Commerce, Economics, Experimentation, Marketing, Metrics and Analytics, Research

Sizing the Market for Patron-driven Acquisitions (PDA)

old books in Château de Breteuil, France

old books in Château de Breteuil, France (Photo credit: Wikipedia)

Since I began to study patron-driven acquisitions (PDA), one nagging question has been how big it is. How many libraries use it or plan to? What sales volume is flowing through PDA systems?

After talking to a number of people in the industry, I am prepared to take a stab at some numbers.

But first, the caveat: These numbers are estimates based on a series of interviews; they are not absolutely firm. The only way to get firm numbers would be to review the internal reports of the various PDA vendors and add them all up. Vendors are understandably very reluctant to share this information. Thus, I did not even ask for it in my interviews. What I asked for instead was vendors’ estimates of the size of the total market.

There appear to be about 400-600 institutions around the world with PDA services up and running right now. For some institutions, the PDA projects are deemed to be experimental, but for many PDA has now found a permanent home. Most of the larger research libraries are now working with PDA in varying degrees, but the penetration of the academic library market is extensive and reaches to some very small institutions. Some of these programs are for print (under 10% of the total), some for e-books (the majority), and for some there is a hybrid structure, where the library may enable PDA for a title and then instruct the vendor to fulfill the order with an e-book if available, a print copy if not.

Perhaps more interesting than the number of institutions now using PDA is the rate of growth. It seems probable that the number of PDA programs will at least double over the next 18 months. There are several reasons for this. One is simply that the library community has been discussing PDA for several years now, which has yielded an extensive literature on PDA’s implications and how it works. It seems that every day I am sent a link for another article, and there is no sign of this stopping. Another reason for the rapid growth is that library consortia are now sending out RFPs to PDA vendors. This means that one sales effort could result in 5 or even 25 libraries signing up for programs. PDA is thus likely to be near-ubiquitous in a few year’s time.  “Ubiquitous” means everywhere; it does not mean everything. Most libraries use PDA in conjunction with other means of acquiring books for their collections.

Publishers who are sitting on the sidelines concerning PDA may wish to reconsider their position. As the number of participating libraries grows, not having your books in a PDA program could limit their exposure in the marketplace. Some publishers are withholding books from PDA programs because they insist that libraries buy their books, whether sold individually or as part of aggregations, rather than leave matters to a chance patron request. (Of course, the responsibility of a publisher is to take the chance out of a patron request through superior marketing.) Do publishers — book publishers, at any rate — really have that kind of influence over a library’s purchasing decisions? I don’t think so. A better strategy is to make books available in the various ways librarians may want them and to let the librarians choose. Thus books should be offered as print, as ebooks, as parts of aggregations, as “firm” sales, and as part of PDA programs.

Getting at the dollar value of PDA is challenging because the estimates offered by people in the field are all over the place. For the amount in dollars of the total annual expenditure for books sold through PDA, I literally heard a range from $2 million to $60 million. That’s an impossibly wide range, leaving me to believe that I had not articulated the question properly. It may be that the high number — $60 million — was for all e-books, and the low number was for university press books only (my research is focused primarily on university press titles). It’s also probable that some respondents did not distinguish between books that were sold through PDA and those that were rented.

When I revisited this question with representatives of the book supply chain, a consensus began to emerge. The 400-600 libraries using PDA generate sales to their vendors of between $15 million and $25 million, including both sales and rentals. Those figures include the vendors’ margin, so publishers received something in the area on 60-70% of that amount.

So, a rough estimate gives us a current PDA marketplace of $20 million, with publishers receiving perhaps $13 million of that. The university press share of that is roughly 25% or $2.6 million (net to the publishers). PDA is a phenomenon of academic libraries, which explains why the university press share is as high as it is.

To put this into perspective, total sales of university press books are in the range of $320 million, with about 25%, or $80 million of that, going to libraries. It’s reasonable to forecast that PDA for university press titles will reach 10% of the total library market for press titles in a few years.

As I write this, I find myself reaching for all the qualifying remarks. No, we don’t really know how many books university presses sell to libraries; no, not all university press publishing programs are alike and, yes, some programs are more heavily skewed to the library market; no, we can’t be confident that people carefully distinguish between print PDA and e-book PDA; furthermore, with so many new offerings of e-book aggregations now coming on-stream, we can’t determine how many libraries will purchase or rent e-books through PDA and how many will opt for entire collections. What we can say with confidence is that PDA is a small but rapidly growing marketing program and that is likely to be with us for many years to come.

The more difficult question to assess is whether PDA sales are additive, subtractive, or neutral. Virtually every case study of PDA notes the savings for libraries, so it is hard to imagine that the current PDA programs are adding to publishers’ revenue. How publishers can claw back some of that lost revenue will be the subject of another post.

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About Joseph Esposito

I am a management consultant working primarily in the world of digital media, software, and publishing. My clients include both for-profits and not-for-profits. A good deal of my activity concerns research publishing, especially when the matter at issue has to do with the migration to digital services from a print background. Prior to setting up my consulting business, I served as CEO of three companies (Encyclopaedia Britannica, Tribal Voice, and SRI Consulting), all of which I led to successful exits. Typically I work on strategy issues, advising CEOs and Boards of Directors on direction; I also have managed a number of sticky turnarounds. Among other things, I have been the recipient of grants from the Mellon, MacArthur, and Hewlett Foundations, all concerning research into new aspects of publishing.

Discussion

12 thoughts on “Sizing the Market for Patron-driven Acquisitions (PDA)

  1. “The more difficult question to assess is whether PDA sales are additive, subtractive, or neutral. Virtually every case study of PDA notes the savings for libraries, so it is hard to imagine that the current PDA programs are adding to publishers’ revenue. How publishers can claw back some of that lost revenue will be the subject of another post.”

