Re: Wiley-Blackwell 2009 Subscription and Licensing Options

[<bernd-christoph.kaemper@ub.uni-stuttgart.de>]

Ian Russell schrieb:

> The 'bottom-line' is, by definition, revenue minus costs so you 
> can't talk about the 'bottom-line' without considering costs...
>
> Incidentally, Fred, your logic is flawed and it is perfectly 
> possible and indeed reasonable that the cost of producing print 
> is a 90% base cost + 10% additional cost for print, the cost 
> for online is a 90% base cost + 10% for online and that 
> therefore the price for online and print is a 90% base price + 
> 10% for print + 10% for online = 110%.
>
> In any case, the situation varies from publisher to publisher 
> and different policies and practices have emerged and continue 
> to evolve.  Please remember, Fred, that when journal publishers 
> (who were at the vanguard of embracing and implementing the 
> web) first put their content online they generally added this 
> for free bundled with a print subscription even though the 
> costs of doing so (especially when the technology was not 
> mature) was great (thus reducing the 'bottom-line' and 
> decreasing profitability).

Yes, I do remember the times when Wiley added "free online 
access" to its print journals.

At the end of 1998, after Wiley had brought their journals 
online, prices went up a staggering 20% on average, at least 10% 
above the "industry average" for 1999. So the "Basic Access" for 
Wiley journals was never "free" for library customers, it was 
just bundled with rising journal prices. Wiley's revenues 
advanced 9% in the fiscal year ended April 30, 1999, while 
operating income rose 41%, resulting in an operating margin of 
12.5% the highest in nearly two decades. The market price of 
Wiley's shares advanced 46% in the same year. So much for 
reducing the profitability.

When Wiley at the end of 2001 finally "unbundled" e-access and 
print, they used the convenient "extra cost" argument to 
introduce another hidden price increase of 5% (on top of their 
ca. 12% "list price" increase, same as the year before), by 
setting "e-access + print combined" as 105% of the list price, 
e-only and print at 100%, instead of 100% / 95% / 95%. If they 
redefined what constitutes the baseline they should have 
readjusted their list price increase by 5 percent points 
downwards, but of course that did not happen. (2 years later the 
combination price was increased by another 5%, so that now P = O 
= 100%, P+O = 110%.)

Now the same is happening again with Blackwell journals. Online 
only Premium access is set at 100% of the list price instead of 
95% before, a 5% price increase. A Print subscription no longer 
includes limited online access to the current and the last 2 
years, but is still priced at 100% of the list price. The former 
"Premium" print plus online still costs 110% as before, but is 
now limited to a single "campus location" only (Wiley calls this 
"campus-wide single-site access", a contradiction in itself, and 
the unwritten Wiley policy of a limitation to at most 10 class C 
nets is as absurd as it always was, especially if Wiley wants to 
get Shibboleth compliant by next year.)

The median list price increase for Blackwell titles last year was 
6,5...7%, this year it is 9%, and sites who already have 
"flipped" (switched to e-only), are penalized by an even higher 
increase (14%). So Fred Friend seems to be right when he finds 
that costs for maintaining a print distribution line are in part 
offloaded to e-only subscribers. Wiley could have avoided this by 
setting the base line for the list price at last year's e-only 
price plus price increase 2008 -> 2009, but of course that did 
not happen.

> Regarding your argument that Wiley-Blackwell are including the 
> cost for print delivery in the online price, the actual 
> distribution of the journal is a far smaller cost that the 
> 'first copy' cost of printing the issue.  In comparison online 
> delivery platforms, discovery tools, SEO etc represent a 
> significant investment.

Your logic seems to be flawed, too. "Online delivery platforms, 
discovery tools, SEO etc." are a basic investment, just like the 
costs for maintaining a print production line; but the marginal 
cost of adding electronic access for another title to a 
customer's online account is certainly smaller than the marginal 
cost of producing and distributing a further print copy to a 
library. And unfortunately, for the former Blackwell titles the 
online delivery platform and discovery tools provided now are 
much worse than the high standard set by the Synergy platform 
before, and they will remain so for at least a full year after 
the recent transition, as we are waiting for the "next generation 
online service" that has now been rescheduled for mid 2009 
(subject to confirmation ...) instead of January 2009 as 
originally promised.

