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Project MUSE's New Pricing Model: A Case Study in Collaboration
Project MUSE’s New Pricing Model: A Case Study in Collaboration Melanie B. Schaffner, Judy Luther, and October Ivins
Project MUSER, an online collection of scholarly journals in the humanities, social sciences, and the arts, undertook an extensive revision of its pricing and subscription model in 2003, the first since the project’s inception in 1995. A collaborative effort of MUSE staff, industry consultants, participating libraries, and publishers produced a new pricing scheme for 2005 based on two factors: peer institutions grouped by Carnegie Class and then divided into quadrants based on their usage. This article discusses the background and implementation of the new business model and next steps. Serials Review 2005; 31:192–199. D 2005 Elsevier Inc. All rights reserved. Johns Hopkins explored options for producing electronic versions of the forty journals then in JHUP’s program. Grant funding to pursue prototypes was secured from the Carnegie-Mellon Foundation and National Endowment for the Humanities in 1995, and a MUSE pilot project ensued with eight journals published online in full text. Several libraries, including members of the Oberlin Group of Liberal Arts College Libraries and the Virtual Library of Virginia (VIVA) consortiums, served as beta testers for the electronic journals, providing feedback on presentation and searching capabilities. By the end of 1996, all of the JHUP journals had been produced online and a pilot offer of subscriptions to the MUSE bcollectionQ was offered to libraries beginning in January 1997. Interest from consortia was strong, and again, some of the charter subscribers contributed ideas on the development of a consortium volume discount model to encourage group purchases. By the time Project MUSE’s grant funding expired in 1998, the project was self-supporting. Libraries had shown enthusiastic support for the journal collection, and the subscriber base had already exceeded initial projections, in no small part because of several significant consortium licenses. The collection had garnered interest and subscriptions from libraries outside of the traditional market for the JHUP print journals, including community colleges and high schools, necessitating the development of discounted pricing for certain categories of libraries. By 1999, several other major American university presses with large journals programs approached MUSE to discuss collaborating in a way to bring their journals online through the same interface. Extensive discussions
Introduction Project MUSER, an online collection of scholarly journals in the humanities, social sciences, and the arts, undertook an extensive revision of its pricing and subscription model in 2003, the first such revision since the project’s inception in 1995. A collaborative effort involved MUSE staff, industry consultants, library customers, and participating publishers. The pricing study and remodeling examined a variety of internal and external pressures for change, with the goal of producing a stable, sustainable solution which meets the needs of all constituencies. Extensive communication and modeling resulted in the development of a new pricing scheme that addressed issues raised by libraries and publishers. Subsequent implementation of the model has borne out some of the conclusions made from the pricing study, while raising new questions as the dynamic world of electronic scholarly journal publishing continues to evolve.
A Historical Perspective Beginning in 1993, The Johns Hopkins University Press (JHUP) and the Milton S. Eisenhower Library (MSEL) at Schaffner is Marketing and Sales Manager, Project MUSE/The Johns Hopkins University Press, Baltimore, MD 21218, USA; e-mail: [email protected]. Luther is President, Informed Strategies, Ardmore, PA 19003, USA; e-mail: [email protected]. Ivins is Consultant, Digital Content and Access Solutions, Sharon, MA 02067-1360, USA; e-mail: october.ivins@ mindspring.com. 0098-7913/$–see front matter D 2005 Elsevier Inc. All rights reserved. doi:10.1016/j.serrev.2005.06.005
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regarding a model for cooperation, content licensing, and a royalty payment scheme followed. In 2000, MUSE introduced journals from eleven other presses to the collection. In each subsequent year more journals have joined the collection, all from not-for-profit publishers, including additional university presses and several scholarly societies. With the additional content, MUSE began offering libraries a choice of several smaller subscription packages along with the option of subscribing to the entire collection. Libraries were also able to choose subscriptions on a journal-by-journal basis. By 2004, the MUSE collection covered well over 200 full-text titles from more than forty publishers. There were more than 1000 subscribing libraries worldwide, with over 20 percent of customers located outside the United States. Eighty-five percent of libraries subscribed to the full collection of all journals offered, up from 72 percent in 2000, when content from other publishers was first introduced. Only 10 percent of subscribers still chose the original JHUP journals package. Project MUSE’s annual subscription renewal rate was consistently 95 percent or better in every year since its launch.
technical development to support evolving expectations of libraries regarding online journals, such as OpenURL compatibility, industry-standard usage statistics, participation in initiatives like CrossRef, new search options and integration of search results with bibliographic utilities, and long-term archiving of digital files. MUSE’s participating publishers set the print prices for their journals. Through 2004, the MUSE list price for its journal collections was generally the total of the current print prices for the journals in each package, discounted by 10 percent. Category discounts on list rates were offered to community colleges, special libraries, public libraries, secondary schools, and very small academic libraries (very small defined as FTE less than 2000). The Consortium Volume Discount Plan effective from 1996 to 2004 was based upon the number of participating institutions in the consortium, with scaled discounts from 10 percent for groups of five to nineteen libraries on up to 50 percent for groups of sixty or more institutions. Volume discounts were compounded with any applicable category discounts to determine the net fee per institution. All surplus income from subscriptions is returned to the participating publishers in the form of royalties. From 2000 through 2004, these royalties were calculated on a combination of the title’s proportion of the sale price and its online usage.
