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    IV. Building and Using Digital Libraries IV. Building and Using Digital Libraries > 15. The Economics of Digital Access: The Early Canadiana Online Project

    15. The Economics of Digital Access: The Early Canadiana Online Project[†]

    This project examined the economics of the production, storage, and distribution of information in print, microfiche, and digital format for the Early Canadiana Online Project. The Early Canadiana Online Project digitized over 3,300 titles and over 650,000 images of the Canadian Institute of Historical Microreproductions collection of pre-1900 print materials published in Canada. An economic model was developed of the stakeholders—-publishers, libraries, and patrons—-and the costs to stakeholders of the three formats—-print, microfiche, and digital. A detailed cost analysis was performed to estimate the costs of each of the three formats. The results of this cost analysis can be used as benchmarks for estimating the costs of other digitization projects. The analysis shows that digital access can be cost-efficient so long as there are a number of libraries that receive sufficient benefit such that they are willing to share the costs of digitization and access.

    15.1 Introduction

    Digital texts in a networked environment hold the promise of lower-cost access to information by a greater number of users than print texts. Projects such as The Making of America, Project MUSE, JSTOR, and the Early Canadiana Online project investigated in this study offer access to digital texts over the Internet to millions of potential users. These digital projects also offer the promise of lower costs by avoiding the cost of printing and shipping multiple copies of a text for patrons. In theory, once the fixed costs of digitization are incurred, the marginal cost of providing an additional electronic copy is zero.

    The potential benefits of digital access are considerable. Patrons who previously traveled to a repository of rare books or a microfiche room at a research library can instead access historical information from their desktops. This dramatically decreases the time and effort patrons spend traveling to the source of the information. This also increases the potential benefits to new patrons who can now access historical texts that previously were only available at sites too distant for them to consider. The economic question is whether the cost of digitization is lower than this stream of future benefits.

    This study examines the economics of digital, microfiche, and print access for the Early Canadiana Online project. The costs for these three methods of access include the costs of archiving and providing access to original print materials, microfiche copies of these materials, and digital copy accessible over the Internet. This study examines the production and storage costs and opportunity costs to patrons for digital access to the Early Canadiana online collection.

    Data collected and analysed for this study will be important in determining the level of investment for future digitization projects of historical materials. Other studies at Cornell University (Kenney, 1997), Yale University (Conway, 1996), and Columbia University (Kantor et al., this volume) investigated the costs of online texts. The study at Columbia University described in this text examines the cost of using publisher-provided electronic files to produce text in HTML format. The studies at Cornell University and Yale University, like this study, examine the cost of digitizing print or microfiche. The Cornell and Yale studies measure the marginal costs per image of primarily in-house scanning. This study includes all costs associated with the production, cataloging, and sales of texts in microfiche or digital format. The cost estimates in this study are considerably higher than the marginal cost estimates in previous studies but are a more accurate estimate of the full costs of the production of microfiche or digital projects from start to finish.

    This study also investigates the benefits of digitization. The primary benefit of these digital projects is the return to patrons from accessing these materials. Once digitized, stored, and made accessible over a campus network or the Internet, the materials are more easily accessible to more patrons. Patrons who previously had to travel to a library with the original or microfiche copies of the materials can now view them online from home or the office. Analysis of the data collected on use of the digital images, microfiche, and original texts will be helpful in predicting the use and benefits of other digital projects of historical materials. This will enable researchers to determine the return to investment of future digital projects.

    The remainder of the paper is organized as follows; first, an economic model of digital access which includes a stakeholder analysis is examined. This provides a general framework for analyzing the costs of print, microfiche, and digital access. Second, a cost analysis of the Early Canadiana Project is presented. This cost analysis includes estimates of the cost of print, microfiche, and digital access; an analysis of the economies of scale for digitization studies; and an analysis of the institution and user cost of access to digital information.

    15.2 The Costs and Benefits of Digital Access to Information

    Digitization of information provides lower costs than do print products for the production, distribution, and access to information for producers, consumers, and intermediaries. Digital access results in on-demand access to information for patrons or consumers, lowering the opportunity cost of access. Consumers can more easily view digital information over networks without having to spend time traveling to the library. The low cost of web development and word processing lowers the cost of producing information in digital form. Producers do not have to print and distribute copies but can instead mount digital products on a local server enabling network distribution. Likewise, digital access provides lower cost distribution by intermediaries such as libraries, saving the costs of storing and circulating printed materials.

    The Early Canadiana Online project includes all three of the stakeholders in the production and consumption of information. Libraries with rare book collections such as the University of Toronto Library and the Laval University Library provide access to original print texts. These libraries also provide access to the Canadian Institute for Historical Microreproduction's (CIHM) microfiche copies of these print materials. In this instance, CIHM is the producer of the information while the libraries are intermediaries in providing access to patrons. Patrons of this information include students and faculty accessing the CIHM collection whether in print, microfiche, or digital form.

