Economics and Usage of Digital Libraries: Byting the BulletSkip other details (including permanent urls, DOI, citation information)
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1. Stakeholders and successful digital transformation of the research library
Libraries and library collections are experiencing transformation. Some aspects of this evolution are gradual, but others are jarring. The digital transformation has been a critical catalyst within publishing and scholarly communication. Before the 1990's library collections were predominantly in print-on-paper formats with modest investment in proprietary citation databases or other electronic reference works. Network-accessible content, of any type, was rare. In the relatively short intervening time, the quantity of popular, reference and scholarly information in digital format exploded, and an increasingly substantial share of library budgets is devoted to acquisition, processing and management of digital resources.
In addition, libraries now make most of their digital content accessible to patrons over the Internet. In less than a decade nearly every library in the developed world has become "Internet enabled." A first step was often to make the existing catalogue accessible to patrons via the Internet. This extrapolation of existing catalogue functions to electronic databases created worldwide access to information about library holdings, further enhancing resource sharing and creating opportunities for libraries to re-conceive labor-intensive operations. Coupled with the availability of online journal indices, these developments set the stage for change both internal and external to the library. Lynch (2000) notes that during this period libraries played a key role in introducing information systems and the use of technology for information access to a campus audience, particularly in non-scientific disciplines.
The development of network-accessible digital collections generated more dramatic impact. The capabilities for creating and distributing highly functional electronic content have empowered users for new types of inquiry, and libraries for fuller engagement in content creation, management, and use.
The ongoing transformation is pronounced within both for-profit and not-for-profit research libraries. The vast majority of scholarly journal publications and reference tools are now available in electronic form. While the Association of Research Libraries' (ARL) data indicate library acquisitions budgets have lost significant purchasing power, largely due to high price inflation for journals, overall library investment in electronic content has risen dramatically in the last several years (ARL 2001). ARL figures for 2001-02 indicate an average 19.6% of library collections budgets is spent on electronic resources, a fivefold increase since 1992-93. Not surprisingly, interlibrary borrowing is rising as budgets are squeezed between inflation and the growing availability of new electronic publications. The increased expenditure for electronic resources is driven in no small part by user demand, and the results are evident in usage. As Guthrie (this volume) notes, when scholarly materials are Internet-accessible and full-text searchable, the number of user accesses is many multiples higher than in traditional print environments. The rapid transformation of library collections is an example of institutional transformation, with a broad definition of "institution." During a period of profound transformation, the patterns and forms of interactions among an institution's many stakeholders will necessarily change. The path of transformation and its success crucially depend on the way in which these stakeholder interactions develop. We develop our thesis in this chapter. The authors in the rest of this volume study institutional transformations with an emphasis on specific stakeholder interactions. In particular, the authors focus on economic interactions (between stakeholders such as publishers and libraries, authors and publishers, and libraries and employees, among others) and access or usage interactions (between readers and libraries).
1.1 Institutional transformation
We use "institution" in its social construct sense: "a custom, practice, relationship, or behavioral pattern of importance in the life of a community or society." Institutions, such as the institution of marriage, are complex social constructs that arise and are shaped in response to social needs, constraints and balances of power among stakeholders. In this sense, research libraries as a whole are an institution; an individual library is an instance of the social institution. Institutions generally provide stability because they do not easily change quickly, although a particular instance of an institution, like a particular marriage, may quickly change.
To illustrate by example, some institutions that bear familial resemblance to research libraries are K-12 education, the bookstore industry, and public parks. Each requires a flow of funds; each engages the interests of multiple parties; each is familiar to its participants and more or less uniform across different instances. Each is designed or emerges to serve a mixture of needs, subject to the social constraints and power relationships. Each institution has numerous individual instances (e.g., individual bookstores).
When there is significant change in the needs or constraints or power relationships on which an institution is based, the practices and behavioral patterns embodied in the institution may no longer effectively serve the new configuration of needs, constraints and power relationships. In the face of such change in external conditions, institutions adapt and change. Institutions, because they comprise a web of social conventions, practices and structures, adapt slowly. Slow adaptation is usually suitable because the foundational conditions (needs, constraints and power relationships) change slowly. However, during times of rapid change in needs and constraints, slow institutional adaptation may lead to frictions and stakeholder frustrations.
