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Re: Consortia Pricing - JSTOR Response
Having now seen two messages addressing JSTOR's policy concerning
consortial pricing, I think it important for me to take a moment to
provide some background on JSTOR's pricing and the reasons for our
decision not to offer special consortial discounts. (If you are
interested in a more detailed explanation of our pricing, please see
"JSTOR: The Development of a Cost-Driven, Value-Based Pricing Model,"
available at <www.arl.org/scomm/scat/guthries.html>).
JSTOR is a not-for-profit organization with an emphasis on archiving and
preserving the long back runs of academic journals. Many of our titles
reach back into the 1800s. For each journal in the database, we seek out
and digitize every numbered page that was ever published in the journal,
not just full-length articles, but other miscellany and advertisements as
well. We did not, and do not, pursue this comprehensiveness because it is
commercially attractive, we do it as a service to future scholars and
researchers. Like a library, we are aware that the great majority of the
pages and articles in the database may never be read or printed. But they
are there just in case.
This emphasis on archiving and preservation of journal back runs
distinguishes JSTOR from other content providers (who have chosen to offer
consortial discounts). There is no precedent for the resource we are
providing, so comparisons to other pricing models are not directly
relevant. For example, many entities offering discounts to consortia are
offering a new version of an existing paper-based journal for which they
already receive an income stream that covers the fixed costs associated
with publication. In setting pricing for the electronic version, their
goal is to insure that the marginal costs of providing the resource to
additional subscribers is covered. Having the paper subscription revenue
as a base offers considerably more flexibility in possible pricing
arrangements. By contrast, the JSTOR database is an entirely new resource
and both fixed and marginal costs must be covered if the enterprise is to
succeed.
It is no coincidence that the emergence of an entity like JSTOR and the
growth of consortia are occuring simultaneously. The technological and
economic forces that make JSTOR possible are also what have led to the
growth of consortia for purchasing electronic materials. The ability to
transmit information digitally offers savings for the community if
commonly held materials can be stored centrally and distributed over
networks. Copies of the journals available in the JSTOR database are held
in thousands of libraries, and they occupy literally hundreds of
thousands, if not millions, of feet of shelf space. Pooling resources to
digitize these materials and store them centrally will result in savings
not only in shelf space and costs associated with maintaining it, but also
future costs associated with archiving the electronic material. In that
respect JSTOR is itself a consortial endeavor dedicated to taking
advantage of the benefits of the advances in electronic technologies for
the scholarly community.
As a not-for-profit organization, our goal in developing the JSTOR
database is to encourage as broad access to the resource as possible. We
decided to pursue a value-based pricing approach that seeks to match the
amount institutions contribute to the value they receive from
participation. Thus, we established four different price levels. By
offering different prices to different classes of institutions, we hoped
to distribute the costs of operating JSTOR over as many institutions as
possible, and in a fair way.
Once we decided to offer a range of price levels, we had to select an
objective method to place institutions into different price categories. We
chose the Carnegie Classification of Institutions of Higher Education for
pricing purposes. In addition to the Carnegie Classes, JSTOR factors in
the FTE enrollment of each institution, making adjustments that move
institutions with smaller enrollments into classes with lower price
levels. We decided to break higher education institutions into four JSTOR
sizes: Large, Medium, Small and Very Small.
We recognize that the database development fees (which range from $40,000
for large libraries to $10,000 for very small libraries) represent a
substantial investment. These one-time fees help to fund the digitization
of the materials and to preserve them for the long-term. But we do not
regard these fees as expensive; rather, they are an incredible value by
any measure. As mentioned, these figures are a fraction of what it costs
to maintain the bricks and mortar and shelves to house the journals in
paper format. They are also approximately one-tenth the cost of
purchasing the materials in other media such as paper or microfilm, which
offer no convenient mechanism for searching. Finally, making these older
materials available to scholars and students in a way never before dreamed
of has a value that, while difficult to quantify, is substantial. That
value is demonstrated by the regular flow of emails we receive urging us
to add more journals and to get them up faster.
So why does JSTOR not offer consortial discounts? JSTOR's prices have
been deliberately set as low as possible while factoring in very ambitious
goals for the number of libraries likely to participate. Combined with
our differential pricing approach, this represents our effort to spread
the benefits of the project to as many institutions as possible. Offering
further discounts to large groups of institutions would put JSTOR's
viability, and with it the potential benefits to the scholarly community,
at risk.
A second significant factor that has prevented us from offering group
discounts revolves around issues of fairness. The distribution of
organizations in consortia is uneven and unstable. Many institutions are
members of several consortia, while some are in none at all (although
there are increasingly few of those remaining). If the consortial
arrangements were more mature and there was a one-to-one relationship
between the institutions in JSTOR's community and consortial groups, it
might have been possible for JSTOR to build a plan that would distribute
costs fairly across those groups. If, for example, every institution in
the United States was a member of one of five separate consortia, a
project like JSTOR could divide its costs by five and a fair contribution
could be made by all. But there are not five consortia; there are
hundreds. The patchwork of consortial affiliations is so complex that it
is extremely difficult, if not impossible, to establish prices that will
be regarded as fair by participants. JSTOR's commitment to share as much
of what it learns with the scholarly community as possible requires that
there be no special deals, that we be open about the contributions that
institutions make and their reasons for making them. Our economic model
would not be sustainable if two very similar institutions contributed
different amounts simply because one was a member of a consortium that
drove a harder bargain.