The Business of MUSE Background on the Project MUSE business model is also useful in understanding MUSE’s expenses, operational strengths, and potential limitations. MUSE is managed by JHUP, in collaboration with its publisher partners, and MSEL. An Advisory Board, an outgrowth of the original Governing Board established during the grantfunded period, includes members of the MUSE and JHUP management staff, representatives from participating publishers, and senior library staff from both MSEL and the Welch Medical Library at Johns Hopkins. The MUSE staff has just over twenty individuals in 2005, most in technical and production roles, along with a project director, a business manager (previously shared with JHUP journals, but dedicated solely to MUSE as of this year), two marketing/sales professionals, and one full-time customer/technical service representative. Four professional librarian positions on the staff have responsibilities for authorities/metadata, usability, and outreach activities. MUSE shares a subscription fulfillment and access control computer system with the JHUP Journals department, with MUSE business representing only a small fraction of the subscriptions processed by the system. MUSE staff take in files from the sixty participating publishers in a variety of formats and do all the work necessary to prepare articles to appear on the MUSE platform in both HTML and PDF formats, at no cost to the publisher. Library of Congress subject headings are supplied for each article, SGML metadata headers are created, material is indexed in the MUSE search engine, and metadata supplied to MUSE’s many linking partners, with all costs absorbed by MUSE. MUSE staff market and sell the journal collections to libraries, provide training and outreach materials, supply library usage statistics, and provide all necessary customer service and technical support. MUSE also funds all new
The Need for Change MUSE’s subscription figures and renewal rates as of 2004 indicated a product that had been well received and consistently supported by the library market throughout its growth from grant-funded initiative to successful, self-supporting product. It provided an online platform for a wealth of high-quality journals in humanities and social sciences with a very library friendly licensing model. So, why the need for an arguably dramatic change in its pricing and subscription model? In a nutshell, because the entire industry has changed—growth in electronic publishing, the needs of users and providers. Pricing must follow suit. By September 2003, Project MUSE was hearing concerns from libraries and publishers regarding the sustainability of the current model. Libraries expressed concern about MUSE price increases, resulting from growth and the inclusion of additional journals. Of particular concern was that, as the number of MUSE’s titles expanded, the price of the full MUSE collection was growing beyond the budget of liberal arts colleges and smaller university libraries, a core part of MUSE’s subscriber base. Additionally, many libraries with an interest in Project MUSE journals were unable to participate under the original pricing model. MUSE did not offer enough choices and options to help different kinds and sizes of libraries find a collection that suited both their needs and their budgets. From a publisher perspective, sustainable revenue and competition from commercial organizations for good journals drove questions about MUSE’s existing model. MUSE’s attractive combination of category and con-
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sortium discounts worked during MUSE’s initial period of high growth and in a different economic climate, when the MUSE royalties represented incremental revenue for journals in the collection, and when consortia were less prevalent. By 2004, 90 percent of MUSE subscriptions came through consortium licenses, most at the 50 percent volume discount level due to consortium consolidation to achieve deeper discounts. Net fees for MUSE subscriptions averaged 53 percent off list price. This model resulted in distorted prices with large libraries that use MUSE extensively paying relatively low rates comparable to much smaller institutions. The base price of MUSE had never been set high enough to support these deep discounts or to reinvest in technology, but this effect was initially masked by rapid growth in new subscriptions. During this period of rapid growth, MUSE royalties represented new revenue for participating publishers in addition to their print subscriptions, offering welcome support for technological investments and moderating price increases. However, the constant and increasing pressure on library budgets has escalated the cancellation of print journals, especially when the electronic files are available from trusted vendors such as Project MUSE. As the price of MUSE has grown to accommodate the inclusion of new journals, libraries have often canceled print in order to afford the package and other attractive electronic packages that are more accessible to their users. By 2004, royalties paid to MUSE publishers represented a fraction of the revenue lost with print cancellations. This is an unsustainable model for publishers, given that this trend will continue as a growing number of libraries either prefer e-only or are prompted to cancel print. A case study of one major societysponsored journal in MUSE determined that the journal’s revenue per MUSE subscriber in 2002 was $21.68. By contrast, its revenue per institutional print subscriber was $96. For every institution that canceled the print because of the journal’s availability in MUSE, the society lost $74.32, or 77 percent. Print cancellations in 2003 were 6 percent on average, across all MUSE journals. For the journal profiled, a 6 percent rate results in a $13,020 loss of revenue. A 38 percent increase in royalties from MUSE would be needed to offset the loss of revenue, but the title experienced only a 22 percent increase in royalties in 2003 over 2002. In addition, participating publishers face aggressive competition from commercial publishers for the journals they do not own. MUSE publishers have already turned over some significant titles to for-profit publishers, and subsequent research has shown that titles leaving MUSE upon acquisition by a commercial publisher have experienced prices increases as high as 386 percent in the year immediately following the transition to the new press. University presses, which contribute the majority of journals to MUSE, operate under the same strained higher education budgets as university libraries. Some participating MUSE presses have recently lost the subsidies provided by their parent institutions, and most
are undercapitalized to begin with. Universities are looking closely at the long-term viability of maintaining a university press that is struggling financially—one MUSE participating press, the University of Idaho Press, was shut down in 2004. Some publishers that had titles in MUSE began to reconsider adding more of their highquality titles to the collection. It became clear that MUSE’s existing pricing structure did not provide the necessary revenue to offer satisfactory royalties for publishers to sustain their participation. Nor did it accommodate collection growth, as libraries found that the increases in the annual price to cover the titles added to MUSE stressed library budgets, or subscription growth, as a variety of interested libraries lacked affordable options for participation.
A Process for Change Realizing that the time had come to address the concerns of both libraries and publishers to ensure a sustainable future for the product, MUSE developed and distributed a request for proposal (RFP) in fall of 2003 to identify a pricing model that would balance the revenue needs of publishers with the budgetary needs of librarians, and that would meet organization objectives. The successful pricing model would need to: ! retain the existing base of subscribing libraries and current participating publishers; ! pay competitive royalties to new and existing publishers; ! attract high-quality content; ! enable expansion into other markets and additional disciplines; ! cover the direct and indirect costs of Project MUSE; and ! build a reserve fund for future technology to keep pace with the market needs. MUSE conducted a thorough bid process for pricing model researchers/consultants and awarded the contract in November 2003 to respected industry consultants October Ivins and Judy Luther. Ivins and Luther were selected because they are both librarians with experience in an academic setting and had also done extensive work with publishers on pricing and product development. Given that the results of the pricing study needed to satisfy concerns from both libraries and publishers, the consultants’ ability to see both perspectives was crucial to a successful proposal. A working group consisting of Ivins, Luther, JHUP’s Director of Electronic Publishing Aileen McHugh, MUSE Marketing and Sales Manager Melanie Schaffner, and then MUSE/JHUP Journals Business Manager Michael Hargrett was established to implement the pricing study and subsequent development of a new model for MUSE. From the start, the group agreed that both current and prospective customers, as well as MUSE publishers, must be consulted in the study because those who would be affected by the outcome should have a voice in the decision.
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Ivins and Luther began by holding informal discussions with current MUSE customers in November 2003 at the Charleston Conference. They also interviewed MUSE’s pricing committee (which includes several publishers with titles in the MUSE collection) and conducted an analysis of pricing models from other electronic journals products. Six pricing models in particular offered useful insights. JSTOR, BioOne, and HighWire are also nonprofit aggregators, collections, or hosts that offer electronic journals on a common platform, but print pricing remains with the original publishers. The American Institute of Physics (AIP), the American Physical Society (APS), and the National Academy of Sciences (NAS) are scientific society publishers who can control the pricing of both the print and electronic formats. In December 2003, Ivins and Luther conducted oneon-one interviews with current and potential MUSE customers at the Online Information Conference in London. Questions included why interviewees felt MUSE’s pricing needed to be adjusted and what might work for them. During the same time frame, Ivins and Luther conducted several in-depth phone interviews with consortia and libraries stateside. Focus groups were held in January 2004 at the American Library Association (ALA) Midwinter Meeting with two distinct groups: (1) collection development, acquisitions, electronic resources librarians—all of whom handle the purchasing of products; and (2) user services, bibliographic instruction, and reference librarians—all who work with the end users. Also at ALA, a public hearing on potential MUSE pricing models took place with some 100 attendees sharing opinions and feedback on the work Ivins and Luther had done to date. Ivins and Luther compiled the knowledge gleaned from the interviews, public hearing, and focus groups to create a Web survey. Invitations to participate in the survey were sent via e-mail to all current subscribers, and announcements were also posted to appropriate professional library listservs. The Web survey was conducted in February 2004 with nearly 250 completed surveys submitted. Among the ideas presented for comment in the survey, developed from the groundwork done in preceding months, were new pricing tiers, new packaging of MUSE into various core and subjectspecific collections, adjustments to the consortium discounting scheme, and matrixes combining one or more of these considerations.