    Patrons of Early Canadiana Online

    With the creation of Early Canadiana Online, patrons have three possible methods for accessing this information: digital, fiche, or original copy. Patrons incur a cost of access depending on their choice of method of access. These costs can be divided into fixed and variable costs. Variable costs are costs incurred each time information is reproduced or retrieved. Fixed costs are costs incurred regardless of the number of items retrieved.

    A patron's choice of access will depend on which method provides lower total costs. A patron viewing images from a single text may have lower fixed and marginal costs in using the print than in using the fiche or digital formats. Accessing the print may require only travel to the library, selection of the text, and turning the pages. There are no learning costs or costs of expensive machines or network connections specifically related to using a print item. Accessing the fiche may require travel, selection, and determining how to use the fiche. Accessing the digital format requires the use or purchase of a computer with a network connection as well as determining how to search and use the digital collection.

    Microfiche or digital access is more likely to have a lower total cost when more than a single text is used. While multiple texts may be found in the same library, the fiche collection may contain items not found in a library's print collection. Accessing print items from another library would require the patron to incur an additional cost of traveling to a second library. Learning how to use the microfiche collection is likely to have a lower total cost than traveling to more than one library in order to use the needed items in print form. Likewise, digital access may provide access to more images at a lower total cost than fiche or print.

    Figure 15.1 illustrates total patron costs for access to information in the three formats. Figure 15.1 assumes that the fixed cost of digital access is greater than the fixed cost of fiche, which is greater than the fixed cost of print. Figure 15.1 also assumes the number of images available in digital form is greater than the number available in fiche at one library, which is greater than the number of print images available at one library.

    The break-even points represent the levels of use at which two methods of access have the same total cost. Initially a patron will have a lower total cost from print texts. As use of images increases and the library's print collection is exhausted, a patron must incur the additional fixed costs of traveling to another library. At this point the total cost of fiche access is lower than the total cost of print access. As use continues to increase, the total cost of digital access becomes lower than the total cost of fiche and print access.

    If Figure 15.1 accurately reflects the fixed and variable costs of access then high-frequency users who require more access to more digital images are more likely to use digital assets. These users incur a high total cost of access to the digital copy but gain greater access to more information. Patrons desiring only a few images from a single text are more likely to look at the original, print copy if it is available in their library. Mid-level users are more likely to use the fiche.

    Figure 15.1: Patron Costs of Access to ImagesFigure 15.1: Patron Costs of Access to Images

    However, what may be an inaccurate assumption in Figure 15.1 is that digital access has higher fixed costs and equal marginal costs to fiche or print. The fixed costs of digital access include the learning costs patrons unfamiliar with digital copy must spend, as well as the costs of having access including a personal computer with network access. Once these costs are incurred patrons may have a fixed cost of digital access less than the fixed costs of fiche or print access. Patrons can also avoid the fixed costs of traveling to the library if they have at-home or office access to the network. The marginal costs of digital access may also be less than print or fiche. Patrons familiar with digital access are less likely to print materials, instead saving electronic copy on a disk or drive. If the marginal cost and fixed costs for digital access are lower than for print and fiche then digital access will have a lower cost at all levels of access and patrons will only access the information online.

    Producers

    The initial promise of digital information was that production costs would decrease when the costs of printing and distribution were replaced in the networked environment. These lower costs have led to an increasing number of free electronic journals published by faculty at colleges and universities. However, digital production also has costs. HTML programming costs, patron service costs, and production in both print and digital formats can increase the costs of production. Traditional print publishers have found that additional costs of production are necessary to publish a journal in both print and digital format, increasing subscription costs to libraries that require access to both forms.

    Digital costs are lumpy, with a large fixed cost of production, and zero marginal cost to produce an additional digital copy over the Internet. However, digital copies have the same, if not greater, patron service costs as print and microfiche. Patrons need service in any environment. In the digital environment patron services include the cost of server maintenance, the cost of updating web pages, and the cost of answering electronic mail from patrons who are having difficulties with access. Since the networked environment allows more patrons to access the information than at the library, the cost of patron service may be greater for the digital information producer. Unlike print publications that are produced and then sent to information intermediaries, customer service in the digital environment requires the information producer to provide direct service to patrons.

    Pricing in the networked environment can also be a difficult problem for information producers. Classic economic theory would indicate that the price of access should be set equal to the marginal cost of zero to achieve economic efficiency. However, a zero price does not allow for information producers to recover the costs of production. Access to digital products will be sold above the marginal cost of reproduction in the same way that books, journals, and other print products are sold above the marginal cost of an additional copy. This pricing, based on the value of the information good to consumers rather than the cost of providing an additional copy, is necessary in the networked environment to recover the costs of production.

    The role of the library as intermediary is critical in the pricing of information. Libraries purchase information materials and provide access to patrons typically without an access fee. Patrons efficiently use the information since, in the networked digital environment, providing the information has no marginal costs and patrons are not charged for access. The charge to libraries covers the cost of production of the information while the absence of a charge for patrons insures economic efficiency.

