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int revenue, should institu-recipitously.rease in prominence, thehese versions will need toented a multi-faceted plantion to boosting electronicJoseph is the former President and Chief Operating Officer,BioOne,Washington,DC20036,USA; e-mail: heather@arl.org.each institutional online subscription is less than thatfrom a print subscription.

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revenue from the sales of tincrease. BioOne has implemto achieve that goal. In addibecoming the preferred delivery method among scho-lars, researchers, and students.1 This creates significantissues, particularly when the print subscription isdiscontinued and the amount of revenue generated by

royalties paid by BioOne represented roughly 5 percentof publishers overall revenue.3 While this percentagecertainly represented a start at a new, ancillary revenuestream as initially intended, it was well short of thebudget priorities away from print journal acquisitions one aspect of their operations with gains in other0098-7913/$see fro

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Carpenter is Directington, DC 20036,n the changes that BioOne has under-lore the directions it may take in futureconceived as an online conduit forne was expected play an ancillary role

ons of participating titles. However, theof change in the marketplace towards an the electronic version of a journal haso reevaluate the role that it plays in theams of its participating publishers.rint subscriptions have been, and con-source of the majority of income thattion programs of BioOne participatingeasingly, libraries are shifting their

prior to the publisher joining BioOneyears of data collected while the publisin BioOne) from a representative cparticipating publishers. Results showthan 65 percent of the income thatpublication for participating publisheinstitutional print subscriptions.2 The csuch a large portion of a publishers resource is a challenge that many indeizations need to address to ensurestability. BioOne is working to help theparticipate to increase and diversifystreams, replacing the diminishing relaunch of its online journal collection, it is an opportunetime to reflect o

three years worth of operating data (one year of data, and the twoInterests of Libraries and Indep

Heather Joseph and Todd A. Carpenter

Available online 16 August 2005

Building on data compiled in 2003participating publishers, BioOne launchreposition the services it provides tomanaging the shift away from reliance obalanced portfolio of revenue streams. Tfaced by BioOne and its participating puof the initiative, and outlines some of thcomponent. It further examines the succeof the initiative and explores some of thSerials Review 2005; 31:187191.D 2005 T. Carpenter and H. Joseph. Pu

As BioOne approaches the fifth anniversary of thent matter D 2005 T. Carpenter and H. Joseph. Publish

2005.06.002

or of Business Development, BioOne, Wash-USA; e-mail: todd@arl.org.

187lancing the

dent Publishers

business and circulation trends ofa multi-faceted, multi-year program toicipating publishers, assisting them institutional print subscriptions to a morerticle explains the background situationers, provides details on all componentsals BioOne hopes to achieve with eachthat have been achieved in the first yearallenges that BioOne continues to face.

hed by Elsevier Inc. All rights reserved.edition revenue, BioOne is also working to develop andenhance additional revenue streams, while also helping

ed by Elsevier Inc. All rights reserved.

Heather Joseph and Todd A. Carpenter Serials Reviewpublishers find opportunities to reduce their overalloperational expense.

What Is BioOne?

BioOne was formed in 1999 by representatives fromlibraries, scholarly societies, the commercial sector, andacademe to provide an electronic publishing platformfor journals in the biological sciences. This uniquecollaboration developed in response to two key trends:the increasing price of scholarly information and theconsolidation of journals within commercial publishersas a result of mergers and acquisitions. Much has beenwritten on the economic basis and impact of thesetrends, particularly Mark McCabes work on the impactof mergers on journal prices.4 From the outset, BioOnesmission has been to work collectively with stakeholdersin the scholarly publishing system to preserve cost-effective access to high-quality scientific literature pro-duced by not-for-profit publishers. Initially providing anelectronic service for thirty-five journals in the ecolog-ical, organismal, and environmental sciences, BioOnehas grown to include more than eighty publicationsfrom sixty-seven publishers.BioOne also returns income to its participating

