic Journal Collection on Library Costs and Staffing Patterns. Paper presented at a Conference entitled: The Economics and Usage of Digital Library Collections, 23-24 March 2000, Ann Arbor, Michigan.
http://www.si.umich.edu/PEAK-2000/montgomery.pdf

6. Reported in Scholarly Communications Report vol. 4 (3) March 2000. Cassis Publishing Ltd., Abingdon U.K.

7. The CISC project is due to report in early July 2000.

8. Kent, Philip, Further Thoughts on Pricing and Paying in an Electronic Environment. [forthcoming]

9. Posner, Neil, Pricing for the Future: the Elsevier Science Perspective. [forthcoming]

Copyright © Neil McLean 2000.
All rights reserved. mclean@library.mq.edu.au