    Intermediaries

    Libraries serve a crucial economic role as intermediaries in the distribution of and access to information. Libraries serve as a point of collective demand for information products, providing access to information as a public good to patrons.

    The economic role of the library as an information intermediary is to estimate the collective demand of patrons and purchase and provide access to information goods. The collective value of any information product in a library is the sum of the value or benefit all patrons receive from it. This can be estimated by the number of times the information product is used multiplied by an estimate of the benefit from each use. If this collective value exceeds the purchase price then it is economically efficient for the library to purchase it and provide access to patrons. Additional access should be priced at zero to insure economic efficiency.

    For digital products there are two possible benefits to library patrons. If the library does not subscribe to the print or fiche copy of the information, then patrons benefit by accessing information previously not available. If patrons have access to the fiche or print original, and access to the digital copy is available over the Internet or campus network, then the benefit of digital access is equal to the value of time saved from using the digital copy from the home or office instead of the fiche or original at the library.

    Individual and Shared Costs and the Role of Information Intermediaries

    The costs for information products and services can be categorized into private and shared costs or the costs of individual demand and public demand for a good. Private costs are the costs to an individual or consumer of his purchase of a good or service. Private costs include the costs of a personal subscription, personal home computer, photocopying papers, and downloading and printing information from the Internet. Shared costs are the costs of information products purchased for public use. Shared costs include the costs of library goods and services. The costs of library goods and services are shared among patrons through tuition payments, tax revenue, membership fees or other sources of revenue used to support the library.

    Information intermediaries also have what can be considered private and shared costs. A subscription to a print or electronic database can be considered a private cost to the library, paid from the library's budget, although it is a shared cost to the library's patrons. The fixed cost of producing the database or print journal that is purchased by several libraries is a shared cost among the subscribing libraries. Each subscribing library pays for a share of the fixed costs of production.

    The costs of digital information in a networked environment are shared. On the Internet, the costs of reproduction and distribution are zero. The fixed costs of production and storage are, by definition, shared among the patrons or information intermediaries that purchase access.

    Market Forces: Demand and Supply

    Digital information in a networked environment results in lower costs of reproduction and distribution for producers and intermediaries and lower opportunity costs for users. The lower costs contribute to an increase in the supply of information. Lower costs also result in more producers providing more methods of access to more information.

    Lower costs mean new information products are produced. New publishers including universities, libraries, faculty and students find that they can produce web-based journals using low cost desktop publishing tools. This has led to an explosion in the supply of new electronic journals.

    Paradoxically, this explosion has raised some costs while lowering others. Although the costs of many new electronic journals are relatively lower than those of print journals, for libraries this ever-increasing supply of digital information can dramatically increase the total costs. As the number of subscriptions purchased rises so will the staff costs involved in cataloging these journals, both elements impacting library budgets. Patrons find that the opportunity cost of accessing any given source of information has declined, while the overwhelming increase in the number of information products results in more time being spent on digital information than was spent consuming print products. The digitization of an information product previously made available only in print or microfiche can lower the cost per unit of production, the cost per unit for subscription by libraries, and the cost of access to the information by patrons, while at the same time dramatically increasing the supply of information products. This increase in the number of information products results in substantially higher total costs of production, subscription and access to information.

    15.3 Cost Estimates of Early Canadiana Online

    Estimating the costs of digital projects is necessary to determine efficient investments in digitization of print or microfiche information products. The primary goals of this project are to estimate and compare the costs of three methods of information delivery; print, microfiche, and digital. Data from the University of Toronto, Laval University, and the Canadian Institute for Historical Microreproductions was collected to estimate these costs. Data on the cost of construction of a new electronic library at the University at Albany was also collected for current library construction and maintenance costs.

    One significant contribution of the cost estimates in this paper is that average costs are estimated for the production, storage, and use of information in print, microfiche, and digital formats. Previous estimates have either focused on one type of cost—production, storage, or use; one format—print, fiche, or digital; or have focused on the marginal costs rather than the full costs of production. In this paper all costs for each format are included.

    The Cost of Print

    Table 15.1 shows the cost estimates for book storage and access. These costs are based on the cost of the Thomas Fisher Rare Book Library at the University of Toronto. Construction costs are based on the 1999 library construction project at the University at Albany. Special environmental controls used in a rare book library imply that the construction costs in Table 15.1 may underestimate the actual construction costs. All costs are shown in Canadian dollars (CD).

