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    10.2 Access and Pricing Models

    A variety of revenue strategies exist in periodical publishing. Controlled-circulation magazines rely almost exclusively on advertisers to pay the cost of producing a journal for a targeted market. The key to success in this type of publishing is to achieve very high coverage of a targeted market that also is a focal point for advertisers. This is an uncommon strategy for peer-reviewed journals however. The scholarly publishing industry primarily relies either on library sales or on personal subscriptions or memberships in a non-profit society for the ongoing revenue to produce the journal. Some rely on a mixture of these circulation revenue streams, along with advertising sales.

    In these early days, it is not surprising that online strategies tend to reflect the print strategy of the publisher. Table 10.1 provides a summary of the main print business models, and their online corollaries.

    Table 10.1: Scholarly Publishing Business Models and Online Corollaries
    Print Model Revenue Stream Market Features Online Corollary
    Controlled circulation Advertisers or external funds Requires high market coverage; Seldom used for refereed journals Free, ad-supported site; or free with print and registration
    Personal or Member subscriptions Individuals Refereed; tends to large audience; may be more general Free or small fee with print; may allow online only
    Institutional subscriptions Libraries Small, specialist audience; tend to higher prices Site-wide for fee or free with print
    Mix Members and libraries (+ads?) Complex interplay of markets Unsettled, but usually fee + print required

    Controlled magazines will tend to put their contents online for free to users, attempting to attract advertising revenue to the site. Those journals relying on library subscriptions will most likely develop a library site-wide access model, while those relying on personal subscriptions or memberships may treat the online product as an added-value benefit of the print subscription. Mixed revenue models may include a mixture of advertising, individual subscriptions, and library subscription, not to mention licensing and authors fees, to provide revenue. Of course, nearly every magazine may have some mixture of these various types of revenue, but what is important in devising an online strategy is to fully understand which revenue stream or streams are the main drivers of the business.

    Science receives some revenue from every one of the sources named above, and so is a rather complex case. However, there is no question that the economic drivers of the journal are membership dues and advertising. Though subscription sales and membership dues represent less direct revenue than advertising, they may nevertheless be seen as the underlying driver for the publication, since advertising sales are also premised on the journal's relatively large circulation. Library subscription sales represent a significant third revenue stream. Though the smallest revenue stream of the three, they represent a critical part of the mix. If there were no library sales, personal subscription rates would be appreciably higher. The corollary is that if there were no personal subscription sales, library rates would be significantly higher. The other revenue sources named, such as licensing, are modest in comparison. There is little reason to think the journal could be sustained on these revenue sources alone.

    I have jumped directly to the complex case of Science, but it is worth mentioning the other paid subscription models. Essentially, there are two: library driven, and membership or personal-subscription driven. A rule of thumb, for which there may be many exceptions, is that if the circulation of a magazine is under 5,000, its underlying economics are probably library-subscription driven. Many scholarly journals fall into this category, even those published by associations. Of course, the economic underpinnings of a given journal may be as much a reflection of publisher's choices as of market conditions. Some journals may have low circulation because they serve a small, highly specialized audience and are only sustainable through library subscriptions. Others may have restricted their personal subscription support by setting prices at too high a level, or by deliberately choosing to focus on the library market.

    What are the online corollaries to these print subscription models? Many scholarly journals, whether commercial or non-profit, are struggling with this question, and many different experiments with access types are being conducted. Among the most widely in use are

    • free public access after an embargo period,

    • free personal online access with membership or paid print subscription,

    • institutional site-wide access free with print subscription,

    • institutional site-wide subscription,

    • institutional access by subscription and restricted in some way, such as via

      • embargo on when the content becomes available online,

      • incomplete content,

      • limited geographic access, for instance to a library or a portion of campus or a single `site' (which may be a building, a campus, or a city),

      • limited virtual access to certain workstations or a subnet.

