Can differences in publisher size account for the relatively low prices of the journals available to master’s universities through commercial publishers’ databases? The importance of price discrimination and substitution effects

Abstract

Using price quotes and invoices for thousands of full-text databases and single-journal subscriptions, this study confirms that for a typical master’s university, the journals acquired through commercial publishers’ databases cost substantially less than those acquired through the databases of scholarly societies, universities, and other nonprofits. Moreover, the lower prices of commercial publishers’ journals cannot be readily attributed to publisher size (number of journals published) or to any of several other explanatory variables. There is a weak, direct association between publisher size and price among the for-profit journals but a stronger, inverse relationship between publisher size and price among the nonprofit journals. These findings, along with the results of previous research, suggest that resource providers may have incentives to keep prices low due to the collection development strategies adopted by many teaching-oriented colleges and universities. If the library’s goal is to hold a sufficient number of high-quality journals rather than to provide immediate access to every wanted journal, particular journals and databases may be regarded as substitutes even when each product provides unique content. Many U.S. bachelor’s and master’s institutions have goals different from those of the major research universities, and commercial publishers (along with some of the larger nonprofits) seem to recognize this when setting and negotiating prices.

Apportioning the Cost of a Full-Text Database Among the Journals in the Database: A Comparison of Six Methods

“…There are several contexts in which the findings of this investigation may be useful. First, recent studies suggest that the acquisition of full-text journal resources for library collections should involve two separate steps: (1) the selection of individual journals on a title-by-title basis and (2) the identification of the full-text databases that can provide access to those journals in the most cost-effective way. 17 If the serials review or evaluation procedure requires price estimates for every acquisition opportunity-every wanted journal within each full-text database-then a defensible method of apportioning database prices among journals will be needed.…”

“…Although nearly 20 studies have examined the determinants of scholarly journal prices since 1989, virtually all of them have focused exclusively on the prices of single-journal subscriptions. 1 The single-journal approach to price analysis remains common even today, when academic libraries acquire most of their journals through full-text databases. 2 Just a few large-scale price studies have accounted for the journals available through online databases or collections.…”

“…3 A second approach is to estimate the cost of each individual journal by apportioning the total database price among the journals in the database. 4 The first approach has the advantage of relying on authoritative data; no price estimation is required. However, the second approach may be more useful when the goal is to evaluate journal-specific determinants of price (e.g., subject area and scholarly reputation) or when the prices of individual journals are required for library collection development decisions-when determining whether to bundle or unbundle subscriptions to individual journals and full-text collections, for instance.…”

Scholarly journals are sometimes regarded as substitutes even though each provides unique content

“…Among the R1 institutions, the average cost of an article in a commercial publisher's journal database is 2.2 times that of an article in a non‐profit provider's database. However, among the colleges and universities in the other Carnegie categories, the corresponding figures range from less than 0.4 to 0.9, indicating lower prices for commercially published journals than for those published by non‐profits (Bergstrom et al, 2014; Walters, 2022; Walters & Markgren, 2021b). Overall, price discrimination makes commercial publishers' journals relatively expensive for R1 institutions but relatively inexpensive for everyone else.…”

“…Most commercial publishers seem fully aware of this situation. At the same time, there is some evidence that the publishers most likely to practice widespread price discrimination are those with the personnel, data, and other resources needed to carefully evaluate elasticity of demand and the potential effects of substitution—that is, commercial publishers and perhaps the larger non‐profits (Walters, 2022). Smaller, specialized non‐profit publishers may have overlooked the benefits of reaching outside their traditional core markets (e.g., research universities), or they may lack the information or expertise needed to determine the degree of price discrimination that would best serve their needs.…”