study developed. In particular, responses indicated the following: ! Librarians want a program that is fair—one built on valid factors and one that offers sufficient flexibility to accommodate their differences. ! Librarians need time to accommodate price increases into their budgets, which are severely stretched in the current economic climate. ! Librarians need to understand the reasons for a significant price increase by a trusted vendor. If a new pricing model results in more limited access, the trust relationship is shaken and it leaves librarians feeling betrayed. Expanding Tiers Librarians indicated they are accustomed to tier pricing but want the tiers to reflect their diverse enrollments and budgets. ! The majority of librarians (83 percent in the Web survey) felt that new pricing tiers were a good approach for MUSE. ! Tiers within tiers were suggested to accommodate the wide range of differences in budgets, programs, and enrollments. The funding level for libraries does not necessarily match research levels at an institution. ! Community colleges have limited usage of MUSE, and their usage is different in nature and volume than that of an academic library. New Collections Although most libraries expressed a preference for subscribing to the full collection of MUSE journals, smaller to mid-size schools indicated a desire for an affordable, stable collection. Development of additional collections consisting of a subset of MUSE journals was discussed in several forums during the study. ! The concept of a bbasicQ collection was acceptable to more than half of those responding (58 percent in Web survey). Libraries indicated such a collection offers an alternative if they cannot afford or justify the cost of all of the titles in MUSE. ! Offering a basic collection to contain growth is preferable to the entire package being unaffordable. ! Over one third (36 percent in Web survey) would seek to maintain the full collection unless the library could not afford it. ! Libraries were not interested in smaller collections consisting of journals from a single publisher. ! Subject collections are attractive only if the full collection is not affordable. ! Collections that maintain MUSE’s unique interdisciplinary focus are of interest. ! Some libraries have weeded titles that are in MUSE based on the expectation that they would always be available. Hence there will be gaps in some library collections if the library has to subscribe to less than the full collection.
The Libraries Speak The interviews, focus groups, hearings, and survey conducted as part of the MUSE pricing study provided a wealth of information from which the working group was able to begin plans for a new model for MUSE. Responses were gathered on a variety of general and specific topics. Primary Concerns Librarians expressed support for MUSE and a need to understand how the situation precipitating the pricing
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! Some librarians expressed a sense of betrayal as they expected continued access long term to all titles in the collection and expressed concerns if they could not afford to continue access to the full MUSE collection.
activity at an institution and its relation to the institution’s mission. Carnegie Classification was also attractive because it provided a wider range of distinction among institutions than MUSE’s previous structure. It is externally derived, is non-proprietary/ widely available, and is updated regularly. The use of Carnegie Classification in the development of MUSE pricing tiers was supported by 83 percent of survey respondents in the study. An analysis of ARL (Association of Research Libraries) and ACRL (Association of College and Research Libraries) library collection budget data also indicated a strong correlation between Carnegie Classifications and library materials budgets. Project MUSE’s new model grouped the major Carnegie classes into five tiers:
Trend to Electronic Access Only Study results indicated thee is a growing trend to acquire electronic access without the print. ! 41 percent of institutions in the Web survey either had an e-preferred policy (21 percent) or are considering it (20 percent). While the majority (57 percent) did not have an e-preferred written policy, several commented that they are operating as if they do have such a policy. ! 50 percent of institutions will cancel print now (32 percent) or in the next five years (18 percent). ! Although consortia license MUSE collectively, cancellation decisions are typically made at the institutional level. (Some consortia coordinate cancellations to share retention of print.)
Tier 5 Doctoral Research—Extensive Tier 4 Doctoral Research—Intensive, Masters I Tier 3 Masters II, Baccalaureate—Liberal Arts Tier 2 Baccalaureate—General, Baccalaureate/ Associates
Additional feedback from the study indicated that libraries felt Project MUSE should raise prices enough to allow sufficient revenue to include technology enhancements. The MUSE Advisory Board received initial findings from the study in March 2004. During the annual meeting in April 2004, the working group shared recommended models with all the MUSE participating publishers, and a course of action resulted. The working group continued to model specific details of the chosen model through May to develop a scheme that would meet the initial goals of the project. The new Project MUSE pricing model, effective as of January 2005, was revealed at MUSE’s User Group meeting during the ALA Annual Conference in June 2004.
Tier 1 Associates Use of Quartiles to Create a Grid Market feedback also called for differentiation, or btiers within tiersQ and suggested as criteria the following: library spending per subject area, total materials budget, total FTE students, student/faculty FTE by subject area, and usage. The working group agreed that usage was the best and fairest way to further distinguish institutions within a tier. Project MUSE is COUNTER compliant (and was ICOLC1 compliant) and usage data are readily available. Usage also, in essence, represents all of the suggested criteria (except budgets, which the tiers address). Usage data can be easily generated to allow an bapples to applesQ comparison. The definition of busageQ adopted for the purposes of the MUSE price model is the number of full-text downloads per institution for a calendar-year subscription term. Usage within each tier is then divided into four quartiles. There is an acknowledged delay in applying usage to prices, and the quartiles will be recalculated annually. This means that usage can (and should) continue to increase, but relative usage is likely to remain stable. New customers will start in Quartile 1. Overall MUSE usage levels will likely be smaller than STM journal usage, reflecting differences in the nature of research. An unintended benefit to the incorporation of usage into the new model was that it allowed MUSE to discontinue another unpopular legacy feature of the original price scheme: separate charges for branch campuses of large university systems. The new model assumes that the branch campus/campuses usage is included with the main campus and will likely result in a higher usage quartile, eliminating the need for separate fees.
The New MUSE MUSE’s consultants analyzed results of the study activities, examined pricing models for electronic products, reviewed extensive data supplied by MUSE, and confirmed that an overall revenue increase of 25 percent, ideally spread over three years, was the target. The specifics of the new price scheme were based in part upon three-to-five year modeling of the impact of the new pricing. In essence, MUSE has replaced deep consortial discounts that were based on the number of participating institutions with a grid that defines pricing based on two factors: (1) peer institutions grouped by Carnegie Class, and then (2) peer institutions divided into quadrants based on usage. This approach offers scaled pricing based on value/usage rather than sheer volume. Tiers Based on Carnegie Classifications The new model expands the number of pricing tiers for academic institutions from two to five, based on Carnegie Classification. This criterion was chosen because it represents, in essence, the level of research
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Carnegie Classification scheme is not applicable outside the U.S. or to non-academic institutions, the new model was not implemented for these markets. New price schemes based on different criteria relevant to these communities are being introduced over time. While separate from the new pricing model, a concurrent revision of the publishers’ royalty scheme was also completed. The new royalty model compensates publishers based upon the depth of their content in MUSE and actual usage of the journals. Philosophically, MUSE believes that depth of content assists in selling initial subscriptions to the collection, while usage of the journals contributes to renewals and continued support of the product. Thus, the new royalty model rewards publishers for the contributions they make to the ongoing success of MUSE.