publishers. Royalties are paid to each participatingpublisher5 to compensate them for the inclusion of theircontent in BioOne. The funds to pay these royalties aredrawn from a pool that represents 50 percent of theannual net income BioOne receives from all subscriptionsales. These funds are then distributed to each publisherbased on a year-end calculation of a journals number ofpages in the database and the relative number of articledownloads the journal received during the prior year.The remaining funds support all BioOne operations: thetechnical conversion of the pre-publication files BioOnereceives from the publisher, the costs for Web hostingand development, and all administrative overhead.Additionally, BioOnes charter specifically limits theamount of any annual surplus that BioOne can retainfor internal use. Any annual surplus beyond thatspecified limit is also added to the pool of funds that isdistributed to the participating publishers. This structureallows the greatest percentage of funds from subscrip-tion sales to pass directly to the publishers, whilesimultaneously allowing BioOne to negotiate compet-itive rates for technological services on behalf of theparticipants.From its first release in the spring of 2001,BioOne has grown rapidly. It now reaches more than6.5 million scholars, students, and researchers at morethan 700 subscribing institutions worldwide. BioOne isalso fulfilling its goal of providing non-profit publish-ers a means of publishing their content online at areasonable cost and thereby improving distribution oftheir scientific knowledge, while maintaining theireditorial independence.

The ProcessIn 2003, BioOne received generous support from theScholarly Resources and Academic Publishing Coalition

188(SPARC) to conduct a research project to help ensurethat BioOnes operating model directly addresses theneeds of its constituents. Under the direction ofconsultant Mary Waltham, this study included an in-depth examination of the financial, circulation, andbusiness operations of a representative sample of itsparticipating publishers. Results provided solid data onactual revenues and expenses as well as on subscriptiontrends. It also identified library market trends thatimpacted both its publishers and BioOnes strategiesand operations. A complete discussion of this study, itsresults, and the implications for BioOne were publishedin the library journal portal: Libraries and the Academyin the fall of 2004.6

To be certain that any proposed changes toBioOnes business model were consistent with itslibrary partners needs for reliable and affordableaccess to research, BioOne conducted extensive out-reach to obtain feedback from that community. As abeginning step, a number of focus group meetingswere held during 2004. The largest and most formalof these was conducted at the American LibraryAssociation (ALA) Annual Meeting, facilitated by theAssociation of Research Libraries (ARL) Office ofLeadership and Management Services. Other lessformal meetings were conducted at conferences ofthe North American Serials Interest Group (NASIG),the Special Libraries Association (SLA), and theCanadian Library Association (CLA). To further aug-ment this feedback, BioOne conducted an onlinesurvey, gathering useful information and opinionsfrom more than 125 libraries both inside and outsideof the US, regarding library purchasing behavior, aswell as librarians level of satisfaction with BioOne.The results of these research activities were dis-

cussed in depth by a variety of BioOne advisorygroups: The BioOne Library Advisory Group, theCollections Development Committee of the GreaterWestern Library Association (GWLA), and BioOnesBoard of Directors representative of all stakeholdersinterests before the final plan was constructed.The results of the Waltham study, coupled with the

results of the surveys of the library community, pointedto the need for BioOne to make a significant change,moving its operating model from one designed toprovide incremental revenue to publishers to one thatprovides progressively more substantial revenue to helpoffset print losses. Without such offsetting income, thecontinued viability and independence of not-for-profitjournal publishing programs would inevitably erode.Over the course of 2004, BioOne worked closely with

its partner communities to construct a five-year, multi-part strategy to address this challenge, while still stayingtrue to BioOnes core missionproviding economicalaccess to bioscience research. BioOnes strategy drawson the collaborative nature of BioOne and included thefollowing actions:

! Working individually with participating publishers to

identify areas where individual publishing programscan achieve greater cost-effectiveness;

Volume 31, Number 3, 2005 BioOnes Business Model Shift! Working collectively with publishers to identifyopportunities for greater operating efficiencies andincreased variety and volume of revenue across thelarger group;

! Adjusting BioOnes initial 50%/50% revenue sharingprogram split to return a larger share of revenuedirectly to publishers;

! Actively increasing the number and types of institu-tions that support BioOne; and

! Implementing a realignment of BioOnes pricingschedule.

Each of these elements contributes to a flexible overallprogram to improve the operations of BioOne and tospecifically support the independent operations of thepublishers participating in BioOne.

