Journals Performance Review

1. Journals Performance Review Publications Committee Meeting 6 January 2010

2. Points of Review • Revenue • Key Indicator Update • Financials • Expense • Key Indicator Update • Direct and Indirect Expenses • Net Margin • Looking Forward

3. Key Indicators: Institutional Subscribers • Institutional subscribers experienced a 5% decrease in FY09. * Data based on September results.

4. Subscription Rates: Institutions • Since FY07, subscription rates have increased 5-6% each year. • FY10 Rates: • AIAAJ: $1,640 JA: $900 JGCD: $915 JPP: $990 • JSR: $850 JTHT: $720 JACIC: $380

5. Institutional Subscriber Mix by Revenue Source • Since FY08, the majority of Institutional subscriber revenue has been generated from customers that prefer some or all content delivered in an online format.

6. Key Indicators: Member Subscriptions • After declining the last two years, the number of member subscriptions increased slightly in FY09.

7. Subscription Rates: Members • Subscription rates for members remained at the same levels in FY10.

8. Key Indicators: Geographic Breakdown • In FY09, domestic subscribers accounted for 65% of total subscriptions. • The percentage of non U.S. subscribers has gradually increased over the past five years. * Data includes Member and Institutional Subscribers

9. Revenue Trends • Although Journal revenue declined 3% in FY09, Journals revenue has grown 11% since FY05. • All products experienced a slight decrease in revenue, with the exception of the Journal of Propulsion and Power, which remained flat.

10. Revenue by Source • Institutions generated 82% of all Journals revenue. • “Other” sales include online transactional sales of Journal articles and reprint sales.

11. Key Indicators: Manuscripts Accepted • The overall number of manuscripts accepted declined 4% in FY09. • While domestic manuscripts accepted remained flat in FY09, the number of non U.S. manuscripts accepted declined by 7% in FY09.

12. Key Indicators: Pages Published • In FY09, the total pages published for Journals increased 2%. • All Journals remained flat or experienced an increase, with the exception of the AIAA Journal, which experienced a 7% decline in number of pages published. .

13. Direct Expenses • Direct expenses include costs for paper, printing, outside production, postage, honoraria, and color printing offset. • After experiencing two years of shrinking expenses due to lower production costs and higher collections for color printing, direct costs increased 6%, or $54K, in FY09. • Increases in expenses in FY09 were due primarily to an increase in Honoraria ($27K), paper ($14K) and print production ($13K).

14. Direct Expense Breakdown • Although printing costs run about 18% of total costs, they are offset by color printing collections. • “Other” costs include committee expenses, consulting fees, office supplies, software, travel, and temporary staff support (designers).

15. Direct Operating Margin • Direct Operating Margin = Revenue less Direct Expenses • Journals direct margin declined 6% in FY09 due to slight revenue decrease and an increase in direct expenses.

16. Indirect Expenses Breakdown • Indirect expenses include salaries, benefits, general and administrative costs and shared services allocations. • The comparison of indirect expenses is not consistent year to year due to modifications in financial reporting practices to allocate all indirect costs to all projects. • Publications Process is an expense account that falls under VP Publications and is then allocated to Books and Journals. • In FY09, Publications Process consisted of $31K in direct costs that covered staff travel ($13K), committee expenses ($15K) and miscellaneous expenses like postage, society dues, and professional subscriptions. The remaining expenses included Labor & Benefits ($358K), and allocations ($462K).

17. Putting It All Together…Net Margin • Journals net margin has declined primarily due to a change in allocation methodology and an increase in indirect costs such as medical and fringe benefits, although direct margin did decline in FY09.

18. Looking Forward • Continue to incentivize institutional customers to subscribe to the “complete” collection without requiring a bundled purchase. • Explore flexible subscription options for non-traditional or developing markets • Concerted focus on international library consortia • Continue emphasize archives • Monitor the print-online tipping point and timing • Appropriate expense discipline • Proactively plan for public/open access models for federally funded research content