The institution of the public access library emerged slowly as needs and constraints changed. The development of the university-based research library grew out of the monastic scholasticism of the early Enlightenment and Renaissance. This development was an early adaptation to changes in power and user needs: the declining power of the Church and the growing importance of secular study. Arguably the first university research library was at Oxford University, founded by Thomas Cobham, Bishop of Worcester, in 1320. In 1598 Thomas Bodley set himself to restoring and opening the library to students; in 1602 the famous Bodleian Library at Oxford officially opened (Bodleian Library (2007)).
The great modern national libraries such as the British Library and the Library of Congress were at least in part a transformation in response to the growth of the bourgeois class and the emergence of populism. These libraries had their origins in mandatory deposit laws of the 17th century, and in the donation of royal collections to the citizenry in France and elsewhere during the 18th and early 19th centuries. The familiar system of multiple, distributed, small-to-medium public libraries with open access to all local citizens developed in the latter half of the 19th century, with substantial help from Andrew Mellon and other benefactors.
Similarly, the history of the scholarly research journal reflects a gradual evolution from the communication mission of the scientific societies founded in the 17th century, to the 18th century emergence of journal articles as a mechanism for registering ownership of discoveries. In the 19th century, journal publications became more closely associated with professional standing (Schauder, 1994).
This three-century evolution of journals illustrates the gradual shaping of community practices as new vehicles for communication emerged and new practices were adopted.
The practice or behavior pattern that defines the research library as an institution comprises a web of interactions between various stakeholders each with distinct interests in the collections of a library. These stakeholders include authors, publishers, librarians and users. Each has an interest in and participates in the processes of creation, publication, distribution, acquisition, organization, archiving, and usage. This web of interacting participants and processes shapes both the research library's collection and the success of the library in meeting the expressed needs of users over time. It is this interdependent, interactive context—the ecology of libraries—that frames this book.
1.2 The Ecology of Libraries: Transformation in Context
The research library is embedded in the broad social systems of information flow management: the production, distribution and use of information resources by members of society. This iterative process among stakeholders is the foundation of knowledge creation and transmission. As the information technology revolution has proceeded over the past three decades or so, all institutions participating in information flow management have been deeply affected. Consequently, the set of social needs, constraints, and power relationships that are served by the research library have changed due to developments in information technology.
Simultaneously, new technology for information access and analysis enabled the development of new research methodologies and discipline interests. The changes in needs and capabilities have, in turn, stimulated pressure for institutional change in values and behavioral norms. For example, new venues and methods for documenting and disseminating research have gradually become incorporated in practice, as the values associated with academic tenure have adapted to these opportunities. These interdependent forces have had an impact on individuals, on disciplines, and on libraries.
The information technology revolution has affected all library types: public, K-12, academic, and organizational or special including corporate and not-for-profit research libraries. The "information technology revolution" is a vague moniker for a vast array of technological innovations and their rapid application throughout society. Understanding the effects of the revolution depends on understanding two fundamental facts that have driven substantial change: the exponential rate of decline in the costs of digital computation (silicon, i.e., microprocessors), and of digital communication (sand, i.e., fiber optics).
Gordon Moore of Intel predicted in 1965 that the power of microprocessors available at a given cost would double about every 18 months (Moore, 1965). The equivalent form of Moore's law is that the cost of a given amount of microprocessor power would be cut in half every eighteen months. Moore's prediction has held for thirty years. There have been a number of astonishing technological and industrial advances over the past several centuries, but there is probably nothing that matches this rate of improvement. To give an idea of the power of this exponential cost decline, consider a luxurious house that cost $100,000 to build in 1970. If housing costs had followed Moore's law, then this mansion would cost only $1.67 to build in 2003. Imagine how different the world would be today if mansions cost only $1.67!
Digital communications technology experienced similar cost declines. In 1994 MacKie-Mason and Varian (1994) documented that digital communications costs had decreased 30% annually for the previous thirty years and, if anything, the rate has accelerated in the past decade.
The cost collapse in computation and communication fostered the rapid development and deployment of powerful networked information technologies. The explosion of digital networking, cheap storage, and powerful computation and display devices has radically changed the constraints, stakeholder needs, and power relationships on which the institution of research libraries is built.
