The new ACS Value-Based Pricing Model: Nonacademic subscribers
By Adam Chesler, Assistant Director, Library Relations and Customer Service
In 2008, the Publications Division of the American Chemical Society (ACS) will introduce a value-based subscription model designed for the digital environment of today and tomorrow. Based on objective criteria and developed with a few key guiding principles in mind, this new pricing model has several innovative characteristics.
In this, previous, and forthcoming issues of LiveWire, we explain how ACS Publications developed this new pricing model, examine its different components, and help subscribers better understand what it means to them. It's our goal to work with our customers to ensure a smooth transition that enables them to maintain the broadest possible access to the most-cited (and, we believe, highest-quality and highest-value) journals in chemistry (ACS Publications also has created a website dedicated to providing subscribers with information about this pricing model).
Here's what's being covered in LiveWire (we may include other background articles as well):
June/July: The Corporate and Government/Not-for-Profit Models
August: Implementation
The nonacademic models: Questions
Discussions about pricing models with our customers (including our Library Advisory Group) indicated a clear distinction between the way academic and nonacademic subscribers value and use our journal content. While librarians from the academic community expressed concern about issues such as long-term preservation and the impact of incidental usage (eg, downloads generated during information literacy classes), nonacademic customers focused almost entirely on usage and access, with an eye on keeping costs-per-use as low as possible. A traditional subscription model doesn't accommodate that appeal very well, because low-use journals have high costs per download, which could inspire subscribers to abandon a subscription in favor of using document-delivery services (DDS), even if it meant sacrificing instant availability. How would we accommodate these different preferences and needs?
Nonacademic subscribers were also concerned about how we priced our journals for multiple sites. Simply multiplying the subscription price by the number of sites wouldn't work, because it was highly unlikely that staff at marketing or administrative locations would have much use for our journal content. And if mergers, acquisitions, or divestitures occurred during the year, the whole process started over again. Could a clearer, more objective method take the place of this cumbersome, inexact approach?
Then there was the question of new journals—not only brand-new, never-before-published journals but also established journals to which a customer held no subscription but might find useful. Continuing to charge multiples of the subscription price for an untested title didn't seem like the way to go; customers would have no chance to try out the journal without paying the full price, making them uneasy about adding new content. And since we want more users to have access to more titles and librarians want users to have access at their desktops when they need it (without waiting for a DDS request to be processed), we had to come up with a better way to introduce journals to new users. How could we get our “new to you” journals into readers' hands?
Finally, we had to account for differences among nonacademic organizations: Corporate and not-for-profit institutions might have similar interests and usage patterns but clearly different capacities to pay. How would we separate different types of customers without developing even more models, which would introduce confusion for both subscribers and our staff?
Usage is the key
With no Carnegie classifications or other means of grouping nonacademic customers, our consultations with subscribers quickly pointed us to the most no-nonsense, straightforward approach available: usage. Customers had told us that they expected to pay for content they used but didn't want to pay for content they didn't use, so package prices weren't really of interest, meaning we had to come up with something attractive on a title-by-title basis.
Since our conversations with librarians kept coming back to usage , we began crafting a model built on article downloads. We certainly didn't want to “meter” them—neither we nor our customers want to worry about every single use of every single article—so we developed a series of tiers, with an aim of keeping the median cost per download well below the average DDS price of $25.
Although prices increase by tier, the median point of usage tier increases more rapidly than the tiers' subscription rates. By applying this method, the median cost per use decreases even as the price increases—so the more content a subscriber uses, the better the value. And since each year customers will be priced according to their usage, if a journal is no longer as valuable as it was the year before, the cost could actually decrease. The cost per use stays well below the DDS price, making a subscription more worthwhile (because access will be immediate and on every desktop, rather than delayed, subject to administrative hassles, and only accessible to individual users).
For example, imagine that a project occupying the attention of dozens or even hundreds of staff researchers is under way. An ACS journal publishes frequently on the topic at hand, so article usage is heavy. After two years, however, the project is wrapped up. Usage of the journal persists, but not necessarily at the same level as in the past. In the old subscription model, the price for the journal would be higher (because of price increases) than when the project started—even though the subscribing organization has less need for it. The cost per use has gone up, and the journal, even if useful for some staff, is on the chopping block because the usage doesn't justify the cost. In the new ACS pricing model, as usage dips to a lower tier, the price drops, thus helping the journal retain its value to the institution, because the cost per use remains less than the DDS price.
Another benefit of this model is the elimination of using sites as a factor in pricing. There will no longer be any negotiations over how many users or how many buildings or locations are incorporated into the price of a journal. Whether 10 users are located at one site or 10,000 users at 100 sites, the price will be based solely on usage. If a merger, acquisition, or divestiture takes place, it won't be necessary to figure out the new number of sites or potential number of users in order to create a price, because usage will tell the tale. This approach should simplify greatly the process of arranging electronic access to ACS journals.
