APS pricing explained for 2003

[Ann Okerson <ann.okerson@yale.edu>]

Thanks to Chuck Hamaker for forwarding this information.

---------- Forwarded message ----------
[N.B.:  The 2003 Price Chart is available at: 
<http://librarians.aps.org/Price03.pdf>

Dear Tier 1 Subscriber:

Over the past years both the library community and the scholarly societies
have wrestled with the painful problem of escalating costs of the
scientific literature. This letter is to initiate a dialogue and to
provide you with advance notice of the APS pricing for the year 2003.

We will begin with financial data from the APS and follow with the
philosophy, which directs the APS pricing model, specifically its
multi-tier pricing. Then, we will provide APS pricing for the coming year
2003. With that we will close with a equest for continued feedback from
the community to guide us in future years.

BACKGROUND INFORMATION

Presented here are some historical numbers to set the context and to
demonstrate what is meant by running a publishing operation to just cover
costs.

Fiscal year ending June 30, 2001:
Total Society revenue from operations: $34 million
Total Society expenses for operations: $37 million
Revenue from publications $27.8 million
Expenses from publications $27.5 million
Net return on publications $ 0.3 million (1% of revenue)

Looking at Publications, from 1997 to 2001 the price per page of Physical
Review rose from $0.135 per page to $0.155 per page, this averages to 3.7%
per year.

During that period APS had average salary increases of around 4% and the
number of subscribers continued their long historical drop of around 3.5%
per year. APS continues to invest in technological advancement, by
digitizing all of our journals online and creating PROLA. We kept our
average price increase in the single digit range while article submissions
increased between 3.5% and 5.5% per year, salary inflation was 4%, and the
annual attrition of the subscriber base was 3.5%, by allowing the margin
on our operations to erode.

The following table provides additional background information.
Year	Manuscript	Manuscript Pages	Price/ Page    Price/
Price/Article
                Received  Published      Published   (US$)
Submission  Published (US$)

1997       22,119      12,789              89,195        0.135
0.546                 0.945
1998       23,276       13,349             92,430        0.140
0.555                 0.969
1999       23,734       13,438             93,263        0.149
0.586                 1.035
2000       24,228       14,245             99,164        0.151
0.620                1.055
2001       25,225       14,631             104,379        0.155
0.643                 1.109

The price increases in 2003 continues a process of just keeping even but
also a process of redistributing the cost.

THE PROCESS

The pricing of journals is ultimately set by the elected Council of the
APS, after advice by the Publications Oversight Committee (POC). A
representative of the library community, appointed in consultation with
the PAM division of SLA, attends the POC committee meetings as an advisor.
In addition, we have held discussions with groups of librarians around the
country and abroad in focus groups and with agents familiar with library
concerns. We have also held discussions with Provosts and Library
Directors. We feel that this process has helped us create a viable and
fair model for distributing the costs of the publications process. 

THE MODEL 

During 2003, the APS will continue efforts to achieve a fair distribution
of costs between major research active subscribers, small undergraduate
institutions, and those in between. The APS was established in 1899 to
Promote and Diffuse the Knowledge of Physics. The APS Council supports the
philosophy that the cost of research activity should be distributed to
reflect the way different institutions utilize the literature. In
particular it should reflect both the value of the product to the reader
(students, researchers, etc.) and the value of the journal as a
distributor of research information (authors, institutions).

There are two points of view which both lead to increasing the fraction of
journal revenue, which comes from the more research active institutions.
One is from a business perspective. As cost pressures weigh on college
budgets, small institutions may feel forced to drop their institutional
subscriptions. This would be a significant loss, both for their students
and for the larger community. In particular, the loss in revenue will have
to be made up by the remaining institutions, since APS operates with no
profit margin to absorb it. By putting a constraint on the prices of the
small colleges we hope to keep them as subscribers. This is economically a
win-win situation.

The second perspective is more fundamental. The future health of physics
is heavily dependent on the educational activities of our small colleges
because they foster both the graduate schools and the technical workforce.
APS is committed to keeping the literature of physics accessible to all
portions of our community.

In keeping with these observations, we are adding two new tiers of
research active institutions for 2003, tier 4 & tier 5.  Tier 5 Very Large
Research Institutions (Represents less than 1% of all subscribers).  The
methodology used to determine this tier is based on the size, nature, and
scale of an institution's research activities, the degree to which an
institution regards research as a fundamental aim, the size of the
research budget in physical sciences, significant usage activity and
significant publishing activities of the institution's researchers in
APS's journals. Tier 4 Large Research Institutions (Represents
approximately 5% of all subscribers).  The methodology used to determine
this tier is based on the size, nature, and scale of an institution's
research activities, the degree to which an institution regards research
as a fundamental aim, the size of the research budget in physical
sciences, substantial usage activity and substantial publishing activities
of the institution's researchers in APS's journals.

Tier 3: Carnegie Research Extensive institutions and their overseas
equivalents, as well as government laboratories and corporations

Tier 2: Carnegie Research Intensive institutions and overseas equivalents

Tier 1: The remainder of the academic institutions and their overseas
equivalents

The fractional price increases for 2003 over 2002 in each tier:

TIER 	ONLINE ONLY    PRINT & ONLINE

TIER 5: 25%		25% Over Tier 3, 2002 prices
TIER 4: 20%		20% Over Tier 3, 2002 prices
TIER 3: 10%		10% Over Tier 3, 2002 prices
TIER 2:  5%		10% Over Tier 2, 2002 prices
TIER 1:  0%		6% Over Tier 1, 2002 prices

Overall, these increases will produce a 5.5% increase in revenue to cover
inflation and absorb the increasing number of manuscripts processed and
published.

ONLINE ONLY OPTION

It is recognized that the large increases for the research institutions
provides a real burden on tight library budgets. In order to provide
additional options to subscribers, online only access to the journals (no
print) continues to be offered at a reduced price. This option provides a
price reduction in 2003 of approximately 15% below the print-plus-online.
Overseas subscribers avoiding airfreight costs would see an even greater
savings.

The 2003 Price Chart is available at: http://librarians.aps.org/Price03.pdf

SUMMARY

APS recognizes the importance to the Community of maintaining stability
and predictability for your costs. We feel that change is necessary, but
do not wish it to be without involving the community. We intend to
maintain this structure and the institutional categorizations for at least
two years, during which time we will continue extensive interactions with
the library community. To help reduce the escalating publication costs,
APS is investing in technologies and looking at efficiencies to help
reduce our publication costs. We are also exploring other revenue sources
to help support the publications operation. Having reviewed the
background, philosophy and details of the 2003 APS pricing model, we
welcome discussion and comments. If you have any questions or concerns,
please write to as at assocpub@aps.org.

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