In addition to these dramatic cost/performance improvements in computational power and communication, several concurrent trends have shaped the landscape in which libraries interact with other stakeholders. The development of standards for creating and protocols for sharing digital content have stimulated electronic publishing and associated systems of access. As a result, we've seen the rapid development of large-scale repositories of electronic publications by major publishers, and increasingly sophisticated retrieval systems and tools.
The community of information "creators" for scholarly or research content include individuals, the academy, and other research investors such as for-profit companies with their own research labs. These stakeholders are crucially interested in the values-based set of social practices defining intellectual property and its ownership. These values have been evolving both as modern societies depend increasingly on intellectual capital for wealth creation, and as digital information technology leads to changes in distribution, collection and information management practices. Institutional adaptation to changes in these social and technological forces has created significant volatility within the world of scholarly communication.
For example, the academy has been revisiting and re-conceiving institutional intellectual property policies, often prompted by explorations of new distance-independent venues for courses (Knight Higher Education Collaborative, 2002). At the same time legislatures have been modifying copyright law. Although largely driven by mass-market commercial interests, the legal changes have important implications for scholarly communication. In response to these stakeholder pressures for institutional change, some universities and other organizations have boldly launched new services for managing and disseminating information.
A related trend is the emergence of open paradigms, which are realized as codifications of principles and social norms for interactions between creators and other stakeholders. These developing norms also result from the interplay of changing values, technologies, and social needs. Just as the open software movement is defined by collaborative development, programs such as the Open Knowledge Initiative (for sharing learning resources), Open Archives Initiative (for sharing research content), and the Open Access movement for journals embrace collaboration and a more open exchange of goods and services. These initiatives are challenging institutionalized practices surrounding the flow of information.
Much has been written about the transformation of publishing. Many authors focus on the new opportunities for dissemination introduced by the capability for self-publishing on the Web, but most of the authors in this book focus on formal publication systems. Formal publication involves a distinction between content creator and publisher, and the use of independent reviewers. Thus the institution embodies norms and routines for interactions between these separate stakeholders.
The early 1990's saw a number of significant experiments among publishers (e.g., Elsevier Science's TULIP project, the predecessor of the PEAK project discussed in several chapters in this book). These experiments typically focused on methods for creating and distributing electronic versions of print journals. Gradually capabilities for linking, more complex search functions, and customization options emerged. These tools were increasingly important to users as the volume of electronic content grew through conversion of older literature and the aggregation of current titles.
While this extrapolation from print to digital production and distribution represented a significant development evident among commercial and non-profit publishers alike, several concurrent and alternative development paths took shape. Inflation in publication prices and concerns about constraints on rights for use and re-use prompted encouragement of alternative models, often within a non-profit context. Similarly, the open access movement to free up access to publications spurred new models for managing rights and supporting costs.
As one recent market analysis of the journal publishing industry reported, initiatives to launch alternative publication vehicles face significant obstacles:
Libraries and academics have been trying for over a decade to develop new ways of disseminating academic knowledge and research, but the barriers to entry enjoyed by the incumbent journals are just too high (loyal readership, brand recognition, 'boards' of academics who peer review research), as are the value proposition [sic] (they bring order to an anarchic process—the development of knowledge) (Morgan Stanley, 2002).
The picture would not be complete without discussing changes in individual user behavior and expectations. Several recent surveys report on the changing dimensions of user activity. The user base for libraries is expanding and the demand for instruction in use of library resources is also increasing. Yet there has been a downturn in circulation of physical collections and use of in-library reference services (Kyrillidou and Young, 2003). While the majority of students and faculty are using online library content, they report that they still desire a hybrid environment with both print and electronic collections (Friedlander, 2002). As the volume and complexity of electronic publications increase, users are also expressing a desire for greater personal control in managing access to electronic content (Cook et al., 2003).
Individual user preferences are strong forces for change, but do not represent the whole picture. Community practices and preferences within specific disciplines are also potent forces, and each discipline community has responded differently to these new opportunities for communicating and documenting research. Traweek's (1988) anthropological analysis of life among high energy physicists captures the culture and practices of this community and depicts the social conventions that enabled the early and extremely rapid adoption of e-prints. In economics, by contrast, the first significant non-commercial e-print site started in 1993, but of the 2500 papers submitted to date, nearly half were only submitted in the last two years. More recently behaviors among authors and editors within ecology have been analyzed to understand the decision processes that lead to publishing in electronic journals in that field (Hahn, 2001).
