Re: Usage-based pricing (was ebooks in libraries a thorny problem)

[Eric Hellman <eric@hellman.net>]

As I said, the trick is to control the budget. Consider this 
variant. Suppose a library system put out a tender for ebook 
supply totalling 1 million dollars per year. Publishers 
participating in the tender would be paid a share of the $1M 
based on usage of the books they supplied.

Please ignore for the moment the technical difficulties of 
measuring usage and consider whether such a system would provide 
the correct economic incentives. The publishers would have 
incentives to get their stuff used. The library would get a fixed 
expense. No one would have their usage rationed.

I would also argue that many OA models are usage-based pricing, 
where the "price" is advertising exposure.

Eric

Eric Hellman
President, Gluejar, Inc.
Montclair, NJ 07042
USA
eric@hellman.net
http://go-to-hellman.blogspot.com/


On Apr 13, 2010, at 6:24 PM, Heather Morrison wrote:

> Eric Hellman wrote:
>
> Usage based pricing only provides a disincentive to use if the 
> price is paid by the user. Viewed from the provider side, it 
> provides exactly the right incentives- you should want 
> providers to make resources that users want to use. The trick, 
> of course is how to control the top-line of the budget.
>
> Comment:
>
> Usage based pricing, by definition, means that someone is 
> paying by the usage, and hence there is incentive to limit 
> usage.
>
> Let's go back to the scenario of libraries purchasing ebooks on 
> a usage-based pricing.  Let's say this model becomes the norm. 
> The library's ebook budget then becomes x dollars to cover x 
> uses.  What happens when the budget is cut, or the cost per use 
> increases more than the library budget?  The library would have 
> to ration usage, or pass the costs along to users (which brings 
> the direct disincentive to usage that you mention).  It is very 
> easy to imagine the same kind of vicious cycle that we have 
> seen with the serials crisis, i.e. if libraries ration reading 
> or users curtail their reading, vendors are likely to increase 
> per-usage cost since their costs are covered by fewer uses, 
> resulting in further rationing of reading, and so on.
>
> This is madness with scholarly knowledge in electronic form, 
> which is nonrivalrous in nature.  Once a copy in electronic 
> form is available over the internet, costs for additional uses 
> are virtually nonexistent.
>
> Usage-based pricing as an alternative is a strong argument for 
> open access.
>
> Heather Morrison, MLIS
> http://pages.cmns.sfu.ca/heather-morrison/