Project MUSE’s New Price Grids Once the criteria for a grid were established, many sets of price points were modeled to create a final version of the grid that provides different price levels for each tier and a reasonable range within quartiles (see Table 1). MUSE can now determine a list price for each collection and simply plug the list price in as the rate for Tier 5, Quartile 4, and prices for all other subscribers are calculated from the grid percentages. To gain a better understanding of whether the price ranges modeled for each tier would be affordable, a rough analysis of library materials budgets was conducted using data from ARL (2002) and ACRL (2001) which included high mean and median budgets. To determine whether MUSE customers corresponded to the ARL/ACRL data, a table was prepared using the budget size reported by survey respondents in the price study. This corresponded well with the ARL/ACRL data. Next, a table of mean and median usage for the five tier classification groups was generated. In this chart, the two lowest tiers each account for 1 percent of usage; Tier 3 for 12 percent, Tier 4 for 25 percent, and Tier 5 for 61 percent. This illustrates the larger resource commitment these tiers require and that the pricing model is a good match with their consumption. The small number of customers and low usage in the lower tiers was emphasized by this exercise. The existing model allowed deep discounts based on the volume of participating institutions in a consortium deal, which produced enormous price discrepancies among similar institutions. The new model replaces these discounts with a structure that bases pricing on variables reflecting the nature of the institution and amount of use they make of MUSE as a relative measure of value. This resulted in some institutions experiencing significant price increases under the new model. For customers with increases of 25 percent or more, MUSE offered a phase-in plan that divided the total amount of increase in thirds and charged the first third in 2005, the second third in 2006, and the full amount in 2007. MUSE also committed to cap price increases on the collections at 6 percent for the first three years of the new price model. The new model was designed for flexibility over the long term. Many libraries found that, under the new system, the tiered pricing offset any loss of a deep volume discount, so their net price for MUSE did not change significantly. Some libraries even paid less. Since the
Consortium and Print Discounts Two questions remaining in the new pricing model involved discounts for consortium subscriptions and discounts on print copies of MUSE journals for subscribing libraries. Consortia have always played an important role in disseminating knowledge of MUSE and encouraging participation among their members. They are also important to MUSE in consolidating and servicing orders. Under the new model, consortia are offered a discount that better matches the actual savings experienced by MUSE as a result of the work the consortia do in consolidating orders and payments. Almost half (48 percent) of the respondents in the Web survey felt this reduction in the consortium discount was fair even before seeing the proposed pricing structure with new discounts based on tiers. Prior to 2004, MUSE asked all participating publishers to extend a deep discount on print to any library that paid full list price for a MUSE collection. Print cancellations have affected MUSE publishers in different ways, depending upon title-specific factors such as the extent of previous print holdings and the number of individual subscribers to the journal. It became clear that a uniform policy is unworkable, especially as print cancellations increase due to library budget constraints. Under the new price model, each publisher will determine a print subscription policy that reflects the needs of their own journal(s) and is responsible for communicating their policy to libraries that are eligible. New Collection Options While MUSE hoped that most libraries would continue to support the full collection, the study also responded to customers asking for smaller collections. Two new collections were created after many criteria were considered.
Table 1. Project MUSE pricing grid (effective 2005), showing percentages for tiers and quartiles Quartiles Tiers 5 4 3 2 1
1
2
3
4
71.4 47.6 33.3 26.5 16.0
81.0 52.4 38.1 27.5 17.0
90.5 57.1 42.6 30.0 19.5
100.0 61.9 47.6 31.5 21.0
! The Basic Research Collection contains approximately 150 titles that are in the selective indexes for research journals, including ISI Journal Citation Report and Periodicals Contents Index. ! The Basic Undergraduate Collection contains approximately 100 titles that are in the selective indexes for
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journals oriented to undergraduates, including Magazines for Libraries and HW Wilson.
1–4 on the new price grid, indicating the libraries are a diverse mix of Associates, Baccalaureate, and Masters level institutions. This speaks to the effectiveness of the new model in addressing the pricing study goal of creating affordable new options suitable for smaller and mid-size libraries.
Other factors considered in selecting journals for these collections are inclusion in archival databases, usage, and wide holdings in libraries. Both of these collections also use tier/quartile pricing modeled above. As a result of feedback concerning lack of interest in purchasing collections of journals from a single press, the Publisher packages previously offered by MUSE were discontinued effective 2005. Subscribers to the only collection with any significant subscriber base, The Johns Hopkins University Press package, were encouraged to consider the Basic Undergraduate Collection. Since this package is double the size of the Hopkins package, these subscribers would experience a price increase to make the transition. About half of the JHUP package subscribers chose to upgrade to the Basic Undergraduate Collection in 2005. MUSE discounts the price of the full collection, so its price per title is lower than that of any other collection and allows the inclusion of titles that are not as widely subscribed. Titles not selected for the Basic Research or Basic Undergraduate Collections have the ability to improve their ratings and migrate to these collections. One issue raised by the introduction of new collections was concern from libraries that if they chose a different collection for 2005 than the one to which they previously subscribed, they would have permanent rights to any content for which they previously paid. MUSE’s license assures this ownership of content by subscribers, and libraries were informed about options for obtaining archives, including DVD-ROM, downloading, or LOCKSS (http://lockss.stanford.edu/).
An Unexpected Dilemma With the introduction of the new price model, MUSE began the process of disconnecting the electronic collection price from the individual print price for each journal. While it was expected that some new journal titles might be added in subsequent years, it was also expected that growth would be very controlled during the transitional phase, especially in light of the commitment to cap price increases to the collections at 6 percent until 2007. This past winter, however, brought an unexpected, although not unwelcome, development that required some re-thinking of MUSE’s short-term plans during the transition to the new model. Nearly 100 journals from current and prospective publishers applied for inclusion in the MUSE collections for 2006. After MUSE’s selective criteria were applied to the list, some forty high-quality titles remained, leaving a question as to how MUSE could incorporate this additional content while honoring its commitment to cap price increases and ensure adequate revenue for currently participating publishers. Once again, MUSE returned to its subscriber base for ideas and feedback on potential solutions. Libraries have often expressed a desire for MUSE to grow and add high-quality content when available, rather than have journals opt to publish electronically in outlets that libraries find less affordable or user friendly. After extensive consultation with library subscribers and publishers in meetings, open discussions, and focus groups at the ALA Midwinter Meeting 2005 and 2005 ACRL Conference, MUSE decided to launch a new collection that would incorporate all the new titles selected, as well as all existing journals, and provide an option for libraries that have the need and the funding to acquire a more expansive collection of refereed titles in the humanities and social sciences. The new collection, named the Premium Collection, will be offered alongside the existing collections. Project MUSE’s current full collection will be re-named the Standard Collection beginning in 2006. The Standard Collection will include all titles currently in the full collection, with a limited number of additional journals added in 2006. In line with the commitment made on the introduction of the new price model, the list price of the Standard Collection is increasing by just 6 percent for 2006. Offering both options provides choices both for libraries seeking the most comprehensive collection of titles and for libraries with a need for a stable collection with predictable pricing.
The Next Chapter Implementation and Acceptance Project MUSE’s new pricing model was implemented with the 2005 renewal effort in fall of 2004. Effectively communicating the changes to the pricing model was considered key to the success of the roll-out, so consultants Ivins and Luther were retained for an additional project to write informational pieces, Web site content, and subscriber letters to help explain the new scheme. MUSE’s consortium partners also played an important role in disseminating details about the new model to their member institutions. As the subscription season concluded in early 2005, MUSE had once again obtained a renewal rate of over 95 percent, demonstrating a high level of acceptance for the changes to the model. Analysis of the non-renewed subscriptions revealed that none of the institutions was experiencing a price increase under the new model. A subsequent follow-up survey indicated that cancellations were due to typical factors such as budget cuts or low usage figures, not the new pricing model. By May 2005, MUSE had received over 100 new subscription orders for journal collections, most (95 percent) for the full collection. An examination of the new customers finds a nearly even spread among Tiers
Conclusions The universe of scholarly journal publishing, in which MUSE, its publishers, and its library customers operate,
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is changing dynamically, with competing pressures to provide affordable access for libraries while generating sufficient revenue to allow not-for-profit publishers to support their business. MUSE’s new price model seeks to balance these needs and provide a framework that allows MUSE to continue to grow, remain financially self-sufficient, and provide customers with the high level of support and service for which MUSE is known. The new model appears to be on track to meet the goals
established at the outset of the pricing study, principally generating a level of revenue needed to retain and attract high-quality journals to MUSE while providing opportunities for libraries of many sizes to participate. The initial implementation is considered a success, but it is clear that continually changing conditions in the marketplace may require further revision or new initiatives to respond to the needs of the constituencies served by Project MUSE.
