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 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.
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.
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.