Economics and Usage of Digital Libraries: Byting the Bullet

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).

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 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.

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 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.

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.

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.)

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.

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.

Figure 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 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 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.