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    5.4 Elsevier's ScienceDirect activities during PEAK

    During the PEAK experiment, the management of the experiment and day-to-day contact with participants, including all billing, was handled by Michigan. There were times when we at Elsevier wanted to be more involved in the daily activities, including sending in our sales support staff to assist in training or promotion of the service. We were concerned about the slow start-up at many sites, fearing this would be interpreted as low demand for the journals instead of the effect of needing to promote and acquaint users with the service, something we had learned from TULIP and ScienceDirect. Michigan discouraged this for valid reasons: (1) it was not our system, so we were not familiar with its features and (2) this could interfere with the experimental design.

    Instead, we focused on production of the electronic files — and we had plenty to be concerned about. Elsevier was the supplier of the testbed journals and, in that context, was most active in trying to improve delivery performance. The product delivered to Michigan under the EES program at that time was the same as TULIP — images scanned from the paper copy. That meant they were, by definition, not timely. Also, there were issues missing and problems within the files. Additionally, not all format changes were handled with appropriate forewarning on our part. Occasional problems also occurred on the Michigan end, as when it was discovered that there were about 50 CDs that had inadvertently not been loaded onto the server by Michigan. This type of problem was not unique to Michigan but is symptomatic of the problems encountered with local hosting.

    Stepping back, it is important to understand Elsevier's product and pricing development during this same time period. The EES product line (the commercialization of TULIP) was available at the time TULIP was ending. It was being sold on a "percentage of print" pricing model, where subscribing institutions paid an additional percentage to receive the electronic files and supplied their own hardware and software. When first introduced, the electronic price had been announced at 35% of the underlying print subscription price (i.e., a total of 135% for paper and electronic). This percentage was chosen because it was the amount that would be required to compensate if all duplicate paper subscriptions were cancelled. It was quickly clear that this was too high, both in terms of what libraries were prepared to pay and what the product was worth. We lowered the price, in the case of Michigan for example, to less than a 5% charge in addition to the paper price. We set such a low price set because we very much wanted Michigan to continue with the electronic package.

    While Elsevier actively sold the EES product, it had also started in 1995 with the design of what would become ScienceDirect, our web-based electronic journal system. This would be driven by the direct output of a single journal production system that would create electronic files from which both the paper and electronic products could be produced. The new system, which would feed ScienceDirect online, would offer journal articles both in HTML (from SGML files) and in PDF.[3] ScienceDirect would also incorporate some of the lessons learned from TULIP, including the integration of a broader abstracting and index layer with the full text.

    ScienceDirect was in beta testing in late 1997, just as the implementation of PEAK was underway. It was available for full commercial use (without charge) in 1998 and sold starting in 1999. That means that the pricing decisions for this product — as well as EES, later SDOS — were going on simultaneously with PEAK. That, in itself, was a source of frustration to the PEAK participants, as there appeared to be a hope that PEAK would lead to a new pricing scheme and Elsevier would not make pricing decisions until PEAK was completed. That was an unrealistic hope from the beginning and one that Elsevier should have done more to temper.

    ScienceDirect pricing had as its fundamental initial objective a desire to smooth the transition from paper to electronic. That meant from our side there was a strong incentive to try to maintain the present library spending level with Elsevier Science. We were hoping to reduce the cancellation of subscriptions. Pricing also had to be explainable by a new team of sales managers and librarians still going through the teething stages of licensing. It could not be too difficult to explain or require too much of a change in thinking.

    We also felt that we could not depart too quickly from the present paper-based journal title, volume, year subscription model. We considered pricing models that were based on separating the content charge from a media charge or that were more reflective of use or the number of users. We also considered making electronic journals the principal charge, with paper as an add-on. In the end, we decided it was too early and too little was known to make substantive changes from the "print plus" model. No one at this stage was prepared to cancel print subscriptions and go electronic-only. The electronic services were too new, electronic archiving had not been addressed in any meaningful way, and the bottom line to be considered by a library was generally, "How much is this going to cost me in addition to what I am already paying, i.e., in addition to print?"

    This translated into the following pricing formula, which was offered for the 1999 subscription year and continued into 2000:

    1. The fees paid by a ScienceDirect customer had three components: platform fee, content fee and transactional fee.

      1. The platform fee was essentially a utility fee to help compensate for the basic costs of developing and maintaining the service. The platform fee reflected the type of institution (academic or corporate) and the number of people within the class of people authorized as users of the system. This was the most novel (and controversial) part of the pricing model from the library's point of view.

      2. If standard accounts wanted to either select only a subset of their paper journals to receive electronically or to cancel duplicates or unique titles from their paper collection, then the content fee was 15% of the paper list price for the titles involved. There was a 10% discount for electronic-only subscriptions.

      3. Finally, subscribers could purchase single copies of articles in journals outside of their subscriptions on a per-transaction basis; the standard price per transaction was $30.

    2. For customers prepared to make a "full commitment," which meant to continue spending at the level currently spent on paper, then the content fee was reduced to 7.5%. Also a significant transactional allowance permitted these customers to get articles outside of their subscribed titles at no cost, and then at $15 per copy if the allowance was used up. They could also substitute within the total spending commitment — that is, cancel a duplicate or unique title (particularly as they got more usage data) and substitute titles of equal value. This permitted an institution to recalibrate its collection as it gathered more usage data.

    3. For consortium customers, it was possible to construct situations where either all members of the consortium had access to all of the Elsevier titles or, for a "cross-access fee," each member could access anything subscribed to by another member of the consortium.

    4. Finally, there were sometimes areas for negotiation, such as the actual amount of the platform fee, the possibility of price caps on print increases from year to year (in multiple year contracts) and, in some cases, the content fee percentage as well. Negotiation was a reflection of the individual needs, goals and readiness levels of specific institutions or consortia, making the comparison of any two licenses difficult.