Publishers’ panel - Rocky Mountain SLA - November 21st 2002

1. Publishers’ panel - Rocky Mountain SLA - November 21st 2002 Miriam Gilbert Liz Haigh Rolf Janke Mary Waltham

2. Why do publications cost so much? • Where does the money go? • Where does the money come from? • What are the challenges? www.MaryWaltham.com

3. “The doors of wisdom are never shut” Ben Franklin www.MaryWaltham.com

4. Costs - some typical cost ratios

5. Costs - fixed and variable • Fixed costs - • Content creation ~ editorial office costs, reviewing ($160 /article), editing ($320/article), SGML, HTML,XML etc • Publishing support ~ marketing (3-5% of revenues), ad sales, finance and administration • Variable costs- • Manufacturing • Distribution - print and online • Order fulfillment - print and online www.MaryWaltham.com

6. First copy and other fixed costs • Content creation costs incurred whether product is print or online or both • Publishing support costs incurred whether product is print or online or both • “New” additional costs are incurred as/when print and online become distinct www.MaryWaltham.com

7. Does publisher size matter?(Source:ALPSP Benchmarking study Sept. 2002 First copy cost in ₤’s )

8. Additional costs of online publication • Copy-editing ~ additional 5%/article • “Typesetting” ~ additional 10-20%/article • Subscription management ~ additional 10-15%/article • Online hosting - varies widely ~$25 -$96+/article/year www.MaryWaltham.com

9. Other significant cost lines • Archiving ~ digitization of content from paper archives • $84.46/article (Classic articles in Neurosurgery) • $0.27 cents/page for 2.3 million pages (Making of America IV) • Typically in the $10/article range • Reference linking ~ 0.25 cents per reference say $6.00 per article in the backfile www.MaryWaltham.com

10. “Out of intense complexities intense simplicities emerge” Winston Churchill www.MaryWaltham.com

11. Where does the money come from? • Business models • Print only - almost extinct! • Print and online • Online only • Aggregations • “Free” www.MaryWaltham.com

12. Where does the money come from? • Currently three major online revenue lines ~ the price of each has an impact on the others • Individual articles • Personal/member subscriptions • Site licenses and institutional subscriptions www.MaryWaltham.com

13. Where does the money come from? • Additional revenue • Author fees/charges • Licensing/rights • Reprints • Advertising • e-commerce www.MaryWaltham.com

14. Not all publishers are created equal • Commercial publishers ~ whether public or private (in general) must do more than ‘break even’ - shareholder pressure • Not-for-profit publishers~ same as above, publications often fund significant other society activities - member pressure or other scholarly publications for University presses • Note: Tax base quite different www.MaryWaltham.com

15. Not all publishers are created equal • In general commercial publishers launch more new products than not-for-profits, examples include product “twigging” and also new product lines • New product launches ~ in general do not expect to break-even for five years sometimes seven to ten e.g.a major reference work • Investment pay-back ~ 8 + years www.MaryWaltham.com

16. Not all publishers are created equal • Most publishers aim to do for their customers what they cannot do for them selves • Peer review • Quality control • Efficient, effective and timely distribution • Aggregation of online information thus common online interfaces • Create and build new online products ~ opportunities to support users are vast www.MaryWaltham.com

17. Mergers and acquisitions • Scholarly publishing market considered a ‘target buy’ • Note: Kluwer Academic Publishers sold for Euro 600 million which is 4 times annual sales, and an estimated 13 times operating profits • More to come …what will be the outcome for the library market? www.MaryWaltham.com