When I began to study the implications of patron-driven acquisitions (PDA) a couple years ago, I concluded that PDA services would put upward pressure on book prices as publishers sought to recover some of the sales and margin they would lose to the new demand-driven systems. While it’s still too early to determine longer-term trends in pricing, an outline of how pricing will evolve is forcing itself into view. But that view is not entirely clear, as the number of players in the supply chain and the availability of many titles from multiple sources make it very hard to determine what an individual book costs.

Libraries purchase books in a number of ways.  Some are purchased in what could be called the old-fashioned way — librarians reviewing individual offerings or responding to an inquiry by a faculty member; sometimes a librarian may simply happen upon a good review. In my experience, this is how most people, including career publishers, believe librarians work most or all of the time, but in fact most books are purchased through approval plans, where the library works with a vendor to determine the kinds of books that are appropriate for the institution. The vendor then sorts through its extensive inventory and presents only a subset of titles, which the library will either approve and purchase or decline. There are large administrative efficiencies in such plans (nothing is more expensive than title-by-title acquisitions), so libraries typically are rewarded for participation in approval plans with a small discount.

Books are also acquired in aggregations. These programs came into existence (inevitably, in my opinion) with the emergence of digital technology. The game here is to make books look more like the journals business, which is now mostly electronic. A digital aggregation of books can be sold like a digital aggregation of journals, aka a Big Deal. As I write this, several vendors are vying for the book-aggregation business, and some very large publishers (e.g., Springer and OUP) have aggregations of their own.  The benefits to libraries of such aggregations are clear — the efficiency of making a large purchase, a discount for buying so many books at one time, the affordances of digital content including full-text search, etc.  Publishers like aggregations because they make it possible to sell many books that might otherwise be passed over in approval plans. And that is why a discount is offered:  what is sacrificed in margin per title is (one hopes) more than offset by volume.

It may or may not be the case that aggregations will add to publishers’ sales to libraries. Short-term, they almost certainly will, but longer term there is the inherent problem of eroding course adoption sales. Let’s say you have a book on the backlist that reliably sells 500 copies a year for upper-level course adoptions. Now a digital copy of that book can be found in the library collection, where any number of students can check it out simultaneously.  How long before those 500 copies disappear into the aggregate library sale? I have seen figures that document this erosion in other segments of professional publishing, and if these figures were public, I doubt many publishers would participate in digital aggregations. Aggregations, in other words, are an administratively efficient way to sell weaker titles. That doesn’t mean that they don’t have value; the market is diverse.  It simply means that the strongest editorial programs will be the least likely to be included in such bundles.

With PDA (increasingly called DDA for demand-driven acquisitions) records for books that a library does not yet own are placed into the library’s catalogue. If a patron seeks to check out such a book, then an order is placed. For e-books the order is filled immediately; for print PDA programs, there is a delay until the book can be shipped ot the library. PDA allows libraries to hedge their bets on books that may be of interest (they got through the approval plan), but for which there may in fact be no express demand from faculty or students or that demand may take years to assert itself. Since the economic relationship between a library and a publisher is a zero-sum gain (when one wins, the other loses), the benefits of PDA to the library are likely to result in publishers fighting back, most likely in the form of higher prices.

So let’s make up some numbers to illustrate these different ways to acquire books. I emphasize that these are indeed made-up numbers and do not reflect actual pricing in the current or evolving marketplace.

Let’s suppose the list price of a book is $50. If a library is purchasing books one by one, this is what the library would expect to pay. While fewer and fewer books are purchased in this manner, the list price establishes a baseline against which all other prices are compared.

An approval plan is more efficient than purchasing books one at a time. Thus the approval plan vendor is likely to provide an incentive to the library for using such a plan. Let’s imagine then that the price of our book with a $50 list price is $45 under an approval plan.

The same title may be placed into an aggregation. So now we have 1,000 titles sold as a single package.  The average list price for individual titles in that package is $50, but libraries will not be willing to pay that amount without getting to cull certain titles. This results in the package being offered at a substantial discount; perhaps the entire package is made available for $30,000, which means that the imputed value of our hypothetical single title is now $30.

Now that title is placed into a PDA program. Publishers have multiple challenges here. Few publishers are large enough to support their own PDA programs, so decision-making is complicated by the need to work with vendors (who exact a slice). But the publishers will seek to get a higher price for a PDA title to offset the lost sales that are the basis of PDA (because the publishers’ lost sales are the libraries’ gain). So our book with a $50 list price may have a PDA price of $60.

It is not clear at this time whether publishers will be able to implement systems to enforce differential pricing for PDA and sales of the traditional (one book at a time) method, but they will try. If they are not successful, the higher price will be the only one.

So our $50 book can be purchased for $50, $45, $30, or $60. And we haven’t even gotten started yet.

There are several other variables that play a role here:

• Format. It makes a big difference if a program is entirely digital or includes print editions.  Rationalizing pricing across formats is hard to do, and it becomes even harder when you may have the print edition available from one source, the e-book available from another.
• Intermediaries. Most books are sold through middlemen, but there are exceptions, especially for ebooks.  The intermediaries impose their own constraints, which can add new variables to costs and pricing.
• Unconventional sources. A company like Amazon may sell one book at a time (in print only, at least at this time), but may do so at a steep discount. Amazon may sell our $50 book for $40 and thus make the evaluation of all the other options that much harder.
• Multiple sources.  What about the book that is available through three different aggregators and perhaps also available from Amazon and other online retailers and perhaps the publisher itself? Surely this will invite some form of discounting.
• Short-term rentals.  An aspect of PDA is that it is not always about acquisition; it is often used for short-term rentals of a title. So to acquire our $50 book through a PDA program may cost $60, but to rent it for a day or two may cost only $10.
• Usage rights.  Some titles may be for one user at a time, another may support multiple simultaneous users. Some titles may enable use in different ways (e.g., integration into a learning-management system), others may not. New use cases are invented daily. How to price these things?

The fact is that marketing books is now as complex as the marketing of any product, and it is much more complex than marketing journals. As an industry, book publishers have not caught up with this yet. Few publishers have the expertise to analyze all these variables.

Another way to look at this is to say that, broadly speaking, books and all other materials in the academic market really have two kinds of costs:  the cost for access to the content and the administrative cost of acquiring it.  What publishers, with the help of library vendors, have been able to do is to reduce the administrative cost to libraries and then turn around and increase the cost for content.  In effect, when libraries come up with more efficient workflows with the aid of their many suppliers, publishers turn around and raise the prices for the materials that are put through that workflow. This is how the Big Deal works:  a substantial collection from a single source, but at a whopping price. Publishers have effectively been hollowing out libraries, taking on more of the administrative tasks and leaving libraries with the hard-to-curate tasks that resist industrial engineering. Libraries get the overhead, publishers get the profit.

We should expect libraries to push back at this, and they are. The library-as-publisher is a popular meme for a good reason. Libraries will also seek ways to sort through the various and seemingly intentionally confusing offerings to get at just what, exactly, is the price of something. There is a real risk that publishers have pushed things too far. Librarians may decide to vote with their checkbooks and just say no.