Dear colleagues:
The following comments are mine alone, and do not reflect the opinions
of my library, my university, or anyone else.
I would like to ask the rhetorical question above. One of the earlier
posts on West suggested that one reason for rising costs may be a
decline in sales, yet the rising costs lead to a further decline in
sales and the spreading of fixed production costs over a smaller
subscriber pool. (I can't find the original message that said that, so I
hope I paraphrased correctly.)
In April, I attended the Instructional Technology conference at Middle
Tennessee State University. The keynote speaker was Stephen Downes, a
senior researcher at the e-Learning Research Group of the Institute for
Information Technology in New Brunswick, Canada. Because the audience
was mostly instructional technology people rather than librarians,
Downes' focus was different than what we normally hear at library
conferences.
One point that Downes made in his talk was that traditional academic
journal publishers are going to disappear. He said that because of the
advent of web-based journals, and the new requirements that research
funded by the National Institutes of Health be published in open-access
journals or repositories such as PubMed Central or the Public Library of
Science, journal publishers are facing a declining subscriber pool.
Downes said that the astounding price increases for scientific journals
will only cause more subscribers to cancel, and eventually the big
journal publishers will go out of business.
When I head this talk last month, I thought that he was wrong about the
disappearance of journal publishers. I thought of all the times when
someone said the book was dead, etc. Having had a month now to reflect
on this talk, especially in light of the conversation over West's
pricing strategies, I have now reconsidered what Stephen Downes was saying.
I am concerned that West is indeed pricing themselves out of the market.
As we cancel more and more titles, the revenue raised by a single title
declines. Yet the fixed prices of production remain the same. (My B.A.
was in economics.) The costs of production are therefore spread among a
smaller group of subscribers. Even without maintaining profit margins, a
decline in subscribers will naturally lead to a price increase.
It is basic economics that when the price goes up, the demand goes down.
If the price of any item (say, a looseleaf service from West) goes up,
consumers (read: law libraries) will naturally begin looking around in
the market for substitutes, or will see whether they can do without. As
a result, more cancellations will occur. This will in turn cause the
fixed costs of production to be spread among a smaller group of
consumers, leading to an increase in price. The increase in price will
then cause a decrease in demand and more cancellations. This cycle of
price increases and cancellations will continue until something occurs
to break the cycle, or until the company goes out of business.
Don't let West tell you that the price increases come from expenses. A
quick look at Thomson's 2005 record on Disclosure reveals that revenue
from the law & tax division increased by 7% in 2005. "This revenue
growth was offset, in part, by a decrease in print and CD products
revenues as customers continued to migrate toward our online offerings.
. . . The growth in adjusted operating profit and improvement in its
corresponding margin in 2004 resulted from the higher revenues and
impact of improved operating efficiencies." In other words, Thomson's
law & business division made record profits last year.
I forsee several possibilities. One (unlikely) possibility is that
Thomson will wake up and realize that they are sacrificing long-term
corporate security for short-term profit returns. That's the Pollyanna
version of events.
Another possibility (somewhat unlikely, but possible) is that Federal
and state court systems will accept vendor-neutral citation systems, and
that state courts will begin placing historic cases online. In this
scenario, Thomson/West will indeed wind up going out of business, as the
remaining West subscriptions will wind up being dumped.
Currently, 13 state supreme courts accept such citations, along with 2
lower courts and the 6th Circuit Court of Appeals. For a list of vendor
neutral states and rules for citation, see
http://www.aallnet.org/committee/citation/. See also, Bryan Carson,
message to Comments to Judicial Conference re Citation Reform, March 4,
1997, http://www.hyperlaw.com/jccite/054.txt.
In my opinion, the most likely scenario is that customers will reach the
point that they have pared down to the essential titles, and now can't
cancel anything at all. At that point, Thomson/West will be able to
charge monopoly prices, since they will have an essential good with no
competition. I believe that this is the business model that has been
adopted, and that now is the time to protest.
It was shamful of AALL to gut CRIV in the early '90s in favor of vendor
donations, and even more shameful that the association "remained
neutral" to the Thomson takeover of West. (To quote the song Freewill by
Rush, "If you choose not to decide, you still have made a choice.") At
this point, it is almost too late. The government no longer has any
interest in pursuing antitrust actions. The AALL can, however, redeem
itself by helping to advocate to the FTC and the Justice Department for
vigorous antitrust enforcement in the law book industry.
AALL can also work with other associations to help undertake enforcement
actions in the wider publishing industry. The associations should
continue advocating to Congress and the courts for more legal materials
to be placed online for free, and should keep working to advocate vendor
neutral citation formats.
What would happen if no one visited West's booth at the conference, if
no one came to their parties, if no one wore their badges. Perhaps at
that point, the management would wake up and realize that they could
very well become a dinosaur, fated for extinction. Maybe that would
cause the company to change its pricing strategy and emphasize the
long-term stability of the company over short-term profits.
--Bryan M. Carson
-- Bryan M. Carson, J.D., M.I.L.S. Associate Professor Coordinator of Reference and Instructional Services Associated Faculty--Library Media Education Program Western Kentucky University Libraries 1906 College Heights Blvd. #11067, Bowling Green, Kentucky 42101-11067 Phone: 270-745-5007; Fax: 270-745-2275 bryan.carson@wku.eduAll original content copyright 2005 Bryan M. Carson
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