Elements of the Strategy

Identify Opportunities for Publishers to WorkIndividually to Improve Operating Efficiency

The majority of the publishers participating in BioOneare small to mid-sized, volunteer-run, non-profitorganizations. As such, the resources needed effectivelyrespond to the rapidly changing conditions in thescholarly publishing arena are often in short supply.BioOne is committed to finding opportunities toprovide these needed resources to its participatingpublishers on an individual basis to help them achievegreater efficiencies in their publishing operations.For example, in early of 2004, BioOne conducted a

workshop for participating publishers, which providedpublishers with access to an experienced publishingconsultant, who focused attention on each publishersindividual financial operating statements. This workshopbuilt on the data collected during the Waltham study andwas designed to provide publishers with up-to-date toolsfor using their budgets and financial statements to moreeffectively manage expenses and identify areas whereadditional revenues could be secured.BioOne also secured grant funding to support its

publishers participation in a recent workshop onemerging business models. The positive publisherresponse to this program has led BioOne to explorethe creation of an ongoing, internal fund to supporttravel to and participation in other educationalopportunities for participating publishers.

Work Collectively to Improve Operations

Modeled after the library communitys successfulbstrength-in-numbersQ consortia approach, BioOne iscommitted to working collectively to find opportunitiesfor participating publishers to gain more cost-effectiveaccess to services and programs that will advance theirpublishing operations.Acting as a central contact point, BioOne has been

able to effectively secure arrangements for all of itsparticipating publishers. Some of the programs alreadyin place include opportunities for publishers to

provide individual member access to electronic ver-sions of their journal, to purchase peer review and

189manuscript management software at significantly dis-counted rates, as well as no-cost participation in bothCrossRef and JSTOR. In addition to these establishedprograms, BioOne is actively working to identify newopportunities.In 2005, a Secondary Rights Management program

was created to expand the range of possibilities forcreating multiple revenue streams for participatingpublishers. This program will include facets such asCCC participation, pay-per-view article sales, and otherreprint distribution opportunities. Designed to operatein much the way a large publisher might, BioOne willact as the society publishers agent in setting up andadministering several secondary rights programs. Byproviding a centralized and subsidized administration,this program is designed to eliminate the need forindividual publishers to take on the burden of overheadand management of these programs, which has been abarrier for participation as independent organizations inthe past. The program is structured to pass through tothe publishers 100 percent of the income generated andthere is no cost to the publishers to participate.

Manage BioOnes Operations to Control Costs andIncrease Royalty Percentage to Publishers

BioOne is deliberately designed to operate with a smallcentral operating staff and to leverage the strengths ofstrategic partners to contain administrative and overheadcosts. A majority of key business operations are managedthough collaborative partnerships with a number oforganizations. Sales and marketing activities are con-ducted by two partner organizations, Amigos LibraryServices in North America and CSA outside NorthAmerica. BioOnes technology services are provided byAllen Press. Additionally, a dedicated group of volunteersprovide the leadership for BioOne via working groups,advisory committees, and a board of directors.This collaborative management structure has allowed

BioOne to operate on only a small percentage of grossincome, and to pass through a significant portion ofincome onto participating publishers. In 2005, BioOnewill be increasing the percentage of net revenue to beearmarked for the royalty pool, which had been set at 50percent since it began operating. The goal at the end ofthe multi-year transition is to raise the percentage of netsubscription income contributed to the surplus pool toan amount approaching 70 percent.

Growth in the Number and Variety of OrganizationsThat Support BioOne

As a new initiative, BioOne has grown rapidly since itslaunch and has moved into a respected position amongresearchers as a primary destination for scholarship inthe biological sciences. However, there is still significantroom for growth into more institutions both domes-tically and internationally, as well as into new marketssuch as government and special libraries, corporations,and other kinds of research institutes. By expanding the

number and types of institutions that subscribe to thedatabase, BioOne is able to exercise a greater degree of

Heather Joseph and Todd A. Carpenter Serials Reviewcontrol over the ultimate amount of pricing increases toany one class of subscribers and to restrain the growth insubscription prices for all institutions. More than 100new institutions have begun subscriptions since Bio-Ones business model realignment in 2004, and indica-tions are that this subscription growth will continue forsome time.

