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Re: Response from Ted Bergstrom to Ann Okerson

In response to Ann Okerson's comment that many libraries do not pay the
list price for journal access, Ted Bergstrom responds:

..."It would be very useful for libraries to collect consortium price data
in a central database, to help libraries understand the negotiating
environment. This would require universities to show some backbone in
refusing to sign secret agreements with publishers"...

This is very interesting, since I proposed such a solution last year at
the 2004 Charleston Conference on Collection Development. While I
received strong vocal support from the library community, few (if any)
were actually willing to adopt this solution. Economists will tell you
that market transparency increases competition and leads to lower prices,
yet it is based on the assumption that individuals are acting in a
collectively rational way. Individuals in our society are generally
unwilling to openly share their salary with others and what they paid for
their home, in spite of the fact that such openness would lead to a fairer
market. [as an aside, I've always wondered what would happen if I stood
up at the front of a plane and openly disclosed what I paid for my ticket. Would the Department of Homeland Security remove me from the flight in
handcuffs for inciting a riot?]

In the same way, librarians are reluctant to share pricing information
(and willfully accept confidentiality clauses) if they believe if they are
getting a "good deal" from the publishers. They are also reluctant to
share pricing information if they believe they got a bad deal (who would
admit they are a poor negotiator?).

While I completely agree with Ted Bergstrom that such a public database of
pricing information would be useful, I was convinced that it won't be
adopted for the simple reason that human behavior in this case does not
lead to collective rational behavior. If anyone can get such a system off
the ground, I'd love to be proven wrong.

--Phil Davis


Sources:

The full conference speech can be found at:
http://people.cornell.edu/pages/pmd8/fair_pricing_speech.doc

and summarized in the D-Lib article:

Fair Publisher Pricing, Confidentiality Clauses and a Proposal to Even the Economic Playing Field
D-Lib Magazine, v10 n2, Feb 2004
http://www.dlib.org/dlib/february04/davis/02davis.html


At 06:22 PM 11/7/2005, Alison Buckholtz wrote:
forwarded from Ted Bergstrom to liblicense readers.
______________________________________________________

Ann Okerson suggests that :

However, the calculations would need to be done quite differently for
library and consortial package collections, wherein for a small extra
surcharge one gets many more titles.

The larger publishers are practicing what economists call price
discrimination (charging different buyers different prices for the same or
similar items) by negotiating individually with libraries for the purchase
of bundles of journals. Contracts apparently vary in important details
like which journals are included and how much money the library would save
by dropping any given journal. Consequently, there is often no single
price for a collection of journals. It would be very useful for libraries
to collect consortium price data in a central database, to help libraries
understand the negotiating environment. This would require universities
to show some backbone in refusing to sign secret agreements with
publishers. For many purposes, the listed price of individual journals is
the most useful information available. To a good approximation, the prices
charged for bundled site licenses are a multiple of the sum of the listed
prices of that publisher's print journals to which the library previously
subscribed. The all-or-nothing bundling policies of the big publishers is
a device for extracting greater revenue. University administrators would
do well to refuse to buy journal bundles without the right to cancel
individual journals from their original holdings at a cost savings equal
to their listed individual prices.

Ted Bergstrom Preston McAfee
_____________________________________

From: Ann Okerson <ann.okerson@yale.edu>
Date: November 3, 2005 6:29:18 PM EST
To: liblicense-l@lists.yale.edu
Subject: Re: Bergstrom & McAfee Open Letter to University Presidents and Provosts
Reply-To: liblicense-l@lists.yale.edu

The authors' calculations (or at least the methodologies) are certainly
accurate for print journal subscriptions. The findings are also consistent
with studies done in the past at ARL and also by other researchers.

However, the calculations would need to be done quite differently for
library and consortial package collections, wherein for a small extra
surcharge one gets many more titles. A not atypical situation would be
that the Library subscribed to, say, 100 print journals from a publisher
-- and with the e-collection might pay an extra 5-10% for the entire list
which could have double or triple the number of titles. At times the
surcharge might be negotiated and aggregated consortially with a payment
made by the consortium.

So, in those cases, numbers would have to be re-worked entirely; the "cost
per" would be lower by quite a lot; and there could also be sizeable
variations between libraries' costs. Re-working is a complex process,
were it do-able. Ann Okerson/Yale Library