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Big Deal Price Caps: Do they really benefit libraries?

Jason S. Price, Ph.D.

Science & Electronic Resources Librarian

The Claremont Colleges

Charleston Conference, 2006

Lively Lunch

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Big Deal Refresher

• E-Journal package pricing

• Includes e-access to subscribed titles plus additional titles at a discount price

• Library makes a subscription expenditure commitment based on current or historical journal subscription total or ‘spend’

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Price cap or Inflation rate?

It is touted as a price cap because:

“The average price per title will not increase by more than X% over the price paid for the prior year”

This is a percentage value that determines the rate of increase in a library’s expenditure commitment

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Two reasons its not a Price Cap…

“The average price per title will not increase by more than X% over the price paid for the prior year”

1. Lower percentages are never applied

2. The knowing the average price increase

per title DOES NOT determine the

amount of the increase for the package

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“Average price increase”

  This year Case 1 Opt 1 Price Case 2 Opt 2 Price

  $10,000 5% $ 10,500 9% $ 10,900

  $ 5,000 5% $ 5,250 5% $ 5,250

  $ 1,000 5% $ 1,050 1% $ 1,010

Ave. Increase   5%   5%  

Total $16,000   $ 16,800   $ 17,160

Overall Increase     5.00%   6.90%

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Reality is not average

• Luckily this clause (though still in many licenses) is not applied as written

• In practice:– Price of every title increases by exactly the

amount of the Annual price increase (PC)

• Are these below the market increase?

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Publisher market rate increases

• 5 year historical list price from Ebsco for ScienceDirect & Wiley Interscience Packages

• Titles with 5yrs of data – SD n = 1434; WI n = 371

• Examined 4yr increase & 2yr increase, to get a feel for change over time

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Historical Market Price Increases 2006

0%

2%

4%

6%

8%

10%

12%

14%

16%

WI SD

Package

Per

cen

t in

crea

se

4 Year Average 2 Year Average

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Four year average increase for WI by Journal

0%

20%

40%

60%

80%

100%

120%

140%

160%

0 50 100 150 200 250 300 350 400

Journal (sorted by increase)

Ave

rag

e In

crea

se

Dashed line = Average for all titles

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Next step…

• Examine the ACTUAL market percentage increase for real subscription profiles

• Convenience sample

• How much variation is there in the price increases that libraries would experience without the caps, and how close is it to those caps

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Percent increase by subscription profile for two time periods

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

WI WI WI WI WI WI WI WI WI

CUC LLU LMU MIL MSM UOP PEP USD WES

School and Package

Ave

rag

e P

erce

nt

Incr

ease

4yr2yr

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Percent increase by subscription profile for two time periods

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

SD SD SD SD SD SD SD SD SD

CUC LLU LMU MIL MSM UOP PEP USD WES

School & Package

Ave

rag

e p

erce

nt

incr

ease

4 year2 year

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But these results are still preliminary

• A definitive answer would require calculation of actual increases in cost for subscription profiles that factor in:– Variation in increases from year to year

(important because of compounding interest)– Variation in subscription price from time zero

(if pricier titles go

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A qualified answer:• Yes, fixed annual price increases (PC’s)

benefit libraries when:– They are sufficiently below the market rate– And they are applied effectively*

• Other conclusions: – PCs are NOT average increases, but fixed– Value is decreasing as market increases slow– Comparison to blanket market increase is of

limited value, but perhaps more value than comparison between deals

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A maybe not: fixed price increases must be applied• Claremont’s story

• A different price for each institution for each title?

• Can subscription agents keep up?– What about new E-only big deals?

– What services do they provide in this ‘price capped’ world?