Access Versus Ownership Strategy
Clearly, if commercial publishers continue to retain or enhance their monopoly power with electronic counterparts of their journals, the academic marketplace must adjust or react more effectively than it has in the past. The reaction of universities could lead to erosion of previous success achieved with price discrimination if an appropriate strategy is followed. Instead of owning the periodicals needed by their patrons, some libraries have experimented with replacing subscriptions with document delivery services. Louisiana State University reports canceling a major portion of their print journals. They replaced these cancellations by offering faculty and students unlimited subsidized use of a document delivery service. The first-year cost for all the articles delivered through this service was much less than the total cost to the library for the former subscriptions. Major savings for the library budget via this approach would appeal to library directors and university administrators as a fruitful solution. However, it may turn out to be a short-term solution at best.
Carried to its logical conclusion, this approach produces a world in which each journal is reduced to one subscription shared by all libraries. This situation is equivalent to every existing journal having migrated to single copies in on-line files accessible to all interested libraries. Some libraries will pay a license fee in advance to allow users unlimited printing access to the on-line title, while others will require users to pay for each article individually. Individual article payment requires the entire fixed-cost-plus-profit components of a publisher's revenue to be distributed over article prints only, whereas with print publications, the purchase of subscriptions of physical artifacts that included many articles not needed immediately brought with it a bonus. The library acquired and retained many articles with future potential use. Transaction-based purchasing sacrifices this bonus and increases the marginal cost of articles in the long run. In sum, the marginal cost of a journal article in the print domain was suppressed by the spread of expenditure over many items never read. In the electronic domain under transaction-based pricing, users face a higher, more direct price and therefore are more likely to forego access. While the marginal benefit to the user may be equivalent, the higher marginal cost makes it less likely that users will ask for any given article. The result may show up in diminished scholarly output or notably higher prices per article.
In the long term, should a majority of libraries take this approach, it carries a benefit for publishers. There has been no means available in the past for publishers to count the actual number of photocopies made in libraries and thus to set their price accordingly. The electronic domain could make all those hidden transactions readily apparent. As a result, publishers could effectively maintain their
corporate control of prices and do so with more accurate information with which to calculate license fees. Given this attempted solution, publishers would be able to regain and strengthen their monopoly position.
A more promising approach lies in consortial projects such as that conducted by the Associated Colleges of the South (ACS). Accompanying the Periodical Abstracts and ABI/Inform indexes of UMI that are made available on-line from the vendor or through OCLC are collections in full text of over 1,000 existing journals with backfiles. The ACS contracted an annual license for these two products (ABI/Inform and Periodical Abstracts ) for the 13 schools represented. Trinity University pays $11,000 per year for the electronic periodicals in the UMI databases, a cost that is similar to that paid by each ACS library. Coincidentally, Trinity subscribes to the print version of about 375 titles covered by these products. Trinity could cancel its subscriptions to the print counterparts of the journals provided and save $25,000. Even considering that Trinity's library will subsidize user printing for paper, toner, and so forth at an expected cost of several thousand dollars per year to service its 230 faculty and 2,500 students, it appears likely that favorable economies accrue from switching to these electronic products. Of course, these savings will be accompanied by a significant decrease in nondollar user cost to patrons, so unmet demand will emerge to offset some of the savings. Moreover, there is a substantial bonus for Trinity users inherent in this arrangement.
There are a number of titles made available in the UMI product for which subscriptions would be desirable at Trinity but have not been purchased in the past because of budget limitations. From some of these titles, users would have acquired articles through the normal channels of interlibrary loan. However, the interlibrary loan process imposes costs in the form of staff time and user labor and is sufficiently cumbersome, causing many users to avoid it for marginally relevant articles. However, if marginal articles could be easily viewed on screen as a result of electronic access, users would consider the labor cost of acquiring them to have been sufficiently reduced to encourage printing the articles from the system. Therefore, the net number of article copies delivered to users will be significantly increased simultaneous with a substantial net decrease in the cost of subscriptions delivered to libraries.
Included in this equation are savings that accrue to the consortial libraries by sharing access to electronic subscriptions. Shared access will result in a specific number of print cancellations, which will decrease publisher profit from subscriptions. Publishers offering their journals in the electronic domain will be confronted by a change in the economic infrastructure that will flatten the scholar's demand functions for their titles while simultaneously increasing the availability of articles to the direct consumers. By lowering the user's nondollar cost of accessing individual articles, demand will increase for those items. Scholars, therefore, will be more likely to print an article from an electronic library than they would be to request it through interlibrary loan. However, depending on library policy, those scholars may be confronted with a pay-per-print fee, which will affect their de-
mand function. If publishers raise the price to scholars for an article, they are more likely to lose a sale. Users will be more cautious with their own money than with a library's. That is, in the electronic domain, where scholars may be paying directly for their consumption, demand functions will be more elastic. This elasticity will occur to some extent even when users do not pay for articles but merely note the article price paid by their subsidizing library. Therefore, price discrimination may be more difficult to apply and monopoly power will be temporarily lost.
The loss might be temporary because this strategy is functionally the same as merging several libraries into one large library and providing transaction-based access versus ownership. This super library could ultimately face price discrimination similar to that currently existing in the print domain. This discrimination will lead, in turn, to the same kind of inflation that has been suffered for many years.