> This price structure - or something very similar to it - is 
> also common across many journal publishers so it's unfair to 
> single out one publisher.

The reason is not the price structure as such, but the context 
and license conditions under which it is applied, plus the fact 
that this is clearly one of the few major STM publishers who 
still is not willing to moderate its annual price increases (in 
contrast to Elsevier, for example). If all those multi-year and 
consortia deals that promise stability and predictability to both 
the publisher and the library do not lead to any moderation of 
annual list price increases, then something must be going wrong. 
However, it seems clear that this pricing strategy offers all 
sorts of opportunities for a publisher to maintain high profit 
margins even in an economic climate that has become much tougher 
than before (libraries who have to retreat from a multi-year 
consortium deal because their budget does no longer bear it have 
then very little chance to decrease their spend w/o massive 
cancellations and lost access). Wiley is successful with this 
strategy, as any shareholder knows.

> In fact, so much of large journal publishers' sales (and to 
> some extent small ones too via things like the ALPSP Learned 
> Journal Collection and BioOne) are to consortia or in the form 
> of bundles as to make the discussion almost moot.

I disagree. Bundles are an opportunity but also beset with many 
problems, as ALPSP well knows (your own Learned Journal 
Collection was an answer to the risk of being squeezed out of the 
market through the binding of an ever increasing part of 
librairies serials budget in multi-year "big deals"). And as long 
as serials pricing continue to be increasing at rates much higher 
than inflation rates, bundles will only provide a temporary 
relief. So customers should continue to have a choice between 
flexible enough bundled deals and single title purchases and not 
be forced into bundle deals. Publisher practices that try to 
limit and discourage this freedom of choice should be rejected.

Bernd-Christoph Kaemper

> -----Original Message-----
> From: owner-liblicense-l@lists.yale.edu
> [mailto:owner-liblicense-l@lists.yale.edu] On Behalf Of "FrederickFriend"
> Sent: 01 October 2008 23:27
> To: liblicense-l@lists.yale.edu
> Subject: Re: Wiley-Blackwell 2009 Subscription and Licensing Options
>
> Emily,
>
> I am grateful to you for providing this information. I could 
> not find the FAQs to which you referred; the page 
> http://www.blackwellpublishing.com/librarians/faq.asp came up 
> with "Error: the page you have requested cannot be found", and 
> the closest I could find to a "Transition" site, viz. 
> http://eu.wiley.com/WileyCDA/Brand/id-35.html does not have any 
> FAQs.
>
> Of course I accept that the cost of producing the content will 
> be the same whether the delivery is print or electronic, 
> because you will be producing print copies from an electronic 
> base. You appear then to be saying that the cost of delivering 
> the content is the same whether it is electronic or print. This 
> contradicts a view I have heard from a number of distinguished 
> publishers over the years, that maintaining a print production 
> line adds between 20% and 30% to the cost of a journal. The 
> argument put to me has always been that for customers to see 
> the cost benefit from cancelling print, the print production 
> line would have to be closed down completely, which is an 
> argument I can understand. What Wiley-Blackwell appear to be 
> doing now is including part of the cost for delivering print 
> (i.e. the cost above the cost of producing the content) into 
> the price paid by online only customers. This may make some 
> customers think twice about moving to e-only.
>
> The justification you put forward for the pricing of the online 
> version is that the online version provides added value. I 
> accept that the online version does provide features not 
> available in the print version, but I am surprised that the 
> cost of providing these features is equivalent to the cost of 
> providing a print copy. And one of the added benefits included 
> in the online version, i.e. perpetual access rights, appears to 
> customers not to be an added benefit at all, because it is 
> included automatically in the print copy.
>
> Thomas Krichel wrote in response to my earlier post to 
> Liblicense that "the issue for a publisher is to maximise 
> profits, not align prices to costs". He may well be right. 
> However, when publishers justify the prices they charge, they 
> do so on the basis of costs. So what I am calling for from 
> publishers is honesty: either be open about your costs, or else 
> stop talking about costs and admit that all that matters to you 
> is the "bottom-line".
>
> Fred Friend
> JISC Scholarly Communication Consultant
> Honorary Director Scholarly Communication UCL