But which usage?
We're not planning to meter usage in the sense that we'll be charging a fixed price for each download and then issuing multiple invoices annually. To get annual invoices into the hands of customers prior to the start of a new subscription year, we determined that it made the most sense to use the most recent, full calendar year, because that's how most of our customers evaluate their usage. Therefore, each customer's tier classification will be based on usage during the year prior to the announcement of prices; in other words, 2007 usage will determine 2009 prices (which will be announced in 2008), and so on. Although this approach isn't perfect—a customer's needs may change in the interim—there's no other way to get the word out about new subscription prices in a timely fashion. It also helps us minimize disruption in the community (one of our Guiding Principles), because no subscriber has to accommodate a unique invoicing pattern (such as one based on a fiscal year that might not match its own). And over time, prices and usage will match up—albeit retrospectively—regardless of whether a customer moves up or down the tier ladder.
What about new journals?
No organization likes to throw money at unproven commodities. Adding brand-new or established-but-previously-unsubscribed journals to a collection can be a tough decision for librarians, especially if the asking price is as much as that of an established, well-known publication. Many customers mentioned the need for a means of testing a new journal to determine whether it fits the requirements of the institution's users.
To accommodate this request, we've decided that newly subscribed content—be it in the form of an entirely new publication or one that's been around for decades but hasn't yet shown up in a customer's collection—will be available for “entry-level” pricing: For the first year of a subscription, the price will be set at the Tier 1 rate. After a couple of dozen downloads, the cost per use will be less than any DDS fees, thereby justifying a subscription. If usage increases, the cost per use will decrease accordingly over time. We believe that this approach meets two key goals: for our customers, the opportunity to try additional content at a reasonable rate; for ACS, a means to fulfill another of our Guiding Principles (i.e., to broaden access).
Another nice aspect of this model is that it doesn't take a one-tier-fits-all-journals approach to each subscriber. For a given institution, the pricing of one journal may be in one tier and that of another journal in a different tier—again, it's all determined by usage. So, a title of peripheral interest with modest usage won't cost the same as a title that's of critical research importance, and tier designations can shift as priorities change. This way, the institution and its users—rather than we, the publisher—determine a publication's value, which we believe makes sense for our subscribers.
Here's how it might break down for an imaginary customer (note that these tiers and usage figures are used for illustrative purposes only):
Note that ACS Nano (a brand-new journal that will commence publication this summer) and Langmuir (which is in its 23rd volume) are both considered “new” titles for this customer and thus would be priced at the Tier 1 rate. This customer's prices are based on its usage. Another customer might have the same titles but different prices (except for ACS Nano, at least in 2008) if its usage of those journals were different. Thus, each journal is priced according to the value each subscriber puts on it, not with a one-size-fits-all figure that may not accurately reflect its importance to an organization.
Not-for-profit, nonacademic subscriptions
We're implementing the same basic model for both corporate and not-for-profit nonacademic libraries, but at different price points. Librarians from both sectors offered many of the same responses to our questions about pricing, and given how many government agencies have multiple sites and given that most of our not-for-profit nonacademic institutional subscribers are research-oriented (as opposed to teaching-oriented), the model we developed for corporate customers seems to fit their needs fairly well.
The scorecard
Have the questions that we faced in beginning of this process been addressed? Our customers urged us to:
Not base electronic subscription rates prices on print subscription history:
Stop using number of sites as a basis for charging multiple times the subscription price of a journal:
Focus on the most important factor in subscription decisions, cost per use:
Find a better way to price new publications and enable customers to try out any journal:
We're eliminating past print subscriptions as a means of determining an institution's electronic subscription rates; creating a system that charges similar amounts to customers with similar characteristics and similar usage; and letting total usage—not number of sites or FTEs—drive prices. We're enabling customers a chance to “test drive” new or previously-unsubscribed journals at low, entry-level price points, so librarians can better determine whether there's a good fit between their patrons' needs and the content being published. And we're building in flexibility, because journal tier pricing will reflect value more accurately than in the past: If a journal's popularity decreases, the price does as well, instead of relentlessly increasing regardless of its importance to the subscriber.
We've tried to boil down a complex process into something simple, and input from our customers helped shape this model. We're grateful for your input and encouraged by the feedback we've received thus far.
Please let us know if you have any questions, comments, or suggestions. We've set up a dedicated mailbox at pricing@acs.org; naturally, you may contact your account representative if you prefer. And you may contact me directly at any time, at a_chesler@acs.org, if you'd like to talk about this new pricing model in more detail.
Thanks for your continuing support as we put this new model in place over the next few years.
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