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Project MUSER, an online collection of scholarly journals in the humanities, social sciences, and the arts, undertook an extensive revision of its pricing and subscription model in 2003, the first since the project’s inception in 1995. A collaborative effort of MUSE staff, industry consultants, participating libraries, and publishers produced a new pricing scheme for 2005 based on two factors: peer institutions grouped by Carnegie Class and then divided into quadrants based on their usage. This article discusses the background and implementation of the new business model and next steps. Serials Review 2005; 31:192–199. D 2005 Elsevier Inc. All rights reserved. Johns Hopkins explored options for producing electronic versions of the forty journals then in JHUP’s program. Grant funding to pursue prototypes was secured from the Carnegie-Mellon Foundation and National Endowment for the Humanities in 1995, and a MUSE pilot project ensued with eight journals published online in full text. Several libraries, including members of the Oberlin Group of Liberal Arts College Libraries and the Virtual Library of Virginia (VIVA) consortiums, served as beta testers for the electronic journals, providing feedback on presentation and searching capabilities. By the end of 1996, all of the JHUP journals had been produced online and a pilot offer of subscriptions to the MUSE bcollectionQ was offered to libraries beginning in January 1997. Interest from consortia was strong, and again, some of the charter subscribers contributed ideas on the development of a consortium volume discount model to encourage group purchases. By the time Project MUSE’s grant funding expired in 1998, the project was self-supporting. Libraries had shown enthusiastic support for the journal collection, and the subscriber base had already exceeded initial projections, in no small part because of several significant consortium licenses. The collection had garnered interest and subscriptions from libraries outside of the traditional market for the JHUP print journals, including community colleges and high schools, necessitating the development of discounted pricing for certain categories of libraries. By 1999, several other major American university presses with large journals programs approached MUSE to discuss collaborating in a way to bring their journals online through the same interface. Extensive discussions
Introduction Project MUSER, an online collection of scholarly journals in the humanities, social sciences, and the arts, undertook an extensive revision of its pricing and subscription model in 2003, the first such revision since the project’s inception in 1995. A collaborative effort involved MUSE staff, industry consultants, library customers, and participating publishers. The pricing study and remodeling examined a variety of internal and external pressures for change, with the goal of producing a stable, sustainable solution which meets the needs of all constituencies. Extensive communication and modeling resulted in the development of a new pricing scheme that addressed issues raised by libraries and publishers. Subsequent implementation of the model has borne out some of the conclusions made from the pricing study, while raising new questions as the dynamic world of electronic scholarly journal publishing continues to evolve.
A Historical Perspective Beginning in 1993, The Johns Hopkins University Press (JHUP) and the Milton S. Eisenhower Library (MSEL) at Schaffner is Marketing and Sales Manager, Project MUSE/The Johns Hopkins University Press, Baltimore, MD 21218, USA; e-mail: [email protected]. Luther is President, Informed Strategies, Ardmore, PA 19003, USA; e-mail: [email protected]. Ivins is Consultant, Digital Content and Access Solutions, Sharon, MA 02067-1360, USA; e-mail: october.ivins@ mindspring.com. 0098-7913/$–see front matter D 2005 Elsevier Inc. All rights reserved. doi:10.1016/j.serrev.2005.06.005
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regarding a model for cooperation, content licensing, and a royalty payment scheme followed. In 2000, MUSE introduced journals from eleven other presses to the collection. In each subsequent year more journals have joined the collection, all from not-for-profit publishers, including additional university presses and several scholarly societies. With the additional content, MUSE began offering libraries a choice of several smaller subscription packages along with the option of subscribing to the entire collection. Libraries were also able to choose subscriptions on a journal-by-journal basis. By 2004, the MUSE collection covered well over 200 full-text titles from more than forty publishers. There were more than 1000 subscribing libraries worldwide, with over 20 percent of customers located outside the United States. Eighty-five percent of libraries subscribed to the full collection of all journals offered, up from 72 percent in 2000, when content from other publishers was first introduced. Only 10 percent of subscribers still chose the original JHUP journals package. Project MUSE’s annual subscription renewal rate was consistently 95 percent or better in every year since its launch.
technical development to support evolving expectations of libraries regarding online journals, such as OpenURL compatibility, industry-standard usage statistics, participation in initiatives like CrossRef, new search options and integration of search results with bibliographic utilities, and long-term archiving of digital files. MUSE’s participating publishers set the print prices for their journals. Through 2004, the MUSE list price for its journal collections was generally the total of the current print prices for the journals in each package, discounted by 10 percent. Category discounts on list rates were offered to community colleges, special libraries, public libraries, secondary schools, and very small academic libraries (very small defined as FTE less than 2000). The Consortium Volume Discount Plan effective from 1996 to 2004 was based upon the number of participating institutions in the consortium, with scaled discounts from 10 percent for groups of five to nineteen libraries on up to 50 percent for groups of sixty or more institutions. Volume discounts were compounded with any applicable category discounts to determine the net fee per institution. All surplus income from subscriptions is returned to the participating publishers in the form of royalties. From 2000 through 2004, these royalties were calculated on a combination of the title’s proportion of the sale price and its online usage.
The Business of MUSE Background on the Project MUSE business model is also useful in understanding MUSE’s expenses, operational strengths, and potential limitations. MUSE is managed by JHUP, in collaboration with its publisher partners, and MSEL. An Advisory Board, an outgrowth of the original Governing Board established during the grantfunded period, includes members of the MUSE and JHUP management staff, representatives from participating publishers, and senior library staff from both MSEL and the Welch Medical Library at Johns Hopkins. The MUSE staff has just over twenty individuals in 2005, most in technical and production roles, along with a project director, a business manager (previously shared with JHUP journals, but dedicated solely to MUSE as of this year), two marketing/sales professionals, and one full-time customer/technical service representative. Four professional librarian positions on the staff have responsibilities for authorities/metadata, usability, and outreach activities. MUSE shares a subscription fulfillment and access control computer system with the JHUP Journals department, with MUSE business representing only a small fraction of the subscriptions processed by the system. MUSE staff take in files from the sixty participating publishers in a variety of formats and do all the work necessary to prepare articles to appear on the MUSE platform in both HTML and PDF formats, at no cost to the publisher. Library of Congress subject headings are supplied for each article, SGML metadata headers are created, material is indexed in the MUSE search engine, and metadata supplied to MUSE’s many linking partners, with all costs absorbed by MUSE. MUSE staff market and sell the journal collections to libraries, provide training and outreach materials, supply library usage statistics, and provide all necessary customer service and technical support. MUSE also funds all new
The Need for Change MUSE’s subscription figures and renewal rates as of 2004 indicated a product that had been well received and consistently supported by the library market throughout its growth from grant-funded initiative to successful, self-supporting product. It provided an online platform for a wealth of high-quality journals in humanities and social sciences with a very library friendly licensing model. So, why the need for an arguably dramatic change in its pricing and subscription model? In a nutshell, because the entire industry has changed—growth in electronic publishing, the needs of users and providers. Pricing must follow suit. By September 2003, Project MUSE was hearing concerns from libraries and publishers regarding the sustainability of the current model. Libraries expressed concern about MUSE price increases, resulting from growth and the inclusion of additional journals. Of particular concern was that, as the number of MUSE’s titles expanded, the price of the full MUSE collection was growing beyond the budget of liberal arts colleges and smaller university libraries, a core part of MUSE’s subscriber base. Additionally, many libraries with an interest in Project MUSE journals were unable to participate under the original pricing model. MUSE did not offer enough choices and options to help different kinds and sizes of libraries find a collection that suited both their needs and their budgets. From a publisher perspective, sustainable revenue and competition from commercial organizations for good journals drove questions about MUSE’s existing model. MUSE’s attractive combination of category and con-
