The shifts to online and OA continue apace, but neither is causing a sea change in pricing

The shift to digital delivery of serials content has had a profound effect on the information ecosystem. Powerful discovery and social networking tools expose users to an incredibly rich world of commercially produced and open access (OA) content. Most publishers have explored new ways of pricing their content—such as population served, FTE (full-time equivalent), tiered pricing based upon Carnegie classification, or other defining criteria—or the database model, which treats all content within an e-journal package as a database, eliminating the need for title by title reconciliation. However, in the end, the pricing conversation always seems to circle back to the revenue generated by the annual subscription model.

Economic Context

The U.S. economy continued to expand but at a slower pace in 2016. According to the U.S. Bureau of Economic Analysis, the U.S. gross domestic product (GDP) increased 1.6% in 2016 after a 2.6% increase in 2015. State expenditures also reflect this trend. Public sector spending has grown consistently since 2008, yet the growth is not yet sufficient to return to prerecession levels when adjusted for inflation. The rate of state spending growth also slowed in 2016. According to the National Association of State Budget Officers (NASBO), overall state spending has increased from $687 billion in 2008 to $786 billion in 2016. Using the Consumer Price Index (CPI) to calculate inflation, 2016 expenditures fall short of the $794 billion that would be needed just to keep up.

State general fund spending based on enacted budgets is expected to top $809 billion in 2017, but again that will be shy of what would be needed to match 2008 spending when adjusted for inflation. According to the NASBO 2016 Fiscal Survey report, “General fund revenue growth slowed in fiscal 2016, increasing only 1.8% (CPI was 2.5%), with 25 states ending the year with collections below budget forecast. Also, adjusting for inflation, 32 states spent less in FY16 than they did in FY08 before the Great Recession hit.” However, not every sector was equally impacted: K–12 education funding has seen solid growth, with a 5.2% increase in 2015 and a 3.6% increase in 2016. Expenditures in higher education have seen similar growth of around 5% for both 2015 and 2016.

As most libraries are publicly funded, state expenditures are a solid indicator of the economic environment experienced by libraries. Slow growth in public funding is reflected in budgets for higher education and libraries. A 2016 report from the Center on Budget and Policy Priorities noted that 46 states still spend less per student in higher education than was spent in 2007–08. The report also states, “Overall, funding for public two- and four-year colleges is almost $10 billion below its prerecession level, after adjusting for inflation.” Endowments in higher education are also not showing robust growth, so funding in private institutions is also impacted. The National Association of College and University Business Officers (NACUBO) reported that the return from endowments was -1.9% in 2016 after a modest increase of 2.4% in 2015.

TABLE 1: AVERAGE 2017 PRICE FOR SCIENTIFIC DISCIPLINES

TABLE 2: AVERAGE 2017 PRICE PER TITLE BY COUNTRY

TABLE 3: COST HISTORY FOR ONLINE TITLES IN CLARIVATE ANALYTICS (FORMERLY ISI) INDEXES

Surveying the Landscape

During October 2016, EBSCO reached out to more than 500 customer libraries in North America asking about total library budget, collections, and staffing. A corresponding survey reached ­EBSCO’s larger publisher partners during the same period. Library respondents reported that while 11% had a current budget increase of 5% or more, the majority, 64%, were working with budgets that were either flat or had increased less than 5% over the previous year; nearly 25% reported budget decreases. For the next fiscal year, the expectation was for more of the same, with 5% expecting an increase, 70% expecting their budgets to remain the same or increase less than 5%, and nearly 25% expecting their budgets to decrease.

As could be expected, approximately 75% of library respondents reported reducing the number of individual subscriptions, and more than half, 54%, reported renegotiating multi­year e-journal contracts. Of those who reduced individual subscriptions, nearly 27% moved individual subscriptions into e-journal packages, 26% reported that they offered pay per view or individual article access to the content, while 38.6% decided no longer to support resources in the impacted subject areas.

