economics

This page highlights research about particular aspects of the economics of electronic publishing.

     overviews

For the big picture start with Information Rules: A Strategic Guide to the Network Economy (Boston: Harvard Business School Press 1999) by Carl Shapiro & Hal Varian. 

The Future of the Electronic Marketplace edited by Derek Leebaert (Cambridge: MIT Press 1998) edited by Derek Leebaert and The Entertainment Economy (New York: Times 2000) by Michael Wolf are both suggestive. Michael Wolff's BurnRate (London: Weidenfeld & Nicolson 1999) is an entertaining memoir of trying to make it big in US online journal publishing, a challenge that no one as yet seems to have mastered. 

Studies by Hal Varian and Andrew Odlyzko - particularly the latter's First Monday article on The Economics of Electronic Journals and Varian's cogent 1996 paper Pricing Electronic Journals - are essential reading. Odlyzko's papers on electronic commerce and publishing, including rigorous studies of pay-per-use versus subscription models in competitive pricing of information goods, are available on the Web. 

Erik Brynjolfsson's 2000 paper Bundling & Competition on the Internet: Aggregation Strategies for Information Goods (PDF) and 1999 paper with Yanos Bakos on Bundling Information Goods: Pricing, Profits & Efficiency (PDF) are both recommended.

For a succinct introduction to business aspects we recommend John December's paper on The Myths & Realities of World Wide Web Publishing, from Computer-mediated Communication 1997. A wider view appears in Economic models for the digital library (PDF), the October 1999 report by Leah Halliday & Charles Oppenheim for the UK Online Library Network. 

Oppenheim had earlier collaborated with Mark Bide on Charging mechanisms for digitised texts, a 1997 report for the UK Joint Information Systems Committee and the Publishers Association.

     pricing and economics

In the near future we'll be providing detailed pointers to key research into the economics of electronic publications.

In the interim we recommend the concise 1998 article The Cost of Publishing an Electronic Journal: A General Model and a Case Study by Marjolein Bot, Johan Burgemeester & Hans Roes and Bot & Burgemeester's more detailed Costing Model For Publishing An Electronic Journal report (PDF). 

Malcolm Getz's 1996 paper An Economic Perspective on E-Publishing in Academia and the report of the Pricing Electronic Access to Knowledge (PEAK) project are also essential reading. The June 1999 issue of D-Lib Magazine included an overview of PEAK, which was sponsored by the University of Michigan Library and the Program for Research on the Information Economy. 

Among conference papers and articles of potential interest are:

Donald King's Economic cost model of scientific scholarly journal publishing (Model) 

John Scott's (Perils) The Perils of Oversimplification: What are the Real Costs of Online Journals?

The Hidden Costs of Electronic Publishing by Owen Hanson & Robert O'Shea (Costs)

Gary VandenBos' Economic aspects of an all-electronic journal (Economic) 

Susan Knapp's Economic aspects of mounting a full-text database vs. Selling electronic subscriptions (Mounting) 

Andrew Odlyszko's comments on economic models

For studies of whether going online does produce real savings, without fundamental degradation of content and usability, rather than merely shifting costs, refer to the JEP papers by Colin Day, Scott Bennett, and Marlie Wasserman. 

The preceding page of this guide noted the furious debate about the viability or inevitability of professional journals going online. Thomas Walker argued for example that 

The total cost of traditional distribution of one year’s issues of an average journal surely exceeds $200,000, yet the total cost of putting and keeping one year’s PDF files on a research library’s Web server for 30 years is less than $1,000 .... Web distribution of journal articles costs less than one-half of 1% as much as traditional distribution!

Jeffrey MacKie-Mason & Juan Riveros's 1997 paper Economics & Electronic Access to Scholarly Information was somewhat more temperate. Mark MCabe's report The impact of publisher mergers on journal prices underpins some of the articles above. A publisher's response was provided in the article by Albert Prior on The vendor's view of E-journal services.

In one of the more provocative articles Peter Krasilovsky, in Grateful Dead mode, argued Forget Fast Revenue Streams: Use Your Web Presence to Build Your Franchise - the web as a marketing mechanism rather than revenue generator.

Publisher Jason Epstein, in his latest jeremiad about the death of the industry majors, gloats that

Whoever prevails in tomorrow's digital marketplace, today's baffled and lumbering conglomerates in their current configuration face certain extinction. In the case of a traditionally published book the publisher pays the author an advance against royalties, provides editorial, production, design, and publicity services, orders an edition from a printer, solicits orders in turn from wholesalers and retailers, arranges for promotion and advertising, attempts to sell whatever subsidiary rights are not retained by the author, and takes back unsold copies for full credit. …. 

In the case of books published electronically, however, the share of value and the publisher's risk attributed to many of these functions is eliminated. The publisher's contributed value to a digitized publication will then consist of a royalty advance, editorial and publicity services, and the cost of marketing a digitized and encrypted text from a website linked to other websites of related interest. Since there will be no retail markup and, in the case of books downloaded to be read electronically, no printed copy, the cost to consumers will be much less than for books published conventionally and the share of revenues allocated to the author will be much greater, reflecting the author's proportionately greater share of contributed value, a reapportionment of revenues enforced by competition among websites for authors and customers.

There's more of the same in his Book Business: Publishing Past Present & Future (New York: Norton 00).

     new age publishing - the edition of one? 

In 2002 we will be releasing a report on Australian and overseas electronic publishing experiments - usually authors provide text to the publisher, who then pours that content into a template and releases it over the Web.  Have your credit card details handy and you can receive the latest opus via an email (usually as a PDF) or your browser for display on your desktop machine, on a handheld device such as a PalmPilot or as a printout.  Start-ups such as Fatbrain, Dissertation.Com , E-Rights and I-Universe (and downmarket copycats such as 1stBooks) may revolutionise specialist publishing or merely serve as the digital version of the vanity press.  

Much has been made in some circles of the "runaway success" of isolated high-profile experiments such as online publication of a Stephen King novel.  For us, the jury is still out, although we are sceptical about the viability of the business model and the technological solutions apart from a few niche markets.  Two examples may illustrate some of our concerns.

Bookface, an Amazon.com affiliate, is essentially a promotional site offering 'free' access to selected texts (no best-sellers, much ephemera and public-domain work), which are displayed online.  The site is funded by advertising and support from retailers and publishers.  While it's proponents claim that the experience will get people "hooked on books", that's field of dreams territory, akin to past trials involving distribution of books with breakfast cereal or popular magazines.  Those getting paid for the distribution are happy but there's no indication that the premises are correct and outcomes achievable.

For those worried about divulging their credit card info online, US-Dutch startup NetPack plans to use bookshops to sell charge cards that when swiped through a special reader at home or the office - yes, you'll have to buy a special keyboard, probably one specific to NetPack! - will allow you to download someone's deathless prose.  Our confidence in the proposal wasn't heightened when twenty out of twenty attempts to access the site resulted in our browsers (four browsers on three machines) falling over.

     next page  (studies)