The changes associated with technology and community norms and values have been sufficiently radical that we should expect to see major transformations of the institution of the research library. Since institutions by nature do not adapt quickly, a period during which the foundations are so quickly transformed might be compared to an earthquake that causes cracks and damage as the institution responds to the quake. When a stable institution experiences increasing pressure to change rapidly, understanding the changes in the interactions between stakeholders is especially important.
The Economics of Libraries
An important contradiction has arisen from the fact that the information technology revolution has been driven by cost reductions, but the costs of research libraries have been increasing during this period. Many observers (and budget administrators) expected a decrease in research library spending over the past decade. In fact, although the costs of the technology have decreased, these constitute only a fraction of the inputs to the research library. The costs are high for creating, adopting, implementing, maintaining and managing new information systems that rely on networked information technology, in part because these activities depend largely on human labor, not silicon or sand. Meanwhile, during the transformation, the older systems must still be staffed and maintained. Overall, the costs of transformation have been added to the ongoing costs of the institution, and the total cost is correspondingly higher.
The seeming paradox of lower input costs but higher total costs is no paradox at all. It follows directly from the nature of institutional transformation. The change in library constraints reflects a decrease in the costs of some inputs to a stable, functioning system. However, adapting to this change in constraints—undertaking the transformations to reach the new stable system—is itself costly, and during the transformation total costs can be much higher. The transformation of the USSR from socialist to market economy is a colloquial example. The institutions of a market economy are likely to be much less costly and more efficient, but the transformation from one to the other is costly and slow.
1.3 Understanding the transformation
Research libraries are experiencing rapid, simultaneous shifts in constraints, needs, and power balances. Institutions develop slowly in response to such powerful, durable social forces, and rapid adaptation to changing forces is unlikely. Thus, during any period of intense change, institutional adaptations may appear to be falling behind, and there will be many false steps. We can potentially lower the social cost of rapid—and thus, wrenching—institutional transformations by understanding the interactions between the stakeholders and the process of change in those interactions.
The interactions between human stakeholders in an institution are loosely-coupled interfaces in a complex social system. That is, a signal on one side of an interaction typically elicits a response from the other side, but the mapping between signal and response is imperfect: a given signal may elicit a range of different responses at different times and locations.
As an example of one such loosely-coupled interface common in the research library, consider the practice of interlibrary loans which is used to share access to collections. If a user at one library wished to read a print-on-paper document held in the collection of a different library, she could request that the distant library deliver the document for local use. Because the distant library owns the copy of the document in question and an unrestricted right to let users read that particular copy, the library can deliver the physical document without involving the publisher.
Sometimes, however, the distant library would prefer to deliver a facsimile of the document to the user, so as to retain its copy for its own users, or to reduce the risk of loss or damage. Typically, a publisher holds the copyright on the document, and thus the user-library interaction (the request for a facsimile) could invoke an interaction between library and publisher: "can we make a copy to deliver to the requesting user?" Because this interaction between library and publisher is likely to occur many times, libraries and publishers have reached pre-arranged agreements (claiming fair use exemptions or relying on agreed upon guidelines). Such agreements—the result of an interaction between at least two interested parties—specify the terms and conditions under which the library may create a facsimile and deliver it to the requesting user.
These are only two of the results that the originating signal—the user's interlibrary loan request—might invoke. The results might differ for the user in various ways; for example, if the original document is delivered, the user normally will be required to return it within a fixed period; if a facsimile is delivered, the user typically retains the copy. Another variation is that in some cases a requested facsimile might be created by the distant, owning library, whereas in other cases the requesting library might purchase a facsimile from a document delivery service (another interaction between two stakeholders); in such cases the conditions for the user (for example, whether the document must be returned or whether a fee is assessed) might be different. Thus, the interlibrary loan process is a loosely-coupled interface between two stakeholders (user and library): the request might or might not invoke further interactions between other stakeholders, and the response to the request might take on a variety of forms.