Instead, we rely on a pricing unit which is easily defined and understood
-- the individual institution. And we rely on a pricing gradient, the
Carnegie Classification, which distributes those institutions objectively
into groupings that are consistent with the nature and value of our
resource.
In closing, I would like to say that it is not entirely accurate to say
that JSTOR refuses to deal with consortia. JSTOR is by no means
idealogically opposed to consortia; as I stated earlier, our mission and
pricing are based on consortial principles. And, in fact, we have made
the database available through arrangements with consortia and systems in
a number of cases. These arrangements have worked out very well in that
the central body has provided assistance with the one-time component of
JSTOR's fees while the individual institutions have taken responsibility
for the annual access fees. We would be pleased to work with more
consortia in this way.
JSTOR was established to help librarians, scholars and publishers to make
better use of important older research that was at risk of being lost in
the transition to electronic resources and tools. We believe strongly
that every dollar spent on JSTOR will yield a savings of more than a
dollar over the long run. We also think that the experience we share with
our library and publisher participants will be of lasting value.
We understand that library budgets are stretched to the limit. In fact,
that was one of the original motivations for establishing JSTOR in the
first place. With resources in such short supply, we also understand why
some librarians might be frustrated with JSTOR's stance regarding
consortial discounts. While from a personal standpoint nothing would
please me more than to lower prices so that all libraries could gain
access to JSTOR tomorrow, it is my responsibility to insure that we live
up to the promises we have made to the over 250 libraries that have
decided to participate. Fulfilling those promises requires that we
generate sufficient revenue to cover the substantial costs of providing a
resource of this scale and quality.
We are extremely encouraged by the enthusiastic response of the scholarly
community to this endeavor. We have far more libraries and publishers
signed on at this stage than even we could have hoped for. Usage of the
database grew more than 340 percent during the fall term with no signs of
letting up. We will continue to work hard to improve the capabilities of
the database, to add more journals as fast as possible, to demonstrate
that participation in JSTOR yields institutionals savings, and to make a
contribution to the general understanding of the use of electronic
materials in scholarship. We thank the many librarians among you who have
offered us support as well as the constructive criticism that has helped
us to improve. We will continue to welcome your feedback.
Sincerely,
Kevin M. Guthrie
President
JSTOR
188 Madison Avenue
New York, NY 10016
______________________________ Reply Separator
_______________________________
Subject: Re: Consortia pricing
Author: David Carlson <dcarlson@bridgew.edu> at Internet
Date: 1/30/98 11:36 AM
The issue of consortial pricing raised by John Campbell is an interesting
one. Mr. Campbell raised in the context of JSTOR so, disclaimer first: my
library is a charter member of JSTOR.
If he doesn't know it already, the main thing I would advise Mr. Campbell
to be aware that while many libraries have joined JSTOR and many members
(and non-members) are supportive of this digital initiative with an
emphasis on the archival as long overdue -- applause, applause -- the
biggest complaint I have heard regarding JSTOR is its stance not to deal
with library consortia. (This complaint gets "mixed up with" the belief
that JSTOR is over-priced; that is, since a library cannot get a
discounted price via a consortia, it is too expensive.) Indeed,
"complaint" really isn't strong enough; many colleagues I talk to are
offended by this position.
I have asked JSTOR about this issue directly and the response I got was
that they see no economic advantage or efficiency to a consortial
arrangement. My interpretation of this remark was, "we can't see what
money or services we would save in dealing with a consortia of 10
libraries versus dealing with 10 libraries individually, therefore we
have no basis on which to base a consortial pricing with reduced costs."
I think this logic is short-sighted and incorrect.
Many of those hypothetical 10 libraries might not join at all due to
individual pricing, but *all* 10 might join if consortial pricing is
permitted and costs are shared. In the end, I think vendors should and
would end up getting more money with consortial pricing than without. Of
course, in addition to the increased dollars, they will also have the
additional burden of support for those 10 libraries (requiring, perhaps,
faster connectivity, greater load on servers, etc.) Still, however, this
*is* a digital product and the cost of additional digital copies are not
as compelling or direct as in the paper space.
Note: it is amazing how many consortial arrangements of which libraries
can be members! We're a medium-sized academic library in Mass. and I can
easily name a dozen consortia or affiliations which might serve as the
basis of some vendor digital initiative. It starts with very broad
groupings (such as Nelinet, our OCLC provider) and all the way down to
very small but very effective local affiliations such as SMCL, consisting
of the four academic libraries in this part of the state. I would agree
that a consortial arrangement should have some advantage to the vendor in
terms of reduced contact points for support issues and billing/payment. I
think these are very reasonable requirements and any consortia that does
not offer them is not, in my opinion, a reasonable arrangement for the
vendor.
However, in addition to the economic factors, there is a more fundamental
reason why I think JSTOR's position is wrong and is also the reason why
libraries are offended by its position. Libraries have a long and valuable
history of consortial arrangements resulting in the sharing of materials,
support, expertise and costs. I think we're one of the few entities in
higher ed that have such meaningful relationships. We deserve credit for
that. Moreover, in these days, when we all recognize that not even the
largest of libraries can have everything and the increased importance of
access and delivery vs. ownership, these relationships are increasingly
important. We should encourage and enhance them, not abandon them. Indeed,
we should look for ways to creatively apply these relationships in the new
digital world. Ultimately, I believe that what's good for libraries are
good for the vendors we deal with; that includes consortial relationships.
-------------
David Carlson
Director of Libraries Bridgewater State College
Bridgewater, MA 02325
E: dcarlson@bridgew.edu
V: 508/697-1256
Fax: 508/697-1349
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