Periodical prices are on the upswing, and technology is advancing at a relentless pace
There’s no way to sugarcoat the impact higher serials prices have on the information marketplace, or the dire state of funding for libraries. Libraries are no longer in a position of having to cut low-use journals in order to make room for high-use ones; instead, they are now being forced to cancel heavily used, even essential subscriptions, much to the dismay of their patrons. The economy still drives any discussion of serials pricing, and it remains a very ugly story.
In September 2010, the National Bureau of Economic Research reported that economic indicators showed that the recession hit its trough and began recovery in June 2009. But while this may be true technically based on economic data, the recovery’s effects remain very difficult for either libraries or their patrons to detect. Educational systems, especially higher education, are easy targets when funding gets tight and states’ budgets are far from flush. The Center on Budget and Policy Priorities released a report in 2010 that had some alarming news: “Counting both initial and mid-year shortfalls, 48 states have addressed or still face such shortfalls in their budgets for fiscal year 2010, totaling $193 billion or 28 percent of state budgets—the largest gaps on record.”
There is more bad news coming from the federal level, as 2012 budgets are hit hard without any federal stimulus funding to fill the gaps, as had been the case in previous years.
For obvious reasons, the combination of funding levels and serial price trends is what sets the boundaries for library serials collections. When budgets are spiraling down, it becomes increasingly hard to maintain existing subscription lists; when prices spiral up at the same time, that difficulty increases exponentially. During the recession there was a reduction in cost for most commodities and goods—with the Consumer Price Index (CPI) dropping in 2009 and only increasing 1.6 percent in 2010. During that same period, serials prices continued to rise at well above the CPI (four to five percent), and, against the backdrop of decreased funding for libraries, price increases are very hard to sustain. Libraries do not have the resources to continue to exist in a world of ever-increasing prices, nor can publishers exist in world of no revenue increases. Publishers’ costs are going up as utilities and salaries need to be paid and shareholders require returns on their investments. Increased revenue and return on investment (ROI) won’t be coming from the public sector anytime soon, however, and libraries have little choice but to deal with their cut budgets by decreasing the services and content they provide to customers.
Between 2009 and 2010, data from the Association of Research Libraries (ARL) showed a slight decrease of $37,000 annually in the average expenditures for serials. Considering that price inflation would have required a four to five percent increase to hold subscriptions steady, obviously, serials were cancelled. The 2011 Library Collections and Budgeting Trends Survey conducted by EBSCO Information Services shows that 34 percent of approximately 450 respondents reported budget cuts for 2011, and 44 percent expect cuts for the next fiscal year. (Most respondents were from academic libraries.) Seventy-eight percent of respondents said they will likely cut print journals. This outcome harms all stakeholders, from publishers down through the supply chain to the eventual consumers of information.
Prices are going up, up, up
The sustained economic downturn coupled with new technologies and user demand has accelerated the shift to electronic collections. According to EBSCO surveys conducted during February 2010 and 2011, more than 80 percent of librarian respondents indicated that they were likely to move print plus online subscriptions to online only in order to achieve budget goals. In surveys of publishers during the same time periods, 60 percent of respondents reported that the economy had a negative impact upon their business. In 2010, approximately 27 percent of respondents reported a decline in their print business greater than ten percent; that number climbed to more than 30 percent in 2011.
Historically, the charts that accompany this article are based upon published print pricing. In the print world, pricing was straightforward: to serve multiple users or locations you needed multiple print copies. Over the years we have seen the metamorphosis of pricing models: from print plus free online, print plus online with an up-charge, standard online only pricing with varying amounts of back file to tiered online pricing and custom online quotes per institution, as publishers sought the best way to package and price their content. With more than 50 percent of respondents to the 2010 and 2011 EBSCO Publisher Survey indicating that they will consider pricing model changes in response to current business conditions, we can expect the next generation of pricing, likely based upon some form of tiers, to be unveiled in the coming year.
Driven to tiers
Tiered pricing sets prices for content based upon attributes such as the amount of back file included with the subscription, institutional FTE, the number of students enrolled in specific disciplines, and/or Carnegie Classification. In print, multiple points of access to content are addressed by multiple subscriptions. With electronic access, a single price means that a small liberal arts college with a handful of users could be paying the same subscription price as a large research university with potentially hundreds of users.
Tiered pricing attempts to set an appropriate price for the amount of access required. For example, the New England Journal of Medicine offers pricing based upon type of institution and number of users, with a 2011 subscription for a public library or a community college being $1260; a university with a medical school, however, would pay $7350.
In an attempt to address online pricing, this year we examined the titles in the combined ISI Arts and Humanities Index, Science Citation Index, and Social Sciences Citation Indexes that offer published online rates. We were able to obtain standard pricing for approximately one-third of the titles covered by the merged ISI indexes. The average online price per subject presented in Table 3 includes a range of pricing models: print plus free online, online only, and the first tier of any tiered pricing, with the common element being the electronic format.