With the development of networks and digital collections the interlibrary loan process faces substantial pressure to change. In the print-on-paper world a loan might be delivered in several days to several weeks. In a networked digital world users put much higher priority on quick, even immediate delivery. Libraries are likely to find that the costs of digital reproduction and networked delivery are much lower than print-on-paper costs, and thus want to implement electronic delivery in response to the loan request. However, because electronic delivery typically requires the making of an electronic copy, this response is likely to invoke a new interaction between library and publisher: "can we make a digital copy and electronically deliver it to the requesting user?" The results of these ancillary interactions may be, and often have been, quite different than the request for permission to deliver print-on-paper facsimiles in response to interlibrary loan requests. The publisher may impose different terms and conditions, or may even refuse permission for electronic interlibrary loans.
What does this example suggest in terms of the interplay that ensues between stakeholders? As we noted, the library and publishers typically have to deal with many interlibrary loan requests, and thus have generally found it efficient to establish pre-arranged agreements that cover most such requests. This routine speeds the process and lowers the transaction costs. As research libraries increasingly rely on digital collections, pressure for electronic interlibrary loans will become frequent, and thus considerable time and transaction costs will be saved if libraries and publishers can work out new pre-arranged agreements to cover these situations. However, the changes in technological costs and capabilities, and the concomitant changes in the interests of the stakeholders, mean that agreements to cover print-on-paper interlibrary loans may not be satisfactory to all stakeholders, and a period of trial, error and negotiation may be necessary. The sooner participants understand the ways in which the constraints, costs and interests of stakeholders have changed, the sooner and better they can adapt the institution by agreeing on new standardized agreements covering electronic interlibrary loans.
The emergence of digital collections as an instance of institutional transformation guides us to look for particular types of problems that arise as the institution adapts to the information technology revolution. We have selected the contributions to this volume to focus on two questions we think will be central.
The first is who will pay to create and sustain digital materials? The information technology revolution has made large-scale digital collections technically feasible, and many of the stakeholders have increasingly demanded digital collections. The creation of materials to include in such collections is a necessary first step, and despite the reduction in the costs of some key inputs, the digital production process is costly. Therefore, who will pay? Various stakeholder interactions in a print-on-paper research library world involve financial transfers to pay for creation services. For example, some authors pay page charges to print publishers, and libraries pay to purchase printed books and to subscribe to printed journals. Among the stakeholders (authors, publishers, libraries, readers, and perhaps others), who will pay for digital material production? The constraints and needs (and perhaps power relationships) have been changed by information technology, and thus we should expect that the financial interactions between stakeholders will also change as the institution adapts. Perhaps we will see more author payments (recommended by some open access journals), or more charitable foundation support for digital publishing (JSTOR was started by the Andrew W. Mellon Foundation; the Public Library of Science has initiated production with a grant from the Gordon and Betty Moore Foundation). Perhaps funding will continue to flow primarily from libraries and individual readers, but the structure of payments is likely to change because of the differences in functionality between electronic and paper publications.
The model of institutional transformation leads us to a second question: How will readers use digital collections? Will users go to physical libraries and interact face-to-face with librarians, or communicate electronically and access documents from their desktops or wireless PDAs? How will user mobility affect the roles of libraries? Will usage increase for stakeholders who had less convenient access to print documents (e.g., students and faculty at smaller colleges, or scientists in developing countries)? Will users do more browsing using electronic search tools and less full-document reading? How will the relative usage of a document's several information features change? For example, when it is easier to find and search documents, will there be more demand for specific elements, such as the data tables or bibliography, and less for the text?
We organized the remaining chapters around these two fundamental questions. In the first section we present several chapters on a major field research project that simultaneously addressed collection building, publisher pricing models, library collection decisions, and usage: the PEAK (Pricing Electronic Access to Knowledge) project. It was our work on this project at the University of Michigan that led us to invite other authors to join us to create a volume that encompasses publishing economics and usage during this era of the digital transformation of libraries. The two organizing questions above were also the framing context for PEAK: Who will pay for digital materials? How will they be used?
In the second section the authors address digital publishing. They focus on publishing costs and the distribution of those costs to various stakeholders in the institution. In the third section we collect several essays on experiences in building and using digital collections. The authors emphasize user needs and the effect that digital collection usage has on building and maintaining the collections. Many of these chapters report on a specific project at a particular time, but they all shed light on the dynamics of stakeholder interactions and the role of these interactions in shaping the transformation of the encompassing institutions.