Modest Increases in Price to Subscribers over MultipleYears

As a final element of BioOnes strategy, after consideringthe potential effects of the other cost-saving andrevenue-generating elements of this strategy, BioOnedetermined that a fairly substantial increase in its annualsubscription prices would be a necessary component aswell. A multi-year, adjustable pricing strategy wascreated, which was designed to spread out the burdenon libraries budgets across several years. Using directfeedback collected from the library community viasurveys and focus groups, BioOne opted to implementa plan that centered around deploying the largestportion of the necessary increase over the first two tothree years, with increases returning to the low singledigits in following years. BioOne projected a successionof price increases to use as targetsand to adjust themas needed based on BioOnes actual performance.In 2005, the price increase for access to the BioOne

database that was deployed was 9 percent. WhileBioOne had anticipated that an increase of this sizemight result in some measure of cancellations, this didnot materialize to any significant extent. Indeed, aspreviously noted, new subscriptions actually increasedsignificantly during this period.As a result of BioOnes better-than-anticipated per-

formance during the first year of the transition, BioOnehas the ability to potentially moderate the plannedsecond-year increase. The percentages for the followingthree out years will also be closely tracked in thismanner and adjusted accordingly.

Results of Business Model Adjustments

In the first year since the implementation of thesemodifications to the BioOne business model, severalpromising indicators have been noted. Most encourag-ingly, new subscriptions increased significantly despiteof increase in subscription costs. More than 100 newsubscribers have subscribed to BioOne since the newpricing structure was announced. Additionally, 99.8percent of institutions renewed their subscriptions forBioOne in 2005, despite the pricing change.This support from the library community continues

to be crucial, and all of the changes that were madeto BioOnes business model were made only aftercurrent market conditions were carefully surveyed.For example, while subscription increases are higherthan BioOne ideally would have preferred, they areonly slightly higher than the average 7 percentincrease for research journals in the biological scien-

ces. It is important to also note that the average totalprice paid by institutions subscribing to BioOne is

190approximately $4000or about $50 per title. Thiscompares quite favorably to the average price for anISI-ranked journal in the biological sciences of$1494.7 Additionally, while the number of journalsparticipating in BioOne has more than doubled sinceits launch, the cumulative price increase over the fiveyears since launch for access to the entire databasehas been only 33 percent.Managing BioOne in a collaborative manner, with

involvement from all constituents, is central to ensurethat BioOne remains an attractive option for libraries, aswell as a viable alternative venue for non-profit publish-ers, and not simply just another aggregation of journals.All operational decisions are balanced against the coremission of BioOne, with the publishing communitybenefiting through increased access and royalties, andthe library community benefiting through continuedaffordable access to quality literature. The businessmodel is designed to ensure that the burden of support-ing BioOne is distributed among its constituents, andnot solely borne by the library community.BioOne actively works to demonstrate this commit-

ment wherever possible. A key example of this commit-ment to delivering value to the library community can beseen in its treatment of its start-up funding, the majorityof which was secured through the fundraising efforts ofSPARC, which helped coordinate the collection of fundsfrom a group of 118 Charter Supporter libraries. By theend of 2005, the vast majority of this start-up fundingwillhave been returned with interest in the form ofsubscription credits to its charter supporters. Thesecredits, serving to reduce a subscribers net cost, totaled$688,000 cumulatively since BioOne was launched in2001.As a corollary, BioOnes commitment to serving not-

profit publishers continues apace.BioOnes ability to attract and retain quality journals

continues to be strong. In 2001, BioOne launched with apackage that included thirty-seven peer-reviewed jour-nals from thirty publishers, ending its inaugural year withabout 89,500 pages of full-text research papers. In 2005,BioOne covered eighty-one journals from sixty-sevenpublishers, comprising some 260,200 pages of full text.As part of its strategy, BioOne was conservative incontent addition in 2004, adding five new titles and anadditional tenmore in 2005. At the end of 2004, two titlesleft BioOne, opting for arrangements with commercialpublishers. As with every publication aggregated withinBioOne, all issues of these titles that were added toBioOne will remain accessible in the database.As a result of BioOnes high institutional subscriber

retention rate and the growth in new subscribers, therevenue-sharing pool for BioOne participating publish-ers has grown each year, achieving its most significantincrease in 2004. The average revenue share amongthe seventy participating journals in 2004 increased byapproximately 34 percent, varying in amount by titlebased upon the numbers of pages and downloads.BioOne royalties have become especially important for

journals that are experiencing greater rates of printcancellations.

