Usage-based pricing (was ebooks in libraries a thorny problem)

[Heather Morrison <hgmorris@sfu.ca>]

Eric Hellman wrote:

Usage based pricing only provides a disincentive to use if the 
price is paid by the user. Viewed from the provider side, it 
provides exactly the right incentives- you should want providers 
to make resources that users want to use. The trick, of course is 
how to control the top-line of the budget.

Comment:

Usage based pricing, by definition, means that someone is paying 
by the usage, and hence there is incentive to limit usage.

Let's go back to the scenario of libraries purchasing ebooks on a 
usage-based pricing.  Let's say this model becomes the norm. 
The library's ebook budget then becomes x dollars to cover x 
uses.  What happens when the budget is cut, or the cost per use 
increases more than the library budget?  The library would have 
to ration usage, or pass the costs along to users (which brings 
the direct disincentive to usage that you mention).  It is very 
easy to imagine the same kind of vicious cycle that we have seen 
with the serials crisis, i.e. if libraries ration reading or 
users curtail their reading, vendors are likely to increase 
per-usage cost since their costs are covered by fewer uses, 
resulting in further rationing of reading, and so on.

This is madness with scholarly knowledge in electronic form, 
which is nonrivalrous in nature.  Once a copy in electronic form 
is available over the internet, costs for additional uses are 
virtually nonexistent.

Usage-based pricing as an alternative is a strong argument for open
access.

Heather Morrison, MLIS
http://pages.cmns.sfu.ca/heather-morrison/