More than 80% of respondents to the publisher survey reported that their number of e-journal package orders remained approximately the same as the previous year. More than 75% said they believed that the Big Deal will likely be around in the next five years.

During fall 2016, the Association of Research Libraries (ARL) also conducted a survey of its member libraries. Some 13.6% of the 88 libraries that responded reported budget increases that surpassed what was needed to keep pace with inflation, an equal number reported budget increases sufficient to cover the full amount of inflation, nearly 40% reported an increase but at a level less than full inflation, approximately 24% reported a flat budget, and 9% reported a reduction in their collections budget.

These results also mirror those of the annual Publishers Communication Group (PCG) “Library Budget Predictions for 2016” white paper. Via a telephone survey, PCG interviewed senior librarians at 686 institutional libraries worldwide. Responses indicate that worldwide serials budgets are expected to increase by 1.4%; North America is expected to be essentially flat, with a 0.2% expected increase. In North American academic libraries, electronic format dominates, with 88% of orders being either e-only or print plus online combinations. In European academic libraries, the results are similar, with 75% of orders being either e-only or print plus online combos.

Periodical Prices for High School and Public Libraries

TABLE 6: COST HISTORY FOR TITLES INDEX IN MASTERFILE PREMIER

Periodical Prices for University and College Libraries

TABLE 7: 2018 COST PROJECTIONS FOR TITLES INDEXED IN ACADEMIC SEARCH COMPLETE

Methodology Matters

This price survey, with the exception of Table 3, uses a print-preferred pricing model based on the standard retail price for the titles in the selected indexes. Print pricing is used for consistency because not all publishers make their online-only pricing available or have a standard online only retail price. The index does contain pricing for print plus online and online only, but only if those were the sole rates offered. When all the data is reviewed, print-only pricing is now 49% of the data used in these tables. More journals are shifting to some form of online pricing, reflecting the overall decline in print.

This survey uses a combination of title sets to provide different views of the impact of inflation on libraries. Titles indexed in the Clarivate Analytics (formerly ISI) Arts and Humanities Index, Science Citation Abstracts, and Social Science Citation Index provide data that is useful for large academic libraries. We have presented the data from these indexes individually as well as in merged format, sorted by discipline and country of origin. Titles indexed in EBSCO’s Academic Search Complete database represent those most commonly held in general academic and public library collections. Starting last year, we switched from Academic Search Premier to Academic Search Complete as it is now the most commonly found product in its markets. Data from EBSCO’s Masterfile Premier is included to provide a data set germane to smaller public and school libraries.

Last year we were able to expand the study to include approximately 15,500 titles indexed by Scopus, creating our largest sample to date. Increasing the sample size makes the results more reliable and, like all other data sources used for this article, the increase in serials price documented in the Scopus Table was again 6% for 2017.

Average prices for science, technology, and medical (STM) serials (Table 1) remain the highest, compared with prices for serials in other subject areas. Chemistry has historically seen the highest average serials prices, and that has not changed. This year the average price for chemistry journals is $4,773 annually. There were only slight shifts in relative rankings for subject areas based on the overall average prices. As noted in the analysis of the charts, content from the five major publishers—Elsevier, Springer, Wiley, Taylor & Francis, and SAGE—continues to represent more than half (53%) of the titles in the merged Clarivate Analytics (formerly ISI) indexes.

There was little change in the relative order for the average price per title sorted by country of origin (Table 2), except that Russia dropped out of the chart. Many of the titles reported here are now priced based on custom quotes, so pricing was unavailable, and this changed the data for Russia. While the average price per title increased from previous years, titles from Ireland continue to have the highest cost per title for all foreign titles included in the merged Clarivate Analytics indexes. The Netherlands, Singapore, Switzerland, England, United States, Germany, Greece, China, and Australia round out the top ten countries with the highest cost per title in 2017.