As expected, nearly 50 percent of the content of the merged ISI indexes consists of titles from five major publishers: Elsevier, Wiley, Springer, Taylor & Francis, and SAGE. All five offer large online “Big Deal” journal packages; price increases for those packages are dictated by the terms of individual contracts and may not mirror standard published rates. Published print prices for the merged ISI indexes increased 5.2 percent for 2011. Prices for the broader set of titles in Academic Search Premier, which includes some titles in the merged ISI indexes, increased 7.7 percent. Print prices for the public library titles in MasterFILE Premier mirror that of the merged ISI indexes at 5.2 percent. In general, 2010 price increases were lower across the board than previous years, reflecting restraint on the part of publishers. Prices for 2011 are trending up again and this will result in higher price projections for 2012.
Although some publishers and vendors have pledged to hold prices level in the coming year, for 2012 serial prices will continue to edge up in the aggregate. The continued weakening of the dollar means that foreign prices will increase at a slightly higher pace than those of U.S. titles, but, overall, we see price increases for general periodicals trending in the five to seven percent range and academic titles in the seven to nine percent range. With library budgets in decline, this range of increases will be just as damaging as the serials price increases seen at the peak of the “serials crisis” in the 1990s, before the Big Deal became common. During that time, serials prices increased 10.8 percent in 1995, 9.9 percent in 1996 and 10.3 percent in 1997, eventually reaching 10.4 percent in 1998.
Normalizing business & pricing models
A broad view of the library serials marketplace shows that budget problems and the shift to digital content have had relatively little impact on basic business and pricing models. The way we do business has changed little since the advent of consortial purchasing and the Big Deal. Now, however, there is a lot of churn beneath the surface as libraries look for different ways to meet user demands for information. Publishers are also looking at their business models, since pricing content based on print subscriptions makes less and less sense as the content moves further into the digital realm.
In January 2011, Information Today published excerpts from an interview with Derk Haank, CEO of Springer Science+Business Media. Commenting on the Big Deal, Haank suggested that it has basically solved the serials crisis by greatly increasing access to journal content within a manageable financial framework. Of course, this generated a good deal of discussion among librarians, both positive and negative. It is unlikely that many people would consider the basic premise untrue. The Big Deal has been a very successful business model, but nothing lasts forever. Indeed, Sanford Bernstein analyst Claudio Aspesi told Haank’s interviewer, Richard Poynder, in March that he predicted that the Big Deal was doomed, citing “a long term unsustainable trend, a cyclical funding crisis and a more tough minded and analytical community of librarians.”
Perhaps the Big Deal did do a lot to ameliorate the serials crisis in the short term, but it will not be able to fix the budget crisis. Budget cuts and price increases do not coexist well, and Big Deals (like smaller-scale subscriptions) increase in price every year. Budget reductions force a reevaluation of all business models. Since Big Deals consume ever-increasing proportions of budgets, there will be libraries that have to unbundle and leave some of their Big Deals. In the recent EBSCO survey, nearly 40 percent of respondents said that they are likely to break up e-packages in favor of renewing only those individual e-journals that are most used. Librarians have shifted from talking about or threatening to cancel packages to unbundling them as budget pressures leave few alternatives.
Even if pricing models change, that will not alter libraries’ fiscal constraints. Simply put, a change in pricing models may not be enough. We can expect many more approaches from librarians to dealing with deficits. Since the budget problems have been around for a while, the easy cuts have already been made: trimming back a few more print journals or buying fewer books is not going to solve the problem. Besides dropping large journal packages, librarians are using more pay-per-view (PPV) to deliver content and exposing more open access (OA) content to users.
Librarians will continue to seek new answers. The value proposition of buying content that is never used is under assault by models that support buying content at the point of need. For instance, in the UK, the PIRUS2 project is funded by the UK-based Joint Information Systems Committee (JISC) and has drawn on the expertise of the Counting Online Usage of NeTworked Electronic Resources (COUNTER) initiative, Oxford University Press, CrossRef, the University of Cranfield, and the University of Manchester’s Mimas organization. The group recently indicated that reporting article-level journal usage is now feasible. These metrics may help drive increased use of PPV business models where libraries purchase articles on a need-only basis.
Open access has matured into a viable publishing channel, although it is certainly not going to put the large publishers out of business. Libraries use OA as a viable option for addressing growth in scholarly communications, as limited financial resources are available to have all content distributed through high-cost publishing channels. Large publishers will continue to cherry-pick the most successful OA journals and add them to their packages (at a price). Some large commercial publishers, such as Nature and Springer, are increasing their OA offerings: Nature now offers OA options in 80 percent of its e-journals and publishes eight fully open access e-journals, including Molecular Systems Biology and Translational Psychiatry; Springer now owns BioMed Central, one of the largest OA publishing platforms.