    The online strategy a given publisher will pursue is closely related to the publisher's view of the likely interaction between print and online publishing in the short run. Since there are many difficulties and unknowns with the revenue model for online access, publishers will often hedge their bets by pursuing what may be thought of as a forced print model. In these models, online access may or may not be charged, but is conditioned on the retention of a print subscription. In most cases, the online product will be treated as a supplement to the print, and charged (if at all) as an ancillary service. Though this is a conservative approach, the forced print model cannot be written off as merely a reactionary and futile attempt to preserve print. Science has substantial user feedback suggesting print is still highly valued among readers. Online values such as immediacy and searchability are highly desirable as complements to the print, but not as substitutes. Offering the two media together currently seems to be the best way for many journals to provide the best of both worlds and, coincidentally, to protect the principal revenue streams that emanate from the print product.

    At the other extreme, some publishers will seek to capture the cost-saving potential of online publishing and, perhaps, to steal a march on competitors in the transition to electronic-only publishing. This approach will be particularly appealing to start-ups, although it is certainly not unheard of among traditional publishers. The strategy is reflected in business models that encourage the buyer to purchase online access only, and provide pricing incentives for doing so. In the case of many start-ups, the strategy could be called a forced online strategy, i.e., there is no print product at all. Other publishers will continue to provide print in response to reader demand, while setting discounted prices for online only, usually at 80% to 90% of the print price, to give buyers incentives to make the switch. Forced online strategies are relatively risky because of the many unknowns about user acceptance, ability to generate revenue from subscriptions or advertising, and sustainability of the system at reasonable costs. But they do make sense for smaller circulation publishers, especially of high frequency or high page-count journals, where substantial savings can be gained by pushing toward online delivery.

    Forced print models attempt to preserve a journal's established revenue base of print subscriptions by offering online access as a free or low-priced added-value service. Generally, this will be a less risky approach than a forced online model. However, forced print models carry their own set of risks, and can be difficult to administer if the publication relies on both personal and institutional subscriptions. This is because institutional site-wide online subscriptions impinge on the personal subscription market, both online and in print, far more severely than institutional print subscriptions do. In print, accessibility to library copies is limited (one-at-a-time usage) and inconvenient (the reader must go to the library), so most frequent readers and many occasional readers will be strongly motivated to acquire personal subscriptions to the journals they find most important or useful. With the advent of site-wide access, however, the contents of journals are far more readily available to all users, thus presenting a temptation, especially among the marginal readers, to forego personal subscriptions. With site-wide subscriptions, there is no ability to reserve online access exclusively for paying individual subscribers. Further complications arise if an advertising revenue stream in print needs to be either preserved or migrated to online. Responses to this situation are the most complex and wide-ranging, in part because no one knows which will be most effective. Thus, many publishers are pursuing a variety of access models simultaneously. Table 10.2 shows the main access models currently in use by Science Online. Note that some of the access models provide only partial content in order to approach certain market segments, or achieve different business goals.

    Table 10.2: Science Online Access Models
    Access Model Target Audience Business Goal
    Personal access
    Free Samples/Searching All potential users Attract prospects
    Abstracts with registration Moderate user Readership for advertising; attract prospects subscription
    Pay-per-View Infrequent user Attract prospects subscription
    Full text access with fee Members only Subscription revenue; readership for advertising
    Institutional access
    Workstation access Libraries, mainly public or high school, or colleges with minimal science focus Economy access for broad range of primary ed. institutions
    Site-wide full text access Universities/Research Institutes/Corporations Subscription revenue; readership for advertising
    Consortial access Universities, 2-year, and HE institutions Expand site-wide subscription market; readership for adverstising
    Licensed content with embargoes or usage limits Library segments with specialized needs Ancillary revenue

    If the proliferation of access models appears confusing, the price structures in use for these many different models are all the more so. Some principles from print subscription pricing do seem to carry over into the online world so far, although not always with the same results.

    There are several regularities in traditional scholarly journal pricing. In general, institutional subscription prices are well above the price for personal subscriptions. Higher circulation journals tend to have relatively lower prices than small circulation specialty journals. And lastly, the narrower titles serving very small populations tend to rely on library sales much more heavily than personal subscription sales. All these rough principles seem to hold true, at least so far, in online pricing. However, as we shall see, publishers face a series of perplexing problems and risks in setting online subscription prices. These issues are far from settled at this time.