Introduction

This chapter reports on a consortial attempt to overcome the high costs of scholarly journals and to study the roots of the cost problem with the advent of high-speed telecommunication networks throughout the world. The literature on the problem of journal costs includes both proposals for new ways of communicating research results and many studies on pricing.

Prominent members of the library profession have written proposals on how to disengage from print publishers.^[1] Others have suggested that electronic publications soon will emerge and bring an end to print-based scholarship.^[2] Another scientist proposes that libraries solve the problem by publishing journals themselves.^[3] These proposals, however, tend not to accommodate the argument that loosely coupled systems cannot be easily restructured.^[4] While access rather than ownership promises cost savings to libraries, the inflation problem requires further analysis of the factors that establish journal prices before it is solved.

Many efforts to explain the problem occupy the literature of the library profession and elsewhere. The most exhaustive effort to explain journal price inflation, published by the Association of Research Libraries for The Andrew W. Mellon Foundation, provides ample data, but no solution.^[5] Examples of the problem appear frequently in the Newsletter on Serials Pricing Issues, which was developed expressly to focus discussion of the issue.^[6] Searches for answers appear to have started seriously with Hamaker and Astle, who provided an explanation based on currency exchange rates.^[7] Other analyses propose means to escape inflation by securing federal subsidies, complaining to publishers, raising photocopying charges, and convincing institutional administrators to increase budgets.^[8]

Many analyses attempt to isolate factors that determine prices and the difference in prices between libraries and individuals. Some studies look at the statistical

relevance of sundry variables, but especially publisher type.^[9] They confirm the belief that certain publishers, notably in Europe, practice price discrimination.^[10] They also show that prices are driven by cost of production, which is related to frequency of issue, number of pages, and presence of graphics. Alternative revenue from advertising and exchange rate risk for foreign publishers also affects price.^[11] Quality measures on the content, such as number of times a periodical is cited, affects demand that then impacts price. Economies of scale that are available to some journals with large circulation affects price.^[12] These articles help explain differentials between individual and library prices.^[13] Revenues lost to photocopying also account for some difference.^[14] Also, differences in the way electronic journals may be produced compared to print provides a point on which some cost savings could be based.

The costs of production and the speed of communication may be driving forces that determine whether new publications emerge in the electronic domain to replace print. However, in a framework shaped by copyright law, the broader issue of interaction of demand and supply more likely determines the price of any given journal. Periodical prices remain quite low over time when magazine publishers sell advertising as the principal generator of revenue. When for political or similar reasons, publication costs are borne by organizations, usually not scholarly societies, periodical prices tend to be lower. Prices inflate in markets with high demand such as the sciences, where multiple users include practicing physicians, pharmaceutical firms, national laboratories, and so forth.

Unfortunately for libraries, the demand from users for any given journal is usually inelastic. Libraries tend to retain subscriptions regardless of price increases, because the demand originates with nonpaying users. In turn, price increases charged to individual subscribers to scholarly journals drive user demands. Therefore, it might be expected that as publishers offer currently existing print publications in an electronic form, they will retain both their price as well as inelastic demand. Commercial publishers, who are profit maximizers, will seek to retain or improve their profits when expanding into the electronic market. However, there are some properties associated with electronic journals that could relax the inelasticity of prices.

This chapter describes a multidisciplinary study of the impact of electronic publishing on the pricing of scholarly periodicals. A brief overview of the pricing issue comparing print and electronic publishing is followed by a summary of the access approach to cost containment. A preliminary report on an attempt at this technique by a consortium and on an associated econometric study also is included.^[15]