    Table 15.1: Annual Average Cost of Book Storage and Access
    Cost Cost/volume Cost/use
    Construction, utilities and maintenance $1,586,056 $3.17 $72.51
    Salaries $1,105,031 $2.21 $50.52
    Equipment and supplies $255,799 $0.51 $11.69
    TOTAL $2,946,885 $5.89 $134.72
    NOTE: Costs of utilities, maintenance, salaries, equipment and supplies are based on University of Toronto cost estimates. Construction costs are based on new library construction at the University of Albany. All costs are in Canadian dollars. Exchange rate used is 1.5257. Costs are amortized using 5% rate of interest and life spans as follows: construction 25 years, equipment 5 years, and computers 3 years. Cost per volume based on library capacity of 500,000 volumes. Cost per transaction based on 21,874 transactions.

    The cost of construction, utilities, and maintenance is comparable to an estimate of $4.68CD (Bowen, 1998) and a 30-year amortization of $6.33CD reported in this book (Kantor et al., this volume). However, the cost per use of $134.72CD is significantly higher than the $1.50CD cost of retrieval previously reported (Bowen, 1998), the $3CD cost of retrieval for the New York Public Library and $6CD for the Harvard Depository Library (Lesk, 1998), or the $9CD maximum retrieval cost reported elsewhere (Getz, 1997). In Table 15.1, the cost per use is derived by dividing total cost by the number of annual requests for books. This inflates the cost per retrieval by adding the costs of storage into the equation. However, it is important to note that the "service" of a library is the use of its materials. All costs when divided by the use of those materials gives an average cost for service which will be higher than separating out only part of these costs for retrieval.

    For a comparison with other estimates of retrieval costs, an estimated 80 percent of salaries at the Thomas Fisher Rare Book Library are for access. Taking 80 percent of salary costs yields an estimate of $40CD per transaction for labor, still significantly higher than other estimates. However, a rare book library has concerns of preservation that require additional staff care and monitoring for patron access. In addition, this estimate includes the total cost of administration, vacations, and benefits for employees rather than the marginal cost of retrieval based on a staff member's time spent multiplied by his salary.

    Table 15.1 does not include the cost of purchasing a book. This is important although it will be a small percentage of total costs once the purchase price is amortized over the expected life of storage and use of the book. For example a rare book that costs $500 but is expected to last 100 years in storage has an annual cost, when amortized, of $4.80. Table 15.1 also does not include the value of the land. This can be significant but is different depending on the location of the library.

    Figure 15.2 shows the categories of rare book annual storage and access costs as a percentage of total costs. As expected, the largest component of total costs for books is the cost of space to store them.

    Figure 15.2: Storage and Access Costs for PrintFigure 15.2: Storage and Access Costs for Print
    The Cost of Microfiche

    The annual costs of microfiche storage and access at the University of Toronto are shown in Table 15.2. Cost per volume is based on a 216-page text, the average size of a text digitized in the Yale Open Book Project.[1] As with Table 15.1 these costs represent the average cost per unit for storage or access. Just as the cost of purchasing a book is not included in Table 15.1, the cost of purchasing the microfiche is not included in Table 15.2.

    Both the cost of storage per volume and the cost per use are significantly lower for microfiche than for rare books. This is not surprising since microfiche is intended to provide access to and storage of information at a lower cost than print.

    The cost per use is derived by dividing the total costs of microfiche storage and access by total use. As with Table 15.1, this assumes that the value of microfiche storage is for access to patrons. If salaries and equipment are the only costs for access, and 80 percent of salaries are for access, then the cost per transaction can be estimated as $3.75CD, which is comparable to estimates of the costs of book retrieval. Both retrieval functions are similar in that staff must locate, check out, and re-shelve the requested materials.

    Table 15.2: Annual Average Cost of Microfiche Storage and Access
    Cost Cost/volume Cost/use
    Construction, utilities and maintenance $170,527 $0.06 $2.71
    Salaries $251,602 $0.09 $4.00
    Equipment and supplies $34,423 $0.01 $0.55
    TOTAL $456,552 $0.16 $7.26
    NOTE: All costs are amortized with the exception that amortization for micrfiche readers used a 15-year life span. University of Toronto microtext use was 62,856 in 1997 for 3,387,777 unit stored in a room of 810 square meters.

    Figure 15.3 illustrates that microfiche costs are more salary intensive. Salaries constitute a larger percentage of the costs of microfiche than in the case of rare books. Rare books take up more space and therefore have a higher percentage of costs in construction, utilities and maintenance.

    Figure 15.3: Storage and Access Costs for MicroficheFigure 15.3: Storage and Access Costs for Microfiche

    Table 15.2 does not include the subscription price of the microfiche to the library. These costs are part of the economic cost of producing microfiche and are shown in Table 15.3: The Costs of Microfiche. By counting these costs in the production but not the purchase of the microfiche, we avoid double-counting these costs. The costs of microfiche production are shared costs. Library subscription fees, grants and donations are used to jointly finance the production of the microfiche as a public good.

    Table 15.3 includes all economic costs of microfiche production including the value of space The Canadian Institute for Historical Microreproduction uses at the National Library of Canada. While this space is donated to CIHM, it still represents an economic cost of producing microfiche. As with previous tables, the average cost of production is calculated by dividing total cost by the number of units. All costs are in Canadian Dollars.

