Usage-based pricing, a view

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

A colleague who was "once upon a time" a publisher, shared the following
thoughts with me, but since no longer in that business, has requested
anonymous contribution.  He makes very good points, for which many thanks.
Ann Okerson

---------- Forwarded message ----------

There was a time when I put a good deal of thought into usage-based
pricing. I couldn't make myself comfortable with it for a number of
reasons, even though I certainly do recognize that it is often viewed as
the most fundamentally 'fair' model.

Here is a list of cons I came up with on the usage-based pricing question:

1) economic disincentive to usage, and so antithetical to both publishers'
and librarians' missions;

2) incentive toward 'bad' behaviors, either to reduce usage or to 'hide'
it in some way - just one example would be that this provides a strong
incentive for one person to download a file and share it around, rather
than having everyone hit the site for that same article. This both
distorts usage stats and begins to touch on sensitive abuse questions;

3) likely to stir up debates and administrative hassles about what kind of
usage should 'count' - Abstracts? Searches? The 500th time a particularly
popular article is viewed? What about the second click to enlarge an
illustration? Mistakes? Yikes! Seems like a disaster in the making...

4) harder to implement beneficial price discrimination and raises other
fairness issues. OK, so a small research institute has relatively high
usage, but does that make it fair to charge them the same as Yale? What
about a big university in a developing country?

5) a good bet is that corporate customers of many key scientific titles do
NOT use anywhere near as heavily as universities or research institutions.
Usage-based pricing will lay bare the fundamental 'unfairness' of a dual
pricing scheme designed to charge corporate customers more.

The previous two objections can be overcome by simply deciding - more or
less as is done today - that these are groups that will be favored or
surcharged based on their category. I don't think the first 3 objections
are as easily defeated.

6) what to do about first year pricing.

7) the unpredictability of year to year pricing. This latter is something
librarians have worried about in the past, understandably because it could
make for some very difficult budgeting.  But I would point out that it is
also a downside for publishers. Not being able to ascertain the revenue
from institution to institution, and year to year, presents a difficulty
in managing costs. And don't let anyone tell you that things will smooth
out over time. They might, but a given publisher would surely be subject
to 'fat' years and 'lean' ones. A single 'blockbuster' article can skew
the stats for a year for nearly everyone; and a single institution whose
author/researchers have a particularly strong year of getting published
will almost certainly see spikes in its own usage - and may especially
resent paying a higher price, since the spike may be mainly related to
works of their own faculty, the very ones they hate paying for in the
first place!

***end**