Tag: Economics

ebooks, libraries, and the discount rate

Evolution of Readers
Creative Commons License John Blyberg via Compfight

The other day I was listening to a Planet Money podcast episode, and they were talking about a new-to-me financial term: the discount rate. As they described it, this is “the rate you use to size up future costs.”

This morning I read a blog/essay by cartoonist Dave Kellett (who draws the nerdy-fun comic Sheldon) which argued that ebooks in libraries would be the death of the traditional publishing industry. As he put it, “The internet has shown, again and again, that the average consumer always tends toward the cheaper, faster solution. And all things being equal between delivery systems, there’s no debate which one is more advantageous for the individual: The borrowed copy.”

Not long after reading this essay, I attended a training session by one of our ebook vendors, during which at one point they mentioned that the cost for MUPO books (multiple simultaneous user access; essentially a site-license) as being only 150% of list price, which in their words is a good deal. I held my breath for a moment, as I knew the cost of MUPO had been contentious in internal discussions in the recent past. However, the moment passed without comment.

All of these bits and pieces began churning in my mind until finally I reached a rather shocking to me conclusion: 150% of list price for unlimited simultaneous user access is an amazing deal, particularly now that these ebooks are becoming more functional for the users.

Think about it — for the cost of half of a second copy, any number of our users can view, download, print, copy, and even read the same book at the same time. In the print world, at best you might get four people reading the same copy a book at the same time if you could smoosh together close enough and the font size wasn’t too small. Or, you’d buy multiple copies for class reading assignments that would then end up being discarded when the curriculum changed.

How could I go from thinking that ebooks shouldn’t cost more than print to thinking that MUPO pricing is a good deal? Well, my discount rate changed. When I thought about it from the perspective of copies saved rather than prices increased, it made the cost difference seem less heinous.

NASIG 2011: Polishing the Crystal Ball — Using Historical Data to Project Serials Trends and Pricing

Speakers: Steve Bosch & Heather Klusendorf

The Library Journal periodicals price survey was developed in partnership with EBSCO when the ALA pulled the old column to publish in American Libraries. There is a similar price survey being done by the AALL for law publications.

There is a difference between a price survey and a price index. A price survey is a broad look, and a price index attempts to control the categories/titles included.

[The next bit was all about the methodology behind making the LJ survey. Not why I am interested, so not really taking notes on it.]

Because of the challenge of getting pricing for ejournals, the survey is based mainly on print prices. That being said, the trends in pricing for print is similar to that of electronic.

Knowing the trends for pricing in your specific set of journals can help you predict what you need to budget for. While there are averages across the industry, they may not be accurate depending on the mix in your collection. [I am thinking that this means that the surveys and indexes are useful for broad picture looks at the industry, but maybe not for local budget planning?]

It is important to understand what goes into a pricing tool and how it resembles or departs from local conditions in order to pick the right one to use.

Budgets for libraries and higher education are not in “recovery.” While inflation calmed down last year, they are on the rise this year, with an estimate of 7-8%. The impact may be larger than at the peak of the serials pricing crisis in the 1990s. Libraries will have less buying power, and users will have less resources, and publishers will have fewer customers.

Why is the inflation rate for serials so much higher than the consumer price index inflation rate? There has been an expansion of higher education, which adds to the amount of stuff being published. The rates of return for publishers are pretty much normal for their industry. There isn’t any one reason why.

snowballing debt

My parents have been talking to me off an on over the past five years or so about their budget plan that is allowing them to pay off debt (they’ll be completely debt-free in August, for the first time since the early 70s) and still live pretty well. They’re following the advice of financial guru Dave Ramsey, and have encouraged me to attend one of his Financial Peace University seminars. Considering that these things aren’t cheap, I’ve opted to make use of free resources, their advice/experience, and the advice/experience of friends.

Recently, a friend was commenting on how by budgeting only $1000 a month and paying down debt using a snowball plan, she could be completely debt-free in just a few years. My initial thought was, “sure, you must not have nearly as much debt as me, or at as high of an interest rate.” And while I was partially correct, I was very surprised to discover that with the same amount of money, I could be completely credit card debt-free in two years and have my student loans paid off in six years.

Of course, this will require a level of discipline I have yet to master, and I’ll need to be more creative about planning for big purchases that occur in frequently. However, seeing the plan laid out before me and realizing that it’s not some unattainable dream has made me much more motivated to just do it already.

The plan starts July 1. I’m going to reassess where I am at that point, and then start tracking my progress, which is also a good motivator.

pay off that debt!

Lifehacker turned me on to the Federal Reserve Bank Credit Card Repayment Calculator today. If you haven’t already, do take a look. With just a few keystrokes, you can find out how long it will take to pay off your consumer debt, how much interest you will pay over that time period, and what your monthly payments should be to do so. You can tweak the numbers by changing the monthly payment or changing the pay-off time.

I was able to get a personal loan earlier this year that allowed me to free up some of my budget and pay off most of my consumer debt in 36 months, but it wasn’t enough to cover everything. The balance on my remaining credit card is rather steep, and I was beginning to wonder if I’d ever pay it off, but now I know that if I keep plugging away at the monthly payment I’ve been sending, I’ll have it paid off in a little over a year. Whew!

css.php