Library News for the Faculty

Scholarly Communication Update

UC Report on Value-Based Journal Prices

Comprehensive access to the expanding amount of scholarly information vital to research and teaching is at risk. Trends in scholarly publishing, especially commercial publishers' business models that result in high rates of subscription price increases, limit the ability of academic libraries to maintain the breadth and depth of their collections; they thus threaten to reduce exposure to and the impact of scholars' work.

To address this crisis, one of the UC libraries' collective strategic priorities is to advance economically balanced and sustainable scholarly publishing systems. With the assistance of the California Digital Library, UC cooperatively spends more than $27 million on digital resources for its faculty, staff, and students. This positions the university system as a key actor in responding to the economic dysfunctions of scholarly publishing and in developing a program of strategic actions to produce change.

As part of those efforts, the UC libraries' Collection Development Committee has examined "value-based" prices of scholarly journals. This technique posits that a journal's institutional price should and can be related to its value to the academic enterprise and that this value can be quantified and used in negotiations with publishers.

The committee's resulting report, The Promise of Value-based Journal Prices and Negotiation: A UC Report and View Forward, proposes a model in which prices are set or negotiated in relation to four key elements: alternative base prices that account for scholarly value, transparency for annual price increases, value-added contributions from the purchasing/leasing institution, and transaction efficiencies.

As the basis for the alternative base price, the report recommends an approach that borrows from analysis done by professors Ted Bergstrom at UC Santa Barbara and R. Preston McAfee at Caltech on journal cost effectiveness. The beta version of their Web site provides price per article and price per citation.

To tie annual price increases to actual increases in publisher production costs, the report recommends using the Producer Price Index's (PPI) "Commodity Finished Goods Less Food and Energy." The PPI measures price change from the seller's perspective, which makes it a better choice for this purpose than the Consumer Price Index, which measures price from the purchaser's perspective.

To account for value-added contributions from institutions, the report cites Bergstrom and McAfee's estimate that universities at which editors or editorial offices are located contribute some $12,000 a year in space and staff-level editorial support. It notes, however, that this figure does not account for primary intellectual contributions of content, peer review, and editorial judgment and acknowledges that attempting such an accounting would be a complex but important component of future development of the value-based pricing model.

In examining transaction efficiences, the report notes that journal publishers typically offer discounts for consortial purchases. But the rationales upon which those discounts are based are either not explicit or are calculated using the concept of equivalent print subscriptions, which isn't meaningful in cases where the journal is electronic only. Further work and discussion could uncover a clear economic rationale and more sophisticated modeling for these discounts.

The report concludes with the caution that there are no easy answers to the complex marketplace of scholarly publishing. It notes that value-based pricing strategies must be combined with other reforms in the evolution of scholarly publishing, particularly those that maximize research impact rather than personal reward.

If you have questions or comments, please contact Cindy Shelton, interim associate university librarian for collections, who was one of the report's authors. She can be reached by phone at extension 51201 or by email.