Year 2003 Subscription Price Projections

2002 Projections, 2001 Preliminary, 2000 Actual, 2000 Preliminary, 1999 Preliminary, 1998 Actual, 1998 Preliminary, 1997 Preliminary, 1996 Actual

Preliminary Price Projections - January 2002

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, and that other key factors will remain similar to factors that influenced prices for 2002.

Despite the recent economic downturns, analysts predict that conditions will improve by Spring 2002, about the same time publishers begin setting their prices for 2003. However, the adverse effect on library budgets is likely to remain a factor.

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	2.0%	2.2%	2.3%	3.0%
Publishing Factors
Paper	2.0%	2.0%	2.0%	2.0%
Postage	0.3%	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, cost of paper continues to be a factor. However, paper prices have remained relatively stable since 1994/95, when a substantial increase occurred. Consolidation in the paper industry continues, and analysts are suggesting that the traditional link between pulp and paper prices may be weakening. In addition, paper manufacturers are moving toward just-in-time production rather than the over-production, which has kept prices depressed. Existing stockpiles, however, at least in the short term, are expected to keep prices below the general inflation rate.

Postage: The U.S. Postal Service and the Magazine Publishers Association have agreed on three key positions: a June 30, 2002, implementation date for new rates as opposed to an earlier one proposed by the Postal Service; a reasonable "back-end" assurance that the Postal Service does not intend to file another rate case earlier than fall 2002, guaranteeing that rates would not increase before October 2003; and, explicit inclusion of an enhanced mail preparation (i.e., "pallet") discount agreed to and supported by the MPA and other representatives of periodicals mailers. This agreement, due to be implemented later in January, would mean an increase of approximately 10% rather than the proposed 15%. Although this increase will affect subscription prices for 2003, the overall impact will be slight.

Page/Volume Increases: The number of pages and volume of printed material will continue to increase in many disciplines. 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 2002 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 some 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 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. However, there is not sufficient history to make any firm assumptions.

Electronic Journals: Bargaining and negotiation has replace "fixed pricing". Moreover, 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, electronic only, electronic plus print, etc. 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 2002, pricing trends may become clearer. divine/Faxon Library Services will continue to monitor publishers' pricing models closely and update its price projections accordingly.

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

Other factors: Most of the large STM publishers have had increases in single digits over the past couple of years, and they have become increasingly sensitive to the adverse psychological impact "double-digit" increases will have on the industry. However, even a modest percentage increase in price for the upper range of STM journals has a significant dollar impact.

Last year's publishing ventures, such as the SPARC initiative and BIOONE, do not seem to have had a direct effect on prices in general; with less library funds available, they represent yet another set of titles from which librarians must choose.