    Table 15.3: Average Cost of Microfiche Production
    Cost Cost/fiche Cost/image Cost/volume
    Master Copies $150,000 $16.07 $0.22 $46.88
    Salaries $602,932 $64.58 $0.87 $188.43
    Equipment and supplies $125,880 $13.48 $0.18 $39.34
    Construction, utilities and maintenance $187,066 $20.04 $0.27 $58.46
    TOTAL (shared costs) $1,065,878 $114.17 $1.54 $333.11
    cost of microfiche reproduction and sales $236,092
    TOTAL COST $1,301,970
    Total cost per library (30-42 copies) $43,399-$30,999 $4.65-$3.32 $0.06-$0.04 $13.56-$9.69
    Annual cost per library (30-42 copies) $2,254-$1,487 $0.22-$0.16 $0.01-$0.00 $0.65-$0.46

    The first four rows of Table 15.3 show the cost of producing master copies of microfiche. The cost of producing master copies of microfiche is $114.17CD per fiche, $1.54CD per image, or $333.11CD per 216-page volume. This is the cost of producing a set of master copies that are then used to produce additional microfiche copies for distribution to subscribing libraries. The cost of the master copies is a shared cost for all subscribing libraries.

    If we compare the cost per volume of creating and storing a master microfiche copy relative to creating and storing a print copy, microfiche is expensive to create but has significant savings in storage ($0.16CD per volume per year) relative to print ($5.89CD). However, at an annual savings of $5.73CD per year, it would take over 50 years to cover the cost of creation ($333.11CD) if the master copies were created solely for the use of one library.

    Microfiche is produced by CIHM, not to have a single copy, but to provide multiple copies to libraries that would not otherwise have access to early Canadian literature. With a limited number of print copies, microfiche becomes a cost-effective alternative for providing access. CIHM produces several copies of each microfiche to sell as subscriptions for libraries throughout Canada, the United States, and the rest of the world. By purchasing a subscription, these libraries share the costs of the original microfiche production.

    CIHM produces about 30 copies each year for library subscriptions and additional copies of individual microfiche at an additional cost of $236,092CD. The last two rows in Table 15.3 show how these costs are shared among the subscribing libraries. If the full cost of microfiche production is averaged over the 30 copies, the cost of annual production is $43,399CD per library. This includes the shared costs of production plus the costs of making copies. If an additional 12 copies of each fiche are sold, the average cost is $30,999CD per library.

    The average cost per fiche, per image, and per volume for 30-42 copies are shown in the final three columns of Table 15.3. The sharing of the full costs of production among subscribing libraries reduces the cost to $0.04CD-$0.06CD per image or $9.69CD-$13.56CD per volume. This compares favorably to the cost of each library acquiring a printed manuscript. At an annual savings of $5.73CD per volume for storage and access relative to print for each library, it takes 1.7-2.4 years for the microfiche to cover the costs of creation ($9.69CD-$13.56CD).

    Once produced, it is anticipated that a microfiche copy of a text will last for 100 years. The purchase of microfiche is an investment in an archival copy of materials that is expected to provide access to patrons to the information for many years. If the cost of the microfiche is spread out or amortized over a 100-year period, then the annual cost of microfiche production is only $0.65CD-$0.46CD per 216-page volume per year. When this is added to the cost of storage from Table 15.2, the annual cost comes to $0.81CD-$0.62CD per volume per year for producing, storing, and providing access to a text in microfiche format.

    These costs indicate that when microfiche is produced in large numbers to accommodate several libraries, it costs significantly less to produce, store, and provide access to microfiche than to books. This shared cost per library declines further if the number of libraries acquiring subscriptions increases. In addition, the CIHM microfiche subscription provides access to a larger collection of texts than is likely to exist in any single library of rare books. These cost estimates show that microfiche is the more cost-effective alternative to library storage of print to provide patron access to out-of-print texts.

    The Cost of Digital

    The previous section showed that microfiche is a cost-effective alternative to print. Digitization of texts may be able to provide even greater savings relative to microfiche and print. Unlike print and microfiche, which must be produced and delivered to a library, digital texts have the advantage of being stored remotely but accessed globally via the Internet. The cost of reproduction and distribution of digital information in a networked environment is zero. The only costs are the one-time fixed costs of producing and the annual fixed costs of storing and maintaining the data. These fixed costs can be shared by subscribing libraries that, in theory, could drive the cost per library to a significantly lower level than the cost of microfiche.

    In the Early Canadiana Online Project microfiche was converted to digital format. Microfiche was sent to Preservation Resources for scanning and the University of Michigan for optical character recognition (OCR). Cost estimates shown in Table 15.4 are based on contractual costs for scanning and OCR.

