Re[2]: Science Online model and Princeton

[mspinell@aaas.org (MSPINELL)]

David,
     
You appear to have decided what the price of Science Online SHOULD be based 
on a specious comparison between the print price of a single library 
subscription and the access price for an entire campus. The functionality 
and breadth of access of a site wide subscription to Science Online can in 
no way be duplicated by one print subscription to Science - or by 10 print 
subs, for that matter. In addition, the economics driving the pricing of 
Science are almost entirely different from the economic drivers of the 
     
It would be impossible to duplicate in print the ready access and research
usefulness of Science Online. Nevertheless, if you were to try to
duplicate only the accessibility, you would quickly recognize that Science
Online's site-wide subscription prices are far less expensive than either
the print or the workstation model, on a per user basis.
     
Sometimes I've noticed that commentary on electronic publication pricing
commits the error of only looking at the cost side of online publishing,
and drawing the conclusion that all prices should be lower than print
because the total cost of electronic publishing is assumed to be lower.  
EVEN granting the assumption (which many publishers wouldn't), it doesn't
follow that the price for a buyer will be lower. If someone tells you they
have a $1 million fixed cost base, what is the price of the product? Well,
of course, it depends on how many buyers there are.
     
The costs of print Science are widely distributed among three groups: a
substantial number of libraries; a very large number of individual
members;  and a substantial base of advertisers. As a result of the
diverse base of buyers, all the buyers enjoy a pretty modest price for
obtaining the value they seek from Science.
     
Science Online is different. In many ways, it supplies more value than
print (searchability; back copy access; immediacy of delivery; breadth of
access); in some ways it supplies less (no archive; not easily portable).
I certainly want to suggest that pricing is related to value for Science
Online, and should be for any product. However, the far more significant
driver of the institutional site-wide pricing we offer is our assessment
of the likely size of the market.
     
No matter what the cost to produce, the price-setting question cannot be
answered without a theory about how many buyers there will be to
distribute those costs among. Even if Science Online eventually garners
more users than the print journal (which it might), it seems most probable
at this point that it will have many fewer buyers. No library needs two
site-wide subscriptions. And once a site-wide subscription is purchased,
why would any individuals at that site purchase personal access? It is -
unlike the print product - identical in utility regardless of whether your
library buys it or you pay for it personally. In print, personal copies
still bring significant added value above the library copy, due to
convenience, timeliness, collectability, etc. Not so for the Online
journal.
     
As for advertising, our business staff has been aggressively marketing
Science Online to advertisers, and we have enjoyed considerable success,
compared to similar online products. But so far, advertising on Science
Online (or for that matter, all online products) is a minuscule portion of
advertising in print. It doesn't come close to covering the additional
costs of producing Science Online. Furthermore, there is some concern that
advertisers who venture online will merely reallocate money from print
products, which, of course, ultimately doesn't help with covering new
costs.
     
I know you don't like the workstation model. As I've said many times: it
wasn't really meant for your kind of institution. I also know that the
economics of Science Online are not going to be easy on the budgets of
librarians in general. I am sympathetic, but I can't make it different by
wishing it so - and neither can you by making ill-conceived comparisons to
our print pricing. I have mentioned before that we remain open to changing
the price should our economic picture look different as we move forward.  
Right now, we are very optimistic about meeting our sales goals for 1999,
but in truth it is too early to tell, and I honestly doubt we'll discover
that the market is much larger than we have estimated. Believe me, I'd
love to be wrong on this one, and be able to 'eat crow' by announcing a
price decrease because we sold so many more than we expected!
     
We're actively looking at other ways to reduce prices for Science Online,
including consortial buying, print/online package deals, and even other
forms of limited access (for example, pay-per-view access will be
introduced this month).
     
In the short run, consortial buying seems to offer the most promise. When
a consortium approaches me, I try to view them as representing a larger
segment of the market than I would have otherwise sold, and so I can
adjust pricing as if we were reaching a larger market. This is especially
beneficial when the consortium has a strong mix of smaller institutions,
because smaller organizations are the most disadvantaged by our current
pricing structure and these are the organizations we mainly aren't
expecting to purchase site-wide subscriptions. What I have found is that I
can almost always offer significant savings (vs. our list prices) to
consortium members, unless the consortium consists entirely of gigantic
institutions. However, from anything I can see right now, the hope of
bringing these prices down by `an order of magnitude' is not likely to be
achievable, even with consortial buying.
     
Stayed tuned. I want Princeton and all the rest of you to be able to
obtain Science Online for your communities. I believe our current pricing
is fair and reasonable, given what we know -- but I'm not attached to it.
If we can do better, while maintaining the income we need to provide this
top quality product, we will.
     
     Mike Spinella


______________________________ Reply Separator _________________________________
Subject: Re: Science Online model and Princeton
Author:  David Goodman <dgoodman@Princeton.EDU> at Internet
Date:    12/1/98 4:55 PM


Since Mike Spinella mentioned Princeton as an adopter of their workstation 
licensing, I'd better explain our logic.
     
No one here thinks this is a good model, for all the reasons that have 
been stated on this list. Princeton would much rather have a campus 
license if it were obtainable at what we consider a reasonable price. The 
institutional price of Science this year is $295, and the campus license 
for an institution Princeton's size would be $3500.
     
Because of the importance of this title, we decided to purchase the $25 
add-on to each of our 10 print subscriptions, and the journals is 
available on one designated computer in each of our relevant branch 
libraries, where it receives significant use.  I do not think of this 8% 
additional price as an "economy model":  I think of it as a not very 
satisfactory compromise to meet an unfortunate pricing policy. If the 
publisher feels compelled to charge non-affordable prices for a campus 
license, it may be better that the publisher offer an alternative than no 
alternative at all.
     
I do not know what we would consider the maximum acceptable price for a 
campus license. In my personal view, it would be about an order of 
magnitude less than the publisher's current price.
     
Though I am stating the consensus of our science selectors' decisions, the 
interpretation is of course only my personal view.
     
-- 
David Goodman 
Biology Librarian, Princeton University Library 
dgoodman@princeton.edu         http://www.princeton.edu/~biolib/ 
phone: 609-258-3235            fax: 609-258-2627