    This is a misplaced statement as it compares two separate questions and comes up with the wrong answer. From the experiences discussed at recent conferences the expenditure is actually higher on ebooks across their respective PDA programs. That Q&A in isolation would say that the model is adding to the publishers’ revenues.

    I hear the shouts of objection already: libraries say they’re saving money! And, as a consequence, publishers are losing revenues. No. They are saving money on not buying inappropriate books and purchasing increasing amounts of appropriate books. That is different form saying that revenue is being lost from the chain. It is being lost to a competing title/publisher, not to PDA. We can now all welcome the University Presses to the commercial world of competition and the need to understand marketing products. And yes, I did just say books were products…

    So the question in the final paragraph is flawed. It is ye olde apples and oranges comparison. Which are also products, just fruitier.

    Posted by Steven Bell | May 8, 2012, 5:59 am
    • To the publisher of apples, there is little consolation in knowing that the market for oranges is thriving.

      Posted by Joseph Esposito | May 8, 2012, 10:17 am
      • So true. With regret at extending this metaphor to an overripe state, if purchasing oranges provides better nutrition for less money then why should we support a market for apples? I think we agree that there will always be a market for apples. What we don’t know yet is whether it will be as big or whether it will be larger but with an altered cashflow. Maybe the proportion will be lower but the overall size of the market will be larger due to a clawback from overpriced serials?
        We have to remove the emotion from any commercial equation and look at how publishers manage any shift in purchasing patterns. Ongoing studies and pilots will provide some clarity on the shape of the industry to come. What is clear is that where libraries now utilise PDA as a key procurement strategy the publishers who refuse to engage are essentially freeing up money for other publishers’ books to be purchased. So even if the user wants apples they can only buy oranges.

        Posted by Steven Bell | May 8, 2012, 11:43 am
        • I entirely agree. There are reasons not to participate in PDA programs (as Sandy Thatcher notes elsewhere, the potential erosion of the course adoption market is put at risk with ebooks, and not just from ebooks delivered through PDA), but much of the time PDA will add to volume. In any event, PDA is a rational collections strategy and publishers who are hurt by these programs will have to adjust their output accordingly.

          Posted by Joseph Esposito | May 8, 2012, 2:26 pm
  2. In the U.S. academic research libraries are still facing budget reductions and the acquisitions budgets are often the focus of reductions. What is clear from the marketplace is database sales are still strong and increasing, journal packages are under pressure, and book budgets are still being squeezed. The growth of PDA programs may help the libraries select books that patrons want but at the same time these libraries are buying less books. Book vendors with active PDA programs are faced with a decline in sales for most of the libraries in the program. Often that decline is a significant reduction. Perhaps libraries would be buying less books even without PDA. In the end some publishers are going to see less sales. We are seeing libraries buying less e-book packages from publishers as they have moved to title by title selection.

    Posted by Dan Tonkery | May 8, 2012, 9:29 am
  3. What about the dilemma publishers face with respect to those books that may have significant course adoption potential? Are they being held out of PDA programs as ebooks, but still on offer in print? This is the same dilemma that university presses have been facing when deciding whether to commit certain titles to the various ebook aggregations available via subscription. This is potentially a huge problem for presses as paperback sales for classroom use are a very important part of their overall revenue, probably close to 40%.

    Posted by Sandy Thatcher | May 8, 2012, 12:22 pm
    • What about the dilemma publishers face with respect to those books that may have significant course adoption potential? Are they being held out of PDA programs as ebooks, but still on offer in print?

      If these books are being held out of ebook programs, it’s probably because the publishers are holding them out. Are you aware of aggregators or libraries deliberately excluding such titles where the publisher offers them?

      Posted by Rick Anderson | May 8, 2012, 12:35 pm
  4. What drives the patron? Ads? Reviews? Word-of-mouth?

    Posted by Fred Gullette | May 8, 2012, 1:05 pm
  5. Perhaps a strategy the university presses could live with is delayed PDA. Wait a year or two, maybe more before adding a title to a PDA program. That way, it would lessen the impact on approval programs, and we would have a little more information on course adoption potential.

    Posted by Tony Sanfilippo | May 9, 2012, 7:11 am
    • Tony, you know the reason that won’t work: to get course adoptions, you need to publish a book in paperback, and if you publish it right away in paperback, too many libraries will but the paperback and the hardback sales will suffer. besides, it often takes at least a year before reviews begin to appear and teachers get to know about a new book enough to consider adopting it.

      Posted by Sandy Thatcher | May 9, 2012, 1:53 pm
      • Earlier today I asked a PDA vendor if they would consider allowing windowing of titles in their program and they said they absolutely would not. It’s PDA up front or nothing. Thinking about the format issue, and the lag Sandy mentions, I think a five year window would work. If only I could find a PDA vendor who would allow it.

        Posted by Tony Sanfilippo | May 9, 2012, 5:29 pm
        • I don’t think this would work, Tony, for two reasons. First, most (probably all) PDA programs have been married to approval systems. These systems work with new publications. If you “window” a PDA title, then you may not get it into the approval systems and hence it will not be incorporated into the PDA offering. Second, few libraries are likely to have multiple PDA vendors. This means that a publisher is going to want to have its titles represented in all the PDA services, not just one that allows windowing, if you can find a PDA vendor that does allow that. I have some more PDA posts in the works and will be addressing some of these issues at greater length shortly.

          Posted by Joseph Esposito | May 9, 2012, 5:40 pm

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