    The total costs for production are $236.08CD per title or $1.20CD per image. Costs in the second and future years for digital storage and access are $35.76CD per title or $0.18CD per image. This includes the cost of salaries for maintaining the ECO Project database (1.5 full-time equivalents for administration, server and database maintenance) and annual costs of hardware storage. Although the cost of producing digital copy from fiche is less than the cost of microfiche, the cost of storage and access for digital, in this project, is more expensive. This is the result of costs averaging over a smaller number of available digital images that will be higher than the average cost per fiche in a university micro-text room that contains hundreds of thousands of microfiche.

    Table 15.4: Average Cost of Microfiche to Digital Production and Storage
    Cost Cost/title Cost/image Cost/volume
    Digitization $439,548 $132.87 $0.67 $145.67
    OCR $159,098 $48.09 $0.24 $52.73
    Salaries $153,264 $46.33 $0.24 $50.79
    Equipment & supplies $7,975 $2.41 $0.01 $2.64
    Construction, utilities & maintenance $21,053 $6.36 $0.03 $6.98
    TOTAL $780,938 $236.08 $1.20 $258.82
    Annual costs of storage & access $118,290 $35.76 $0.18 $39.20

    There are two factors that significantly lower the average cost per image of digital production and storage: the number of libraries subscribing to the database and the number of images stored. The production costs of the digital images are fixed costs that are constant regardless of the number of libraries that subscribe to the database. If 30 libraries subscribe to the database, the cost per library is $8.63CD per volume. An increase in the number of libraries or other organizations that subscribe to the database will decrease the "cost-share" for each organization. In addition, the annual cost of storage and access to the database is also a "shared" cost. If this cost is shared among 30 libraries it decreases to $1.31CD per volume per library per year.

    As the number of images available in the ECO Project increase, the cost per volume will also decline. Space costs (utilities, construction, etc.) and salaries for maintaining and updating the database and server constitute 97 percent of the costs of storage and access. These costs are incurred regardless of the number of images. Storage costs per volume are $0.90CD of annual costs. As the number of images in the database increase, total storage costs will increase, but the average cost will continue to decline.

    The cost estimates from Table 15.4 can be compared to similar recent studies estimating the cost of digital production. Estimates from studies at Cornell University and Yale University are shown in Table 15.5. (Cost estimates from Cornell and Yale are shown in Canadian dollars for comparison. Cost per volume is based on a 216-page text.)

    Table 15.5: Average Cost of Digital Image Production
    Cost/Image Cost/Volume
    Early Canadiana Online $1.20 $258.82 Average cost estimate
    Yale $0.40 $83.96 Marginal cost estimate
    Cornell $0.43 $91.37 Marginal cost estimate

    These earlier studies show a significantly lower cost of digitization. The Cornell study created digital copies from paper while the study at Yale created digital copy from microfiche. The major difference between the Early Canadiana Online Project and these earlier studies is the method used for estimating costs. Both the Yale and Cornell studies estimated costs by timing staff scanning pages of print or microfiche. These studies are based on the marginal cost of scanning images and producing digital copy. The cost estimates for the ECO project are average costs based on dividing total project costs by the number of images, titles, or volumes. The ECO Project cost analysis includes the full cost of producing digital copies and mounting the database on a server for access over the Internet. The ECO project is larger in scope, number of titles, and number of images. ECO costs include all salaries, space costs, and outsourcing of digitization and OCR. Therefore this cost analysis should be viewed as a liberal cost estimate of a large digitization project with Internet access to the database.

    Economies of Scale

    The ECO project scanned a larger number of titles and images than the projects at Yale University and Cornell University. The ECO project scanned 3,308 titles compared to the 1,270 titles scanned at Cornell or the 2,000 titles scanned at Yale. Table 15.6 compares fixed, variable, and total cost estimates for the three projects.

    Table 15.6: Digital Project Average Cost Comparisons
    Annual fixed project costs (equipment & salaries) Per image variable cost estimates Total Cost Estimate Extras Project size
    Yale University Project Open Book (film to digital, 1994/95, marginal cost estimate) $142,420 $0.182 (based on 600 volumes timed) $221,177 432,000 images; 2,000 volumes
    Cornell University (paper to digital to COM, 1994/96, marginal cost estimate) $27,931

    $0.319 manual

    $0.288 auto (150 volumes timed)

    $197,275 manual

    $183,353 auto

    $80,417 (COM costs)

    450,000 images

    1,270 volumes

    Early Canadiana Online (fiche to digital, 1998/99, average cost estimate) $161,239 $0.674 (digitization contract) $600,787

    $159,098 (OCR)

    $21,053 (space)

    651,742 images

    3,308 titles

    The variable cost estimates in Table 15.6 for the ECO project include only the cost of scanning the images. OCR, space, and other salary costs contribute to total costs. For comparison with the Yale and Cornell studies, however, the vendor's cost of providing digital access may be more relevant. If texts were digitized without OCR then the additional cost would be $0.674CD per page. The relative costs and size of the three projects are shown in Table 15.7 and Figure 15.4.

