2002 Preliminary Price Projections

2001 Preliminary, 2000 Actual, 2000 Preliminary, 1999 Preliminary, 1998 Actual, 1998 Preliminary, 1997 Preliminary, 1996 Actual

Based on discussions with major publishers and the latest information on publisher price changes, world economic conditions, the current and projected values of the U.S. dollar, and electronic journal trends, divine/Faxon Library Services is projecting an approximate overall increase of 10% for a typical journal collection. This estimate is based largely upon our expectation that paper prices will increase slightly, the U.S. dollar will remain strong against all major currencies (including the Euro and the British pound sterling), and that other key factors will remain similar to factors that influenced prices for 2001. Please note that these are preliminary projections based on current conditions and information and are subject to change as the year progresses.

Publisher located in	North America	Continental Europe	U.K.	Other
General Inflation	2.3%	2.2%	2.3%	3.0%
Publishing Factors
Paper	2.0%	2.0%	2.0%	2.0%
Postage	0.0%	0.0%	0.2%	0.0%
Page/Volume Increases	3.0%	3.4%	3.3%	3.0%
Cancellations	3.1%	3.0%	3.0%	2.0%
Currency	0.0%	0 to -1%	0 to -1%	0 to -2%
TOTAL	10.4%	9.6 to 10.6%	9.8 to 10.8%	8.0 to 10.0%

Sample Collection Increase:	% of Budget $	x	Increase	=	Total
North America	50%	x	10.4%	=	5.2%
Continental Europe	30%	x	9.6 to 10.6%	=	2.88 to 3.18%
U.K.	15%	x	9.8 to 10.8%	=	1.47 to 1.62%
Other	5%	x	8.0 to 10.0%	=	0.40 to 0.50%
TOTAL					9.95 to 10.5%

To determine the overall increase for your collection, multiply the % of Budget $ of your collection for each category above by the Increase listed, and add the resulting numbers as illustrated above.

Key Assumptions

Paper and postage: Although electronic journals continue to form an ever-larger part of library subscriptions, most publishers continue to bundle print with the electronic version, resulting in slightly higher paper and postage costs. However, paper prices have remained stable since 1994/95, when a substantial increase occurred. Despite consolidation in the industry aimed at stabilizing production, overproduction still is expected to keep prices below the general inflation rate.

Postage: The U.S. Postal Service has raised postage rates starting in January of 2001. The Postal Service is requesting a further increase in early 2002. In the UK, postage is expected to rise by 2-5%.

Page/Volume Increases: Republications on the web and article-by-article postings will continue to expand this year, as will the number of pages and volume of printed materials. Until the journals switch entirely to electronic publication, this pressure to publish will result in higher costs for additional content.

Cancellations: Subscription cancellations will continue to affect publishers' pricing models. We will monitor this factor closely throughout the year, especially as publishers analyze their 2001 renewal rates. Movement from print to electronic format may offset the cancellation rate slightly, but publishers will also be factoring in changes in revenue streams resulting from consortial sales and from any trend towards document delivery or pay-per-view in lieu of subscriptions. In addition, to prevent the erosion of subscriptions, some publishers are offering lower price increases in exchange for guaranteed 100% renewals over 1 or more years, or for purchase of journal packages. Moreover, in many libraries, as larger portions of their budgets become tied to publisher or database packages, cancellation of journals outside those packages becomes necessary.

Currency: We expect the U.S. dollar to continue its strong position, despite the current slowing of the economy. At this early date, there are a host of unknowns that may affect the economy, including tax cut initiatives, changes in the interest rate, and energy prices. However, current projections in the financial markets suggest that the key currency exchange rates will remain relatively constant over the next year. The effect of the Euro has stabilized the European currencies with regard to each other, and may thus even out the more extreme swings in exchange rates among the major currencies, including the U.S. dollar.

Electronic Journals: The concept of "price" continues to evolve, as publishers offer new options and choices. Librarians must choose among a range of access and buying decisions, including consortial deals, package deals, simultaneous user levels, etc. Pricing models for individual print and electronic journals are likely to continue following a few basic patterns: bundled (electronic included with print, or more recently print included with electronic), electronic-only at a modest discount from the print price, and a combination at a modest premium over either print or electronic alone. Publishers are also experimenting with variable pricing based on previous or expected usage, or type and size of institution.

Archiving is still of concern to librarians who contemplate changing entirely to electronic only subscriptions. As more publishers issue guarantees of long-term access capabilities, however, librarians may feel more comfortable making this switch, for enhanced access and a price incentive.

As publishers evaluate usage patterns and subscriptions in the early part of 2001, pricing trends may become clearer. Faxon, Rowecom will continue to monitor publishers' pricing models closely and update its price projections accordingly.

General Inflation: While contributing to overall price increases, inflation, particularly in the U.S., Canada, and Western Europe is projected to remain at a moderate and consistent level into 2002.

Other factors: The ongoing consolidation of publishers via mergers and buyouts may affect prices, but it is not clear what effect these mergers will have. The largest of these still in the offing is likely to encounter few problems, at least in the U.S. (Elsevier's proposed acquisition of Harcourt Brace pales in comparison with the recent AOL-Time Warner deal). Most of the large STM publishers have had increases in single digits over the past couple of years. However, even a modest percentage increase in price for the upper range of STM journals has a significant dollar impact.

New publishing ventures, such as the SPARC initiative and BIOONE, are not likely to have an immediate effect on prices in general, although publishers will be following their progress and success with interest.