Continuing Challenges

It is important to stress that the scholarly journalmarketplace is undergoing rapid and continued changes,and there is not likely a time when participants collec-tivelywill have arrived at a situation of long-term stabilityand calm. BioOnes mission recognizes that this is anongoing process, and it will continue to address newdevelopments in the dissemination of scholarship as theyarise.BioOne is committed to making operating decisions

based on current data and, as such, is continuing toupdate and monitor data both from its publishers andfrom the library community. Since the 2003 Walthamresearch study, BioOne has continued to collect thecirculation trend and financial data from participatingpublishers. Focus groups, both formal and informal, withlibrarians and scholars continue to provide data on theneeds of the academic community. To date, the datacollected continues to support initial business planmodifications, and BioOne participating publishers, onaverage, have not seen a discernable precipitous deteri-oration in the print subscriptions. However, BioOne isprepared to rapidly adjust its operations and modelsshould market conditions change course suddenly.

Notes

2003), http://www.dlib.org/dlib/october03/king/10king.html);

Boston Consulting Group and Inc., bVital Signs Update: DoctorsSay E-Health DeliversQ (September 2001), www.bcg.com/publications/files/Drs_E_Health_sept_plus_report.pdf (accessed July 30, 2004)

Steve Hiller, bAssessing User Needs, Satisfaction and LibraryPerformance at the University of Washington Libraries,Q LibraryTrends 49 (4) (Spring 2001): 605625;

Sandra L. De Groote and Josephine L. Dorsch, bMeasuring UsePatterns of Online Journals and Databases,Q Journal of theMedicalLibraryAssociation 91, no. 2 (April 2003): 231241;

Janet P. Palmer and Mark Sandler, bWhat Do Faculty Want?QLibrary Journal-Net Connect Supplement (Winter 2003): 2628,

http://www.libraryjournal.com/index.asp?layout=article&articleid=

CA266432&.

2. Todd Carpenter, Heather Joseph and Mary Waltham, bBusinessTrends at BioOne Participating Publishers,Q portal: Librariesand the Academy 4 no. 4 (2004): 465484. http://muse.jhu.edu/journals/portal_libraries_and_the_academy/v004/4.4carpenter_t.pdf (accessed June 17, 2005).

3. Ibid.

4. Mark J. McCabe, bThe Impact of Publisher Mergers on JournalPrices: A Preliminary Report,Q ARL: A Bimonthly Newsletter ofResearch Library Issues and Actions 200 (October 1998), http://www.arl.org/newsltr/200/mccabe.html.

5. There are three titles that participate in BioOne that are Open

Access journals. There is no charge to libraries for their contentand they do not receive any payment for participation in BioOne

as other journals do outlined here.

6. Carpenter et al., bBusiness Trends.Q

Volume 31, Number 3, 2005 BioOnes Business Model Shiftfound in Sarah E. Aerni et al., bPatterns of Journal Use by Faculty atThree Diverse Universities,QD-LibMagazine 9, no. 10 (October 10,1917. Periodicals Pricing Survey, Library Journals (April 15,2005), http://www.libraryjournal.com/article/CA524958.html.1. A sample of some of the research examining these trends can be

BioOne's Business Model Shift: Balancing the Interests of Libraries and Independent PublishersIntroductionWhat Is BioOne?The ProcessElements of the StrategyIdentify opportunities for publishers to work individually to improve operating efficiencyWork collectively to improve operationsManage BioOne's operations to control costs and increase royalty percentage to publishersGrowth in the number and variety of organizations That support BioOneModest increases in price to subscribers over multiple years

Results of Business Model AdjustmentsContinuing ChallengesNotes