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sortium discounts worked during MUSE’s initial period of high growth and in a different economic climate, when the MUSE royalties represented incremental revenue for journals in the collection, and when consortia were less prevalent. By 2004, 90 percent of MUSE subscriptions came through consortium licenses, most at the 50 percent volume discount level due to consortium consolidation to achieve deeper discounts. Net fees for MUSE subscriptions averaged 53 percent off list price. This model resulted in distorted prices with large libraries that use MUSE extensively paying relatively low rates comparable to much smaller institutions. The base price of MUSE had never been set high enough to support these deep discounts or to reinvest in technology, but this effect was initially masked by rapid growth in new subscriptions. During this period of rapid growth, MUSE royalties represented new revenue for participating publishers in addition to their print subscriptions, offering welcome support for technological investments and moderating price increases. However, the constant and increasing pressure on library budgets has escalated the cancellation of print journals, especially when the electronic files are available from trusted vendors such as Project MUSE. As the price of MUSE has grown to accommodate the inclusion of new journals, libraries have often canceled print in order to afford the package and other attractive electronic packages that are more accessible to their users. By 2004, royalties paid to MUSE publishers represented a fraction of the revenue lost with print cancellations. This is an unsustainable model for publishers, given that this trend will continue as a growing number of libraries either prefer e-only or are prompted to cancel print. A case study of one major societysponsored journal in MUSE determined that the journal’s revenue per MUSE subscriber in 2002 was $21.68. By contrast, its revenue per institutional print subscriber was $96. For every institution that canceled the print because of the journal’s availability in MUSE, the society lost $74.32, or 77 percent. Print cancellations in 2003 were 6 percent on average, across all MUSE journals. For the journal profiled, a 6 percent rate results in a $13,020 loss of revenue. A 38 percent increase in royalties from MUSE would be needed to offset the loss of revenue, but the title experienced only a 22 percent increase in royalties in 2003 over 2002. In addition, participating publishers face aggressive competition from commercial publishers for the journals they do not own. MUSE publishers have already turned over some significant titles to for-profit publishers, and subsequent research has shown that titles leaving MUSE upon acquisition by a commercial publisher have experienced prices increases as high as 386 percent in the year immediately following the transition to the new press. University presses, which contribute the majority of journals to MUSE, operate under the same strained higher education budgets as university libraries. Some participating MUSE presses have recently lost the subsidies provided by their parent institutions, and most
are undercapitalized to begin with. Universities are looking closely at the long-term viability of maintaining a university press that is struggling financially—one MUSE participating press, the University of Idaho Press, was shut down in 2004. Some publishers that had titles in MUSE began to reconsider adding more of their highquality titles to the collection. It became clear that MUSE’s existing pricing structure did not provide the necessary revenue to offer satisfactory royalties for publishers to sustain their participation. Nor did it accommodate collection growth, as libraries found that the increases in the annual price to cover the titles added to MUSE stressed library budgets, or subscription growth, as a variety of interested libraries lacked affordable options for participation.
A Process for Change Realizing that the time had come to address the concerns of both libraries and publishers to ensure a sustainable future for the product, MUSE developed and distributed a request for proposal (RFP) in fall of 2003 to identify a pricing model that would balance the revenue needs of publishers with the budgetary needs of librarians, and that would meet organization objectives. The successful pricing model would need to: ! retain the existing base of subscribing libraries and current participating publishers; ! pay competitive royalties to new and existing publishers; ! attract high-quality content; ! enable expansion into other markets and additional disciplines; ! cover the direct and indirect costs of Project MUSE; and ! build a reserve fund for future technology to keep pace with the market needs. MUSE conducted a thorough bid process for pricing model researchers/consultants and awarded the contract in November 2003 to respected industry consultants October Ivins and Judy Luther. Ivins and Luther were selected because they are both librarians with experience in an academic setting and had also done extensive work with publishers on pricing and product development. Given that the results of the pricing study needed to satisfy concerns from both libraries and publishers, the consultants’ ability to see both perspectives was crucial to a successful proposal. A working group consisting of Ivins, Luther, JHUP’s Director of Electronic Publishing Aileen McHugh, MUSE Marketing and Sales Manager Melanie Schaffner, and then MUSE/JHUP Journals Business Manager Michael Hargrett was established to implement the pricing study and subsequent development of a new model for MUSE. From the start, the group agreed that both current and prospective customers, as well as MUSE publishers, must be consulted in the study because those who would be affected by the outcome should have a voice in the decision.
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Ivins and Luther began by holding informal discussions with current MUSE customers in November 2003 at the Charleston Conference. They also interviewed MUSE’s pricing committee (which includes several publishers with titles in the MUSE collection) and conducted an analysis of pricing models from other electronic journals products. Six pricing models in particular offered useful insights. JSTOR, BioOne, and HighWire are also nonprofit aggregators, collections, or hosts that offer electronic journals on a common platform, but print pricing remains with the original publishers. The American Institute of Physics (AIP), the American Physical Society (APS), and the National Academy of Sciences (NAS) are scientific society publishers who can control the pricing of both the print and electronic formats. In December 2003, Ivins and Luther conducted oneon-one interviews with current and potential MUSE customers at the Online Information Conference in London. Questions included why interviewees felt MUSE’s pricing needed to be adjusted and what might work for them. During the same time frame, Ivins and Luther conducted several in-depth phone interviews with consortia and libraries stateside. Focus groups were held in January 2004 at the American Library Association (ALA) Midwinter Meeting with two distinct groups: (1) collection development, acquisitions, electronic resources librarians—all of whom handle the purchasing of products; and (2) user services, bibliographic instruction, and reference librarians—all who work with the end users. Also at ALA, a public hearing on potential MUSE pricing models took place with some 100 attendees sharing opinions and feedback on the work Ivins and Luther had done to date. Ivins and Luther compiled the knowledge gleaned from the interviews, public hearing, and focus groups to create a Web survey. Invitations to participate in the survey were sent via e-mail to all current subscribers, and announcements were also posted to appropriate professional library listservs. The Web survey was conducted in February 2004 with nearly 250 completed surveys submitted. Among the ideas presented for comment in the survey, developed from the groundwork done in preceding months, were new pricing tiers, new packaging of MUSE into various core and subjectspecific collections, adjustments to the consortium discounting scheme, and matrixes combining one or more of these considerations.
study developed. In particular, responses indicated the following: ! Librarians want a program that is fair—one built on valid factors and one that offers sufficient flexibility to accommodate their differences. ! Librarians need time to accommodate price increases into their budgets, which are severely stretched in the current economic climate. ! Librarians need to understand the reasons for a significant price increase by a trusted vendor. If a new pricing model results in more limited access, the trust relationship is shaken and it leaves librarians feeling betrayed. Expanding Tiers Librarians indicated they are accustomed to tier pricing but want the tiers to reflect their diverse enrollments and budgets. ! The majority of librarians (83 percent in the Web survey) felt that new pricing tiers were a good approach for MUSE. ! Tiers within tiers were suggested to accommodate the wide range of differences in budgets, programs, and enrollments. The funding level for libraries does not necessarily match research levels at an institution. ! Community colleges have limited usage of MUSE, and their usage is different in nature and volume than that of an academic library. New Collections Although most libraries expressed a preference for subscribing to the full collection of MUSE journals, smaller to mid-size schools indicated a desire for an affordable, stable collection. Development of additional collections consisting of a subset of MUSE journals was discussed in several forums during the study. ! The concept of a bbasicQ collection was acceptable to more than half of those responding (58 percent in Web survey). Libraries indicated such a collection offers an alternative if they cannot afford or justify the cost of all of the titles in MUSE. ! Offering a basic collection to contain growth is preferable to the entire package being unaffordable. ! Over one third (36 percent in Web survey) would seek to maintain the full collection unless the library could not afford it. ! Libraries were not interested in smaller collections consisting of journals from a single publisher. ! Subject collections are attractive only if the full collection is not affordable. ! Collections that maintain MUSE’s unique interdisciplinary focus are of interest. ! Some libraries have weeded titles that are in MUSE based on the expectation that they would always be available. Hence there will be gaps in some library collections if the library has to subscribe to less than the full collection.
