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    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.