Table 3 examines the titles in the combined Clarivate Analytics Arts and Humanities, Science Citation, and Social Sciences Citation indexes that offer published rates for online formats. This table now has 54% of the titles in the full Clarivate-based tables. As in past years, the data reflects online only, print plus free online, and the first tier of any tiered pricing, with the common element being pricing for the online format. As in Table 1, STM titles are the most expensive, with chemistry titles having the highest average cost. The 2017 average cost for this set of titles is $1,385. While this increase over last year’s average price of $1,314 may seem modest at 5%, the individual titles in the data set and associated pricing models reflected by Table 3 change each year, so price increases can be owing to changes of which titles are included in the data as well as actual price changes of particular journals. What does remain consistent is the annual increase falling in the 5%–6% range and the relative high cost of titles by subject areas, with science and technology at the top of the chart.

As noted in this article and its predecessors, the significant portion of library budgets now dedicated to the purchase of e-journal packages must be considered. Since e-journal package prices are often based on custom publisher quotes, we analyzed the 2017 price increases of more than 6,300 e-journal packages handled by EBSCO and found that the average inflationary increase for 2017 was in the 4.5%–4.9% range. Reflecting the percentage of library orders dedicated to electronic format, approximately 78% of the 2017 orders placed by EBSCO on behalf of academic libraries were for either e-only or print plus online combinations.

TABLE 8: TITLES INDEXED IN SCOPUS COST HISTORY BY LIBRARY OF CONGRESS SUBJECT

Not a Game Changer

There were interesting developments in OA during 2016, but OA is not yet the disruptive force on commercial publishing that many had hoped it would be. The growth in the gold OA model (in which the author pays to have an article published as OA) has allowed commercial publishers to become large producers of OA content. The largest OA publisher remains Springer’s BioMed Central, with stiff competition from Elsevier and Wiley. Publishers have embraced OA as another means of generating revenue and have been successful.

OA remains a hot topic in scholarly communications. There continue to be numerous studies and initiatives and much discussion but not much consensus. In 2016, OA 2020 emerged as an international initiative to work toward the transformation of the business model for scholarly journals from subscription to OA publishing. Many international organizations signed on, but there has been little uptake in the United States. The “Pay It Forward” study, a project spearheaded by the University of California (UC)–Davis and the California Digital Library, in collaboration with the ten UC libraries, Harvard, Ohio State, and the University of British Columbia, analyzed the economics of “flipping” the market from one based on subscriptions to one supporting OA based on article processing charges (APC). The study, published in July 2016, concluded that for the large research universities in North America, the total cost to publish in a fully APC-funded journal market exceeded current library journal budgets, so the cost difference would need to be covered by other sources, such as grants.

There were other negative reactions to the OA model based on flipping from subscriptions to APCs. David Shulenburger, Senior Fellow, Association of Public and Land Grant Universities, produced a white paper distributed through ARL that concluded that the APC-based model was more expensive than the current subscription-based model, calling the “cure worse than the disease.”

TABLE 9: TITLES IN CLARIVATE ANALYTICS (FORMERLY ISI) INDEXES COST HISTORY BY LIBRARY OF CONGRESS SUBJECT

TABLE 10: 2018 COST PROJECTIONS BY BROAD SUBJECT

The 2018 Forecast

The 2018 serials marketplace will continue to see steady price increases, with no indicators that this will change. Drivers in the marketplace, such as budget compression, currency fluctuation, OA, government mandates, shifts in the global political climate, new assessment and evaluation tools, and alternating patterns of the distribution of information offered by research platforms and social networks have not changed the fundamentals of the business models, and serials price inflation remains constant. Publisher and vendor consolidation will continue, and libraries will actively manage their portfolios to get the biggest return for their dollars. Annual price inflation has hovered in the 6% range since 2012. As in previous years, the 6% average price increase seen in 2017 is expected to be much the same for 2018. The mature market seems to have found the 5%–6% equilibrium a rate of increase that neither libraries nor publishers like but with which both can work.

Stephen Bosch is Materials Budget, Procurement, and Licensing Librarian, University of Arizona Library, Tucson, and Kittie Henderson is Vice President and Chief Librarian, Subscription Division, EBSCO Information Services, Birmingham, AL