    Figures 15.4 illustrates the increase in cost per image and cost per title between the three projects. This may show diseconomies of scale, i.e. an increasing average cost as output increases. Larger projects may require more staff or have a greater complexity of task that results in higher costs per unit. However, much of the difference shown may simply be the result of different methods of estimating costs.

    Table 15.7: Digital Project Average Cost Comparisons
    Number of images Cost/image Number of titles Cost/title
    Yale University (fiche to digital, 1994/95, marginal cost est.) 432,000 $0.51 2,000 $111
    Cornell University (paper to digital to COM, 1994/96, marginal cost est.) 450,000 $0.42 1,270 $155
    CIHM Early Canadiana Online (fiche to digital, 1998/99, average cost est.) 651,742 $0.92 3,308 $182
    Figure 15.4: Project Cost Comparisons by Number of Images and VolumesFigure 15.4: Project Cost Comparisons by Number of Images and Volumes
    Cost of Access to Digital Information

    The cost of access to digital information is very difficult to quantify. Access to digital information includes the personal computer, network connection, and space used by the patron. Since these are all fixed costs of access that a patron or library must incur regardless of what information is accessed, the marginal cost of accessing any image or database is zero.

    We can attempt to quantify the average cost per use to the library of providing access to digital information. This is shown in Table 15.8.

    Table 15.8: Average Annual Cost of Access to Digital Images
    Cost Cost per internal use Cost per use
    construction, utilities & maintenance $186,274.25 $0.01 $0.00
    Salaries $114,000.00 $0.01 $0.00
    equipment & salaries $398,000.00 $0.03 $0.01
    TOTAL $698,274.25 $0.04 $0.01

    Table 15.8 includes the cost of computers within the library, staff to maintain the server and network, and the cost of space for each computer. Cost per use is shown in terms of internal use and all uses of library databases regardless of the source. Internal use is defined as the number of unique and significant hits to the library server which originate from within the library (0.3 million per week). Use is the number of hits regardless of source (1.2 million per week). Regardless of which definition of use is applied, access to digital documents comes at a very low average cost per use. This is significantly lower than the average cost per use for microfiche or rare books.

    Table 15.8 also illustrates the importance of understanding the difference between total, average and marginal costs. Table 15.8, like previous tables, shows the total and average costs per use. The total cost of providing electronic access within a university library is significant, but the high level of use of terminals within the library result in a very low average cost per use. The marginal or additional cost for each patron's use is zero. All costs in Table 15.8 are fixed costs, incurred regardless of whether a patron uses a terminal or not. Investments in information technology within university libraries can be expensive although digital documents in a networked environment come at a zero marginal cost of distribution.

    User Costs of Access

    The final economic cost of access is the cost to the user. With print and microfiche the user must travel to the library to use the information. Any library will have only a limited collection of print titles. To read other titles in print from the collection a patron may have to travel to another research library. With the CIHM microfiche collection a research library can offer patrons access to a greater number of titles than are typically available in print, although the patron must still travel to the library to access the microfiche.

    Digital copies are accessible to all patrons of subscribing libraries with a network connection. This increased accessibility of the collection to patrons may result in a greater number of subscribing libraries and greater access to the CIHM collection of materials.

    The cost to patrons of using information is the opportunity cost of their time spent in acquiring and consuming it. The value of access to information by patrons is reflected in the demand for using the database. Hypothetical demand for use of Early Canadiana Online is illustrated in Figure 15.5.

    In theory, if the user has a cost of time of $10 per use of a manuscript in a rare books library, he may only use the manuscript 5 times a month. If the patron's opportunity cost of time spent consuming the information decreases then use will increase.

    Microfiche is easier and takes less effort to use than books in a rare book library. Microfiche delivery by library staff takes less time than retrieval of a rare book. Once a patron understands how to use a microfiche reader he can view several books with relative ease. In addition, patrons do not have to travel to another library to view early Canadiana texts if their library holds the entire CIHM collection on microfiche. If we assume that the cost to a patron of accessing an Early Canadiana text on microfiche is $5, then patron use of the microfiche will increase to 30 times a month.

    Figure 15.5: Demand for Early CanadianaFigure 15.5: Demand for Early Canadiana

    Digital access lowers the opportunity cost of access to the information even further. It enables patrons to view the information from their personal computer in their home or office or from a computer terminal in the library. Instant access to a large collection of images from the CIHM collection means faster, searchable access to the images. Using Figure 15.5, if we assume that the opportunity cost of patron access is only $2 per access for digital images, patron use of digital access will increase to 50 uses a month.

