Friday, November 5, 2004

Are Consortia Their Own Worst Enemies In The Pricing of E-Journals?

Library Journal pointed to an updated version of the Statement of Current Perspective and Preferred Practices for Selection and Purchase of Electronic Information from the International Coalition of Library Consortia (ICOLC). I can't help contrasting their position with the conclusions drawn in an article I read last week, The Costs and Benefits of Library Site License to Academic Journals, by Carl T. Bergstrom and Theodore C. Bergstrom. Note that the authors of both documents share the perspective that scholarly journals are priced too high.

In The Costs and Benefits, Bergstrom and Bergstrom demonstrate how bundling across users reduces "the amount of variation in willingness to pay among buyers". Consequently, more profit can be realized by the seller if price is set to maximize profit when selling to a group. The microeconomic analysis of selling to a "bundle" of users via site licenses draws upon similar analysis that has been conducted to show that selling bundles of information goods can improve profits.

Library consortia that collectively negotiate prices, especially when package deals are involved, may in fact be overstating the demand for the packages because some member libraries rely heavily on certain titles and the must-have titles of individual libraries drive up the demand for the bundle. The ICOLC Statement also declares that "Improved measures of electronic information value will be essential to enable libraries to secure future funding..." Perhaps a return to a pricing model that reflects usage by institution as a measure of value is called for.

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