January 9, 2007

Back Issue Digitization Projects (BIDPs): Accessing the Whole Megillah

Several publishers already recognize that the most promising buyers of electronic versions of their back issues are institutional in nature, and those institutions will most likely be libraries. Driven by the needs of their patrons, public, academic, corporate, and even secondary school libraries "channel" research by raising the visibility of sources that the World Wide Web and search engines effectively flatten. Libraries are more than mere customers; they are promoters. They operate as a market for intellectual goods and as a partner for the redistribution of those goods, which can benefit publishers seeking to monetize their back issues.

Take the example of JSTOR, which has successfully capitalized on the research needs of library patrons by recognizing them long before the publishers whose content it has digitized. Seeded by money from the Andrew W. Mellon Foundation, JSTOR’s mission was to preserve and disseminate in digital form those academic serials, particularly in the arts, humanities, and social sciences, whose publishers lacked the fiscal wherewithal, vision, or interest to support a BIDP. For these publishers, JSTOR provided an enormous service in salvaging their journals. However, JSTOR is a third-party distributor. This means that in exchange for bearing the cost of digitization, it pays royalties based on "usage," which can decline over time into a fairly limited revenue stream. (I will blog "usage royalty" arrangements another day to explain how they work). While publishers managed to shed the risk of investment in a BIDP, they may have given up greater returns to their top and bottom lines as a consequence.

JSTOR's role as a third-party distributor is not unique. The variety and subtlety of its pricing models is. Instead of tiering its costs solely by FTEs or materials acquisition budgets, it cannily drew on specialized or weighted systems to classify customers. This modeling process started with JSTOR's use of the Carnegie Classification scheme for academic libraries (its main market). This tiered system offered a new way to calibrate and target an academic library's level of interest in the kinds of publications JSTOR featured. Since then JSTOR has tailored its pricing for community colleges, public libraries, secondary schools and museums in order to make its product offerings more responsive to the subscriber's mission and sensitive to its fiscal ability. For community colleges, it uses the "Associate of Arts" designation in the Carnegie Classification scheme; for public libraries, it balances sizes of populations served, materials budgets, and numbers of active serial subscriptions; for secondary schools, it divides them into three classes according to their "college-enrolling rate"; and finally for museums, it weighs operating budgets, material acquisition budgets, numbers of active serial subscriptions and numbers of FTE curators and librarians.

A number of JSTOR’s targeted publishers, some belatedly recognizing the success of this business model, have jumped into the market with their own offerings, a list of which appears on the website of the American Association of University Presses. These include the University of California Press’s CALIBER, Cornell University’s EUCLID, and Duke University Journals Online. (One of the few early entrants prior to JSTOR was Johns Hopkins University Press's Project Muse.) Moreover, even though BIDP offerings may end up spotty (e.g., incomplete), more publishers have begun to recognize the value of the staking their own claim instead of collecting royalties that can range from middling to marginal from third-party distributors.

Up until the last few years, online serial products, including those with relatively long backfiles, have been supported through subscription models. More recently, however, publishers have begun to explore the outright sale of back issues. Take the case of Sage Publishing, which not only offers subscriptions to its backfiles but permits institutions to purchase them outright. What is unusual about Sage's model is the way in which it pitches its offering. Third-party distributors typically provide serial subscriptions (and sometimes even "archival purchases") prepackaged by topic (e.g., religion, science, health) or target audience. (e.g., high school student, college student, academic researcher). Aggregators like Gale, EBSCO, ProQuest, JSTOR and sundry others all offer packages like this. Sage, however, has taken the unusual step of allowing customers to purchase individual title backfiles. Alas, it is not clear if this purchase is in lieu of or in addition to a subscription. As technology continues to permit microtargeted customization, it may be a matter of time before prefab packages becomes themselves a thing of the past for serial subscribers/buyers.

In the meantime, the economics of subscriptions and archival purchases represent two different business models. Each has its respective risks and benefits. Archival purchases feature higher price tags because the transaction is structured as an outright “buy” of the content. The customer obtains ownership rights to the content, which obliges the publisher or distributor to ship copies of the digital files to the customer on a hard medium storage device (e.g., USB hard drive) for offline storage or create a “dark archive” with a trusted third party (such as the Library of Congress). In the end, this transfer permits customers to locally load, host, and disseminate the data from its own or contracted servers in the event of the product’s discontinuation by the publisher. Unlike electronic subscriptions, should the product go away, the customer is left with something more than a mere history of access.

For publishers, archival purchases can offer a more aggressive return on the investment, but the publisher or distributor will still have hosting and access management obligations. These are currently recouped through “access fees.” For libraries, archival purchases offer two benefits: one is ownership of the content, something that online subscriptions simply do not permit (lease-to-buy options are rare because of the accounting nightmares for publishers); two is the ability for librarians to use discretionary portions of their materials acquisition budgets instead of their typically stressed and often preallocated serials acquisition budget. The downside for libraries (and therefore publishers) is the growing resistance to access fees as they accumulate within a library’s budget.

Fee accumulation and unique interfaces for each offering create special resistance to backfile products that comprise a single or just a few titles that had modest circulation at best. Major titles stand a better chance, even as one-offs. Best are large sets of titles, like those available from Sage, Elsevier, OVID, and others that assemble many titles in one place for institutional consumption.

Bennett Lovett-Graff
Publisher, Content Solutions
National Archive Publishing Company
Digitization, Microfilming, and Publisher Services