    To patrons the time savings from digital access has two parts. First, there is the value to patrons of lower cost access to images they would have traveled to the library to view on microfiche. If a patron would have used microfiche 30 times a month at a cost of $5 per use, and this cost declines to $2 per use in digital form, then this patron has a $3 lower cost of access for 30 uses, or has decreased his cost by $90 a month. Second, there are additional uses of digital access that provide additional benefits to patrons. These additional uses can be assigned an average value of $1.50 each, or one-half of the value of lower cost access to the first 30 uses a month. If use increases to 50, the additional 20 uses per month would provide a benefit to this patron of roughly $30. The total value to this patron would be $120, the $90 in lower costs plus the additional $30 in benefit from an increase in access.

    During this study, patron use of the print, fiche, and digital collection was observed. Patrons were also asked questions about their use and travel time to the library. Annual use of the collection at the University of Toronto and Laval University increased from 2,984 for print and microfiche to an estimated 7,030 uses of the digital texts. Travel time to the library for print and microfiche patrons varied from less than 30 minutes to more than one day, with 90 percent of patrons needing one hour or less.

    If we assume that digital access saves print and microfiche patrons 30 minutes of travel time and that the value of this time is $10 per hour, then the annual savings of 7,030 uses equals $25,035.[2] This represents a lower-end estimate of the savings from accessing the CIHM collection online versus traveling to the library to use the microfiche or print. Some patrons are likely to save more than 30 minutes of travel time. Other patrons are likely to have an opportunity cost of time greater than $10 per hour. Most significantly, use of the Early Canadiana Online collection is likely to increase as more scholars and students are made aware of it.

    15.4 Conclusions

    This project estimated the cost of access to information in print, microfiche, and digital format. The results include

    • The average cost of producing a 216-page book in digital format from microfiche is $258.82 (C$) plus any copyright fees. The annual cost of storage and access is $39.20 per book. In theory, these costs can be shared by the number of libraries and patrons that access the digital copy over the Internet significantly lowering the costs per library.

    • The average cost of producing a book on microfiche is $333.11. Given the number of number of copies sold by CIHM, the cost per library is between $9.69 and $13.56 per book. The annual cost of storage and access in a university library microtext room is $0.16 per book.

    • The cost of a book in print format is the purchase price of the book. The annual cost of storage and access is $5.89 in a rare book library.

    These cost estimates show that digitization of texts can provide significant savings if shared by a sufficient number of subscribing organizations. Networked access to digitized texts also provides several economic benefits to users including (1) increasing the availability of these texts to patrons of organizations with access to the Internet, (2) decreasing the opportunity cost of patrons' time spent accessing digital copies rather than traveling to libraries to use print or microfiche copies, and (3) providing electronically searchable texts making it easier for users to find items of interest. These increased benefits should result in a significant increase in use of the digital information relative to use of the print or microfiche copies.

    Previous studies have estimated the marginal costs of production, acquisition, and storage of books, microfiche, and digital copies of texts. This study included all costs associated with the production, cataloging, and sales of texts in microfiche or digital format. Therefore, the estimates of the cost per book in print, microfiche, or digital format are average cost estimates based on digitizing over 3,300 titles and 650,000 images. Individual libraries engaging in small digitization or microfiche projects may have lower costs per text but the final product may not be of a quality needed for national or international sales. Large-scale projects that include cataloging and sales of several thousand texts are likely to experience a similar cost structure as estimated in this study.

    The remaining paradox of digital information is finding the correct financial strategy to collect sufficient revenues to pay for the benefits of digitization. Digital information provides greater access to information at a lower cost. However funding the production, archiving, and access to the information requires creative financing including value-based pricing of information as well as the solicitation of grants and donations.

    Information production and access comes at a cost. An accurate measurement of the full economic costs of different methods of information delivery is essential in determining the most cost-effective method. This study has shown the costs of three methods of access; print, microfiche, and digitization of microfiche. The cost of digital information is lower on a cost-per-library or per-patron basis so long as a sufficient number of libraries are interested in subscribing to the database.

    In general, the lower cost of digital production will continue to result in more information products appearing in digital format on the Internet. The increase in the number of digital products will further contribute to the information overload of patrons and librarians. Information consumers are confronted with too many journals, databases, and research sources for the limited amount of time and attention they can give to any one source. Given a limited amount of time for information consumption, patrons will search for information of higher quality for use of their time. Any new digital product must have an assurance of quality in order to convince patrons and librarians that there is value in spending time consuming it. Manuscripts of historical significance, such as the ECO Project, produced by trusted organizations, such as CIHM, provide libraries and patrons with an assurance of quality.

    Notes

    I would like to thank Pam Bjornson, Meredith Butler, Marshall Clinton, Malcolm Getz, Wendy Lougee, Tim Nef, Guy Teasdale, and Karen Turko for their comments and assistance. Funding for the Early Canadiana Online Project and this economic analysis was provided by the Andrew Mellon Foundation.return to textreturn to text

    1. Volumes are considered to contain 216 images. Images are page images. Each microfiche image has two page images. return to text

    2. This comes from the original 2,984 uses multiplied by $5 saved per use plus an additional 4,046=7,030-2,984 multiplied by an average of $2.50 savings per use.return to text