There are several lessons that are driven home by their common emergence in the chapters of this book. Regarding payment for materials, a variety of economic interactions exist in the social institution of research libraries. In the past century, most of the flow of resources has been to publishers from users (individuals and libraries) through subscriptions or society membership fees. The studies in this book demonstrate that a variety of alternative mechanisms are feasible in theory and in practice, and that there are reasons to expect some transformation of these economic interactions in response to the digital revolution. The PEAK project focused on interactions between users and publishers, but experimentally tested on-demand document delivery and found that a small but non-trivial number of scholars were willing to purchase immediate access to articles using a credit card. PEAK also tested a novel, generalized subscription scheme that is only feasible in a digital, networked collection. Other chapters consider quite different configurations of the institution, including proposals and projects based on the open paradigm, and models in which author fees to publishers primarily finance the publication functions.
Regarding the ways in which digital collections are used, several chapters show that readers want and will use older scholarly material, not just new publications. Several successful projects have focused on creating digital collections of archival material. In the case of unique collections, accessibility has greatly increased because users no longer need to physically travel to the collection. Perhaps more surprising has been the dramatic levels of usage for older scholarly publications made available by JSTOR. These publications to a large extent are available in print in the users' local research libraries. When made available over the network and digitally searchable, however, usage far exceeds all estimates of usage for the print-on-paper collections of scholarly journal back issues.
We also have three chapters that report on user and librarian experiences in traditional university and corporate libraries that made early investments in large-scale digital collection projects. One of the most striking findings is that the interactions between librarian and user are changing; users need different types of services from information professionals, in many cases delivered through different types of interactions. Thus, the human production systems embedded in the institution of research libraries must adapt to the technological changes, just as the collections themselves—and the economic models that support them—must adapt.
We are still in the early stages of the digital transformation of libraries, and more broadly, the social institutions of information creation, distribution, and retrieval. In this book we present the reflections and findings of leading scholars and practitioners who have been in the front lines of the transformation. We think the evidence is compelling that successful adaptation to the forces of change require an understanding of stakeholder interactions as the many participants in the institution negotiate and navigate the details of the transformation.
1. Kyrillidou and Young (2003) report an average annual increase of 7.7% since 1986, well ahead of general inflation.
3. After the British burned Washington and the original Library of Congress during the War of 1812, the new Library of Congress collection was established when Thomas Jefferson sold his magnificent collection of nearly 7000 books.
4. See Hedstrom and King (2003) for an historical discussion of the emergence of the related institutions of libraries, archives and museums.
6. The median price for all houses sold in the U.S. in 1970 was only $23,000. See U.S. Census Bureau (2000), Table 1201.
7. Recent examples include the durable digital depository (DSpace) initiative from MIT and the University of California's e-scholarship program. Of course, experimental initiatives rise and fall quickly, so the landscape will look considerably different within a few short years. One initiative that appears to have succeeded is JSTOR, described by Kevin Guthrie in a chapter of this book.
8. For a discussion of the influence of open models in prompting new roles for libraries see Lougee (2002).
10. See, e.g., Suber (2002).
11. The Economics Working Papers Archive was created by Bob Parks at the University of Washington, St. Louis, and can be found at http://econwpa.wustl.edu/. 2500 papers is a very small fraction of the working papers disseminated in Economics in the past 10 years. For example, the more recent and commercial albeit not-for-profit Economics Research Network now hosts over 36,000 full-text economics working papers.
12. In actual practice, interlibrary loans involve interactions among three parties: the individual requestor, originating library and lending (distant library). For this example in these three paragraphs we simplify, treating the loan as a direct transaction between the borrower and the distant library.
13. As an example, when a facsimile is made on paper, the quality is necessarily less than in the original document, and this degradation is compounded as copies are made of copies. This fact, among others, limits the extent to which the print-on-paper system could be abused to implement large-scale republishing of a document to avoid copyright payments to the publisher or author. Digital copying, on the other hand, generally maintains perfect fidelity. Thus, publishers are concerned that a digital copy delivered to a user at a different institution might be used to create multiple copies redistributed without associated compensation.
14. Of course, most of the payment to authors for the creation of their works has been through their employers: universities and the owners of government and private research labs. This bifurcation of payments, with one stream from users to publishers, and another stream from sponsors to creators, is a bit unusual, and certainly quite different than in commercial or popular publishing. However, albeit fascinating, in this book we have not addressed the economic interactions between information creators and their sponsors.