The Libraries Speak The interviews, focus groups, hearings, and survey conducted as part of the MUSE pricing study provided a wealth of information from which the working group was able to begin plans for a new model for MUSE. Responses were gathered on a variety of general and specific topics. Primary Concerns Librarians expressed support for MUSE and a need to understand how the situation precipitating the pricing
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! Some librarians expressed a sense of betrayal as they expected continued access long term to all titles in the collection and expressed concerns if they could not afford to continue access to the full MUSE collection.
activity at an institution and its relation to the institution’s mission. Carnegie Classification was also attractive because it provided a wider range of distinction among institutions than MUSE’s previous structure. It is externally derived, is non-proprietary/ widely available, and is updated regularly. The use of Carnegie Classification in the development of MUSE pricing tiers was supported by 83 percent of survey respondents in the study. An analysis of ARL (Association of Research Libraries) and ACRL (Association of College and Research Libraries) library collection budget data also indicated a strong correlation between Carnegie Classifications and library materials budgets. Project MUSE’s new model grouped the major Carnegie classes into five tiers:
Trend to Electronic Access Only Study results indicated thee is a growing trend to acquire electronic access without the print. ! 41 percent of institutions in the Web survey either had an e-preferred policy (21 percent) or are considering it (20 percent). While the majority (57 percent) did not have an e-preferred written policy, several commented that they are operating as if they do have such a policy. ! 50 percent of institutions will cancel print now (32 percent) or in the next five years (18 percent). ! Although consortia license MUSE collectively, cancellation decisions are typically made at the institutional level. (Some consortia coordinate cancellations to share retention of print.)
Tier 5 Doctoral Research—Extensive Tier 4 Doctoral Research—Intensive, Masters I Tier 3 Masters II, Baccalaureate—Liberal Arts Tier 2 Baccalaureate—General, Baccalaureate/ Associates
Additional feedback from the study indicated that libraries felt Project MUSE should raise prices enough to allow sufficient revenue to include technology enhancements. The MUSE Advisory Board received initial findings from the study in March 2004. During the annual meeting in April 2004, the working group shared recommended models with all the MUSE participating publishers, and a course of action resulted. The working group continued to model specific details of the chosen model through May to develop a scheme that would meet the initial goals of the project. The new Project MUSE pricing model, effective as of January 2005, was revealed at MUSE’s User Group meeting during the ALA Annual Conference in June 2004.
Tier 1 Associates Use of Quartiles to Create a Grid Market feedback also called for differentiation, or btiers within tiersQ and suggested as criteria the following: library spending per subject area, total materials budget, total FTE students, student/faculty FTE by subject area, and usage. The working group agreed that usage was the best and fairest way to further distinguish institutions within a tier. Project MUSE is COUNTER compliant (and was ICOLC1 compliant) and usage data are readily available. Usage also, in essence, represents all of the suggested criteria (except budgets, which the tiers address). Usage data can be easily generated to allow an bapples to applesQ comparison. The definition of busageQ adopted for the purposes of the MUSE price model is the number of full-text downloads per institution for a calendar-year subscription term. Usage within each tier is then divided into four quartiles. There is an acknowledged delay in applying usage to prices, and the quartiles will be recalculated annually. This means that usage can (and should) continue to increase, but relative usage is likely to remain stable. New customers will start in Quartile 1. Overall MUSE usage levels will likely be smaller than STM journal usage, reflecting differences in the nature of research. An unintended benefit to the incorporation of usage into the new model was that it allowed MUSE to discontinue another unpopular legacy feature of the original price scheme: separate charges for branch campuses of large university systems. The new model assumes that the branch campus/campuses usage is included with the main campus and will likely result in a higher usage quartile, eliminating the need for separate fees.
The New MUSE MUSE’s consultants analyzed results of the study activities, examined pricing models for electronic products, reviewed extensive data supplied by MUSE, and confirmed that an overall revenue increase of 25 percent, ideally spread over three years, was the target. The specifics of the new price scheme were based in part upon three-to-five year modeling of the impact of the new pricing. In essence, MUSE has replaced deep consortial discounts that were based on the number of participating institutions with a grid that defines pricing based on two factors: (1) peer institutions grouped by Carnegie Class, and then (2) peer institutions divided into quadrants based on usage. This approach offers scaled pricing based on value/usage rather than sheer volume. Tiers Based on Carnegie Classifications The new model expands the number of pricing tiers for academic institutions from two to five, based on Carnegie Classification. This criterion was chosen because it represents, in essence, the level of research
1
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Carnegie Classification scheme is not applicable outside the U.S. or to non-academic institutions, the new model was not implemented for these markets. New price schemes based on different criteria relevant to these communities are being introduced over time. While separate from the new pricing model, a concurrent revision of the publishers’ royalty scheme was also completed. The new royalty model compensates publishers based upon the depth of their content in MUSE and actual usage of the journals. Philosophically, MUSE believes that depth of content assists in selling initial subscriptions to the collection, while usage of the journals contributes to renewals and continued support of the product. Thus, the new royalty model rewards publishers for the contributions they make to the ongoing success of MUSE.
