Re: Rational and irrational economics, was , Elsevier ...

[John Sumsion <J.W.Sumsion@lboro.ac.uk>]

David

I found almost everything you say rings true.  But this argument of
'staying within budget' and 'spending up to budget' is so common - on both
sides of the Atlantic and in all types of library - that it needs to be
challenged.  In the short term and at the tactical level there is no
denying its strength.  But librarians do not need to ignore the strategic
and longer term - where their institutions deserve their expert advice on
the level and type of resources the organisation requires.  The true
objective must be to provide resources at the best value level - and this
may imply higher or lower budgets than set by historical precedent.

In the context of this discussion the objective should be use electronic
networking developments to achieve better value for our users.  It is
common ground that this is likely to imply quick and convenient access to
high quality and popular journals and less expensive and less convenient
access to fringe titles.  But there is on the horizon the possibility of a
massive extension of journal readership through easier access - most
obviously to scholars in adjacent specialities and easier more fruitful
browsing.  There must also be prospects for retrieving abstracts and full
text in the same operation.  But there is also the possibility that new
scenarios will deliver greater value at lower cost - and that has to be
explored too.

These potential advantages would represent a revolution in improving
access to information similar to what happened in the last century with
the change to open access shelves and to automated catalogue records -
still far from universal on the world scene.  Such benefits are not easy
to measure - but the advantages are obvious to enlightend top people.  It
is a vital part of our job to tell them what developments they should
support and what changes in resources are needed.  That should not be
taken as given - or as the starting point.

Where would we be with Computer Services departments that limited
themselves to what was their annual budget in 1980?

It is only a small part of your argument.  But I felt moved to write
because too many top librarians in both public, academic and national
libraries are tempted - at least on paper - to opt out of the vital step
of telling their organisations what resources they need to deliver a best
value and modern service.  And too many performance measurement texts say
the same.  I suspect, however, that it is the 'theology' that is defective
rather than the practice!

John Sumsion - Senior Fellow
Department of Information Science,
Loughborough University
Loughborough, Leics  LE11 3TU (UK)
Tel +44 (0) 1509 223082/223052 
Fax: 223053
HOME ADDRESS (preferred): 
The Granary
29 Main Street
Rotherby
Melton Mowbray, Leics  LE14 2LP
Tel: +44 (0) 1664 434485
Fax:  434918 [same e-mail]


>Anthony, I want to challenge the general statement running though your
>discussion that publishers act according to the same economic motives as
>libraries. Publishers try to maximize profit. The greater their net
>returns, the more money the owners (corporate or individual) have for
>their private purposes. Libraries must stay within their allocated
>budgets, but do not benefit institutionally or personally from any savings
>beyond that point. Indeed, if we do not spend all our money we are almost
>certain to receive a proportionately lower allocation the following year,
>so we normally try to spend it all. Optimum economic behavior for us is to
>spend all our money, but to spend it so as to maximize the satisfaction of
>the users.  However, our success at meeting user needs has only a very
>limited effect on our personal careers. Our actions affect the quality of
>the institution, but they are rarely critical to its survival. .
>
>The economic status of a journal depends primarily upon the number of
>subscribers at full institutional price, because of the high first copy
>costs and low incremental per-copy costs. The number of institutional
>subscribers depends upon price, and quality (and a number of less rational
>factors, such as prestige and tradition).  Their subscription decisions,
>as has been discussed here and elsewhere, are relatively insensitive to
>price, but much more sensitive to quality (which they judge primarily by
>user demand).  This is a consequence of the Bradford distribution: the
>small number of highest quality journals are the ones that receive most of
>the use.  A journal of sufficiently high quality can charge a high price
>and not lose subscribers. Recent complaints of journal pricing on this
>list and elsewhere have addressed not high priced journals per se, but
>journals whose high price is not matched by their present quality. In
>these discussions, the general publishers response is: but look at the
>very large number of articles the journal publishes.  This is of no
>concern to a library or a user: both want the journals with the best
>articles, not the ones with the most.
>
>A journal of very high quality does not need to charge a very high price
>to survive and make a profit--because of its quality it will sell a
>reasonably large number of subscriptions, and thus enjoy the benefits of
>the low marginal costs that apply.  In the past, this has permitted
>smaller libraries to afford a useful collection of high-quality academic
>journals, and permitted larger libraries to collect the best journals in a
>very wide range of fields.  What we have seen in the last two years is an
>proportionately greater increase in the prices of the best journals. The
>American Society for Microbiology comes to mind as the most dramatic
>example; a less drastic but more significant one is the much greater
>percentage increases for Elsevier's Current Trends group than the rest of
>their list. This will indeed maximize short term revenue--as long as the
>journals I have mentioned retain their superlative quality, we will all
>buy them. We will buy them, of course, at the expense of the titles of
>lower quality--and all major commercial publishers have many of these.
>This will accentuate even further the positive feedback that Anthony
>discusses. This may and should drive such journals to extinction.
>
>The traditional way for a publisher to escape from this dilemma is by
>subsidizing these journals with the more successful ones. This is of
>course the motive behind all-inclusive subscription plans; by denying to
>libraries the opportunity to choose titles, they force us to continue
>these subsidies. This removes the normal competitive forces promoting
>higher quality higher profit journals, and I anticipate that it will
>depress both quality and economic efficiency.  If this drives the total
>costs too high, the entire package may fail. Unlike the selective loss of
>minor titles, I do not consider this a desirable result.
>
>David Goodman
>Biology Librarian, and
>Co-Chair, Electronic Journals Task Force
>Princeton University Library
>dgoodman@princeton.edu         http://www.princeton.edu/~biolib/
>phone: 609-258-3235            fax: 609-258-2627