Contributing factors to the crisis in journal pricing

1. Contributing factors to the crisis in journal pricing Philip Davis Life Sciences Bibliographer, Mann Library Cornell University

3. Problem:serials inflation has been outstripping increases in library budgets resulting in an inability to purchase scientific information

4. Contributing Factors • Commercialization of publishing • Mergers and Acquisitions • Disappearance of personal subscriptions • Price insensitivity of library subscriptions • Differential pricing • Bundling • Site Licensing

5. From: Journal Price Study: Core Agricultural and Biological Journals. Ithaca, NY: Cornell University, 1998, http://jan.mannlib.cornell.edu/jps/jps.htm

6. from: Bergstrom, C. T., & Bergstrom, T. C. (2004). The costs and benefits of library site licenses to academic journals. PNAS 101(3), 897-902.

7. Mergers and Acquisitions Monopolies (and oligopolies) have the effect of increasing prices for all consumers

8. Contributing Factors • Commercialization of publishing • Mergers and Acquisitions • Disappearance of personal subscriptions • Price insensitivity of library subscriptions • Differential pricing • Bundling • Site Licensing

9. “in science, the people who drink are not the people who are paying, it is a disastrous model as any bartender can tell you”. Derk Haank, former CEO Elsevier Is electronic publishing being used in the best interests of science? The Publisher's view. Paper presented at the Second ICSU-UNESCO International Conference on Electronic Publishing in Science, held in association with CODATA, IFLA and ICSTI, UNESCO House, Paris.

10. = additional revenue = lost revenue Personal subscriptions are price-sensitive. Small increases in price result in many cancellations and less profit to the publisher price B A B` A` subscriptions

11. = additional revenue = lost revenue Library subscriptions are price-insensitive. Increases in price result in few cancellations and more profit to the publisher price B A B` A` subscriptions

12. One subscription price for all library subscribers price demand curve Consumer surplus A Revenue Dead weight loss A` subscriptions

13. Differential pricing can yield more profit than charging the same price to everyone price A = medium libraries B = small libraries C = large libraries = additional revenue C A B C` A` B` subscriptions

14. Bundling

15. e-publishing: high fixed, low variable costs print Costs online Bundling can lead to large profits when marginal costs are low First copy costs Quantity

16. Contributing Factors • Commercialization of publishing • Mergers and Acquisitions • Disappearance of personal subscriptions • Price insensitivity of library subscriptions • Differential pricing • Bundling • Site Licensing

17. “If a journal is priced to maximize the publisher’s profits, scholars on average are likely to be worse off when universities purchase site licenses than they would be if access were by individual subscriptions only”. from: Bergstrom, C. T., & Bergstrom, T. C. (2004). The costs and benefits of library site licenses to academic journals. PNAS 101(3), 897-902.

18. “As we know, there are known knowns. There are things we know we know. We also know there are known unknowns. That is to say, we know there are some things we do not know. But there are also unknown unknowns, the ones we don't know we don't know”. Donald Rumsfeld, U.S. Secretary of Defense