Project MUSE’s New Price Grids Once the criteria for a grid were established, many sets of price points were modeled to create a final version of the grid that provides different price levels for each tier and a reasonable range within quartiles (see Table 1). MUSE can now determine a list price for each collection and simply plug the list price in as the rate for Tier 5, Quartile 4, and prices for all other subscribers are calculated from the grid percentages. To gain a better understanding of whether the price ranges modeled for each tier would be affordable, a rough analysis of library materials budgets was conducted using data from ARL (2002) and ACRL (2001) which included high mean and median budgets. To determine whether MUSE customers corresponded to the ARL/ACRL data, a table was prepared using the budget size reported by survey respondents in the price study. This corresponded well with the ARL/ACRL data. Next, a table of mean and median usage for the five tier classification groups was generated. In this chart, the two lowest tiers each account for 1 percent of usage; Tier 3 for 12 percent, Tier 4 for 25 percent, and Tier 5 for 61 percent. This illustrates the larger resource commitment these tiers require and that the pricing model is a good match with their consumption. The small number of customers and low usage in the lower tiers was emphasized by this exercise. The existing model allowed deep discounts based on the volume of participating institutions in a consortium deal, which produced enormous price discrepancies among similar institutions. The new model replaces these discounts with a structure that bases pricing on variables reflecting the nature of the institution and amount of use they make of MUSE as a relative measure of value. This resulted in some institutions experiencing significant price increases under the new model. For customers with increases of 25 percent or more, MUSE offered a phase-in plan that divided the total amount of increase in thirds and charged the first third in 2005, the second third in 2006, and the full amount in 2007. MUSE also committed to cap price increases on the collections at 6 percent for the first three years of the new price model. The new model was designed for flexibility over the long term. Many libraries found that, under the new system, the tiered pricing offset any loss of a deep volume discount, so their net price for MUSE did not change significantly. Some libraries even paid less. Since the
Consortium and Print Discounts Two questions remaining in the new pricing model involved discounts for consortium subscriptions and discounts on print copies of MUSE journals for subscribing libraries. Consortia have always played an important role in disseminating knowledge of MUSE and encouraging participation among their members. They are also important to MUSE in consolidating and servicing orders. Under the new model, consortia are offered a discount that better matches the actual savings experienced by MUSE as a result of the work the consortia do in consolidating orders and payments. Almost half (48 percent) of the respondents in the Web survey felt this reduction in the consortium discount was fair even before seeing the proposed pricing structure with new discounts based on tiers. Prior to 2004, MUSE asked all participating publishers to extend a deep discount on print to any library that paid full list price for a MUSE collection. Print cancellations have affected MUSE publishers in different ways, depending upon title-specific factors such as the extent of previous print holdings and the number of individual subscribers to the journal. It became clear that a uniform policy is unworkable, especially as print cancellations increase due to library budget constraints. Under the new price model, each publisher will determine a print subscription policy that reflects the needs of their own journal(s) and is responsible for communicating their policy to libraries that are eligible. New Collection Options While MUSE hoped that most libraries would continue to support the full collection, the study also responded to customers asking for smaller collections. Two new collections were created after many criteria were considered.
Table 1. Project MUSE pricing grid (effective 2005), showing percentages for tiers and quartiles Quartiles Tiers 5 4 3 2 1
1
2
3
4
71.4 47.6 33.3 26.5 16.0
81.0 52.4 38.1 27.5 17.0
90.5 57.1 42.6 30.0 19.5
100.0 61.9 47.6 31.5 21.0
! The Basic Research Collection contains approximately 150 titles that are in the selective indexes for research journals, including ISI Journal Citation Report and Periodicals Contents Index. ! The Basic Undergraduate Collection contains approximately 100 titles that are in the selective indexes for
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journals oriented to undergraduates, including Magazines for Libraries and HW Wilson.
1–4 on the new price grid, indicating the libraries are a diverse mix of Associates, Baccalaureate, and Masters level institutions. This speaks to the effectiveness of the new model in addressing the pricing study goal of creating affordable new options suitable for smaller and mid-size libraries.
Other factors considered in selecting journals for these collections are inclusion in archival databases, usage, and wide holdings in libraries. Both of these collections also use tier/quartile pricing modeled above. As a result of feedback concerning lack of interest in purchasing collections of journals from a single press, the Publisher packages previously offered by MUSE were discontinued effective 2005. Subscribers to the only collection with any significant subscriber base, The Johns Hopkins University Press package, were encouraged to consider the Basic Undergraduate Collection. Since this package is double the size of the Hopkins package, these subscribers would experience a price increase to make the transition. About half of the JHUP package subscribers chose to upgrade to the Basic Undergraduate Collection in 2005. MUSE discounts the price of the full collection, so its price per title is lower than that of any other collection and allows the inclusion of titles that are not as widely subscribed. Titles not selected for the Basic Research or Basic Undergraduate Collections have the ability to improve their ratings and migrate to these collections. One issue raised by the introduction of new collections was concern from libraries that if they chose a different collection for 2005 than the one to which they previously subscribed, they would have permanent rights to any content for which they previously paid. MUSE’s license assures this ownership of content by subscribers, and libraries were informed about options for obtaining archives, including DVD-ROM, downloading, or LOCKSS (http://lockss.stanford.edu/).
An Unexpected Dilemma With the introduction of the new price model, MUSE began the process of disconnecting the electronic collection price from the individual print price for each journal. While it was expected that some new journal titles might be added in subsequent years, it was also expected that growth would be very controlled during the transitional phase, especially in light of the commitment to cap price increases to the collections at 6 percent until 2007. This past winter, however, brought an unexpected, although not unwelcome, development that required some re-thinking of MUSE’s short-term plans during the transition to the new model. Nearly 100 journals from current and prospective publishers applied for inclusion in the MUSE collections for 2006. After MUSE’s selective criteria were applied to the list, some forty high-quality titles remained, leaving a question as to how MUSE could incorporate this additional content while honoring its commitment to cap price increases and ensure adequate revenue for currently participating publishers. Once again, MUSE returned to its subscriber base for ideas and feedback on potential solutions. Libraries have often expressed a desire for MUSE to grow and add high-quality content when available, rather than have journals opt to publish electronically in outlets that libraries find less affordable or user friendly. After extensive consultation with library subscribers and publishers in meetings, open discussions, and focus groups at the ALA Midwinter Meeting 2005 and 2005 ACRL Conference, MUSE decided to launch a new collection that would incorporate all the new titles selected, as well as all existing journals, and provide an option for libraries that have the need and the funding to acquire a more expansive collection of refereed titles in the humanities and social sciences. The new collection, named the Premium Collection, will be offered alongside the existing collections. Project MUSE’s current full collection will be re-named the Standard Collection beginning in 2006. The Standard Collection will include all titles currently in the full collection, with a limited number of additional journals added in 2006. In line with the commitment made on the introduction of the new price model, the list price of the Standard Collection is increasing by just 6 percent for 2006. Offering both options provides choices both for libraries seeking the most comprehensive collection of titles and for libraries with a need for a stable collection with predictable pricing.
The Next Chapter Implementation and Acceptance Project MUSE’s new pricing model was implemented with the 2005 renewal effort in fall of 2004. Effectively communicating the changes to the pricing model was considered key to the success of the roll-out, so consultants Ivins and Luther were retained for an additional project to write informational pieces, Web site content, and subscriber letters to help explain the new scheme. MUSE’s consortium partners also played an important role in disseminating details about the new model to their member institutions. As the subscription season concluded in early 2005, MUSE had once again obtained a renewal rate of over 95 percent, demonstrating a high level of acceptance for the changes to the model. Analysis of the non-renewed subscriptions revealed that none of the institutions was experiencing a price increase under the new model. A subsequent follow-up survey indicated that cancellations were due to typical factors such as budget cuts or low usage figures, not the new pricing model. By May 2005, MUSE had received over 100 new subscription orders for journal collections, most (95 percent) for the full collection. An examination of the new customers finds a nearly even spread among Tiers
Conclusions The universe of scholarly journal publishing, in which MUSE, its publishers, and its library customers operate,
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is changing dynamically, with competing pressures to provide affordable access for libraries while generating sufficient revenue to allow not-for-profit publishers to support their business. MUSE’s new price model seeks to balance these needs and provide a framework that allows MUSE to continue to grow, remain financially self-sufficient, and provide customers with the high level of support and service for which MUSE is known. The new model appears to be on track to meet the goals
established at the outset of the pricing study, principally generating a level of revenue needed to retain and attract high-quality journals to MUSE while providing opportunities for libraries of many sizes to participate. The initial implementation is considered a success, but it is clear that continually changing conditions in the marketplace may require further revision or new initiatives to respond to the needs of the constituencies served by Project MUSE.
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