Easy and cheap will trump expensive information wrapped in digital rights management (DRM). Transformational changes aren’t always to the “best” but tend toward “good enough.”
The new world of mobile
The launch of the iPad in 2010 created a stir in the publishing and reading communities as tablet devices showed their e-content potential. The tablet’s popularity is quickly spreading, with Forrester Research estimating that the tablet will outsell desktop computers by 2013. (Such predictions should be taken with a grain of salt, since tablets will be very good at consuming content but not so good at creating content, which is the strength of laptop and desktop computers.)
Publishers responded, making their content increasingly available on mobile devices. Consumer publications, such as Newsweek and U.S. News & World Report, have been reborn online, many with an accompanying smartphone app. Finding and using the library now rests in the palm of your hand with apps that help users easily find the resources they need—such as Alberta’s Yellowhead Regional Library’s YourLibrary app—by searching for a resource and then locating it at the nearest public library. Mobile technology is enabling library patrons to connect to their local library’s virtual shelves for audiobooks and ebooks. Scientific journal content is also becoming more dynamic thanks to mobile options such as SciVerse Mobile from Elsevier, HighWire’s native apps for iPhone and iPad, or EBSCOhost Mobile from EBSCO Publishing. The opportunities to have your information anytime, everywhere, are, well, everywhere.
How does the move to mobile affect periodicals pricing and libraries? Marshall Breeding, writing in Smart Libraries, suggested that libraries will continue to “struggle to meet demands for mobile support” and that mobile support should be built into library-facing products, not something for which libraries must pay additional fees. Many publishers will feel that in order to remain competitive they must offer mobile options. Fortunately, many publishers and platforms either already have a mobile component available (such as Atypon’s Literatum) or are actively developing mobile components (e.g., MetaPress’s web-based mobile solution, due later this year) that will bring the reading experience to a variety of mobile devices.
But new technology does not come without costs. The development process alone is expensive, and it is then more expensive to make content available through multiple channels. Even if libraries and publishers both view supporting mobile access to content as a “must do,” libraries have no solid resource base to cover even the most reasonable and modest increases needed to take content mobile. A side issue in the development of mobile access will be the growing need for ubiquitous broadband access.
Publishers and libraries are on this journey together. As app stores report increases in the creation and use of journal, magazine, and newspaper apps, such as apps for Time magazine and the New York Times, publishers are experimenting with new business models. Libraries provide more access to e-content, and they are also dealing with learning curves associated with device use, content economics, and copyright compliance as patrons’ adoption of e-content continues at a fast and relentless pace.
The library role
This could present a conundrum for libraries as their role in the provider/platform/app relationship changes. That a library’s resources are “free” may be outweighed by the convenience of buying content online for a minimal price. Libraries will need to deliver content quickly and provide new ways of discoverability and manageability. Some public libraries, such as the Southern Maryland Regional Library Association and the District of Columbia Public Library, are starting to offer free apps that allow users to discover new resources, check reviews, place holds on items to pick up later, and even renew items seamlessly through the app without having to make an additional trip to the library. Academic libraries are also offering mobile options, such as the University of Toronto’s UTL Mobile and Cornell University’s CU Library app, to help faculty and students stay better connected.
Libraries and publishers are just beginning to see how these changes, and especially those catalyzed by the forthcoming proliferation of tablets, will open up new avenues to them—allowing librarians to connect better with their users and provide more dynamic content in a variety of ways. We are mostly through the transition to e-journals, when electronic was first bundled free with print. We are now in the midst of a new transition where users will consume content anywhere, anytime, anyhow, and online access is a given rather than a novelty or a “value-add.” Content is still king, but it wants to go mobile. Libraries, publishers, and users can all benefit, but only if pricing settles down to sustainable levels.
Evolve or die?
We are going to evolve. As has been well documented, the library world was already suffering from funding and technological pressure before the recession officially began in December 2007. In the five years since, the pressure and pace of disruptive change have only accelerated. In order to survive the next five years, the library community will have to focus on the much more difficult task of finding new opportunities. Libraries, publishers, and vendors will all shed some legacy processes; information purchasing patterns will change, leading inevitably to new pricing models. Technology will continue its march forward. The library landscape of 2016 will be very different from today’s.
The future starts with planning for 2012. As mentioned previously, prices for the current subscription models are trending up. The 2010 inflation rate of 4.3 percent and the 2011 inflation rate of 5.3 percent for the merged set of titles in the ISI indexes will likely be in the six to eight percent range for 2012, possibly higher as the impact of economic uncertainty, cancellations, and technology reverberate through the library scene. Times are changing—and, to survive, libraries will need to be nimble.
|Stephen Bosch is Materials Budget, Procurement, and Licensing Librarian, University of Arizona Library, Tucson; Kittie Henderson is Director, Academic and Law Divisions, EBSCO Information Services, Birmingham, AL; and Heather Klusendorf is Media Relations Coordinator, EBSCO Information Services|