Digitization, Internet publishing and the revival of scholarly monographs: An empirical study in India
First Monday

Digitization, Internet publishing and the revival of scholarly monographs: An empirical study in India by Rojers P. Joseph and Shishir K. Jha



Abstract
This research shows the growing utility of internet-based digital models in reviving the crisis-stricken traditional print monograph publishing. The rising prices of scientific journals in the past three decades forced academic and research libraries to resort to cutbacks on monograph budgets. The declining sales to libraries and rising production costs led to a significant drop in global demand for print monographs, rendering monograph publishing financially unattractive. Combining the flexibility of digitized content with the global reach of the Internet, three emerging digital models — print on demand, bundled e-books, and e-consortia — are beginning to revamp the monograph publishing business.

Contents

Introduction
Crisis in traditional scholarly monograph publishing
Methodology
Digitization, print on demand and the revival of print monographs
Monograph prices: Print vs. digitized
Monograph prices in an e-consortium
Conclusion

 


 

Introduction

Technological innovations have played a crucial role in transforming book publishing (Keh, 1998), ever since commercial printing began in the mid-fifteenth century with the invention of printing press. Content digitization, coupled with the spread of the Internet and wireless technologies, has significantly altered the book value chain [1]. For instance, digital publishing [2] transforms the way book is consumed, as e-books are accessed on digital devices such as e-readers, tablets and even smartphones. Digitized books are expected to constitute about 20 percent of the book market in value by 2015 in developed nations (ParisTech Review, 2011).

A significant outcome of digitization in book publishing is the possibility of substantial cost savings, mainly in two ways. First, e-books have no marginal physical cost of production (cost of paper, printing and binding) after the first copy is produced. Second, selling digital books directly to users eliminates the cost of distribution (distributor and retailer margins) (Kukalis, 2009).

Digitization generates small but significant savings in other value chain costs too. The cost related to storage, pilferage, and return of unsold stock is virtually non-existent, as e-books are distributed through digital content management systems (CMS). In addition, digitization lowers transaction and search costs (Brown and Goolsbee, 2000; Brynjolfsson, et al., 2003) and helps achieve economies of scale by enabling wider market reach (van Dusen, 2000). Digitization and the associated cost savings have led to substantial reduction in books prices, particularly in trade fiction and self-published segments (Rich, 2010; Post, 2011).

 

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Crisis in traditional scholarly monograph publishing

Books targeting students and faculty in universities and colleges are referred to as higher education books which comprise textbooks and scholarly monographs [3]. In India, the higher education publishing market is valued at Rs 15 billion (~$US250 million) [4] (Publishing Horizon, 2008), a major share of which is held by books imported from the U.S. and Europe. India needs an estimated 116 million more scholarly books to fill the quality gap in its tertiary education sector (University Grants Commission, 2008; Manjunatha, et al., 2011). Moreover, to achieve the targeted Gross Enrolment Ratio [5] of 21 percent in tertiary education by 2017 (Suneja, 2011), India needs to make higher education books available to several million more students.

Despite having opportunities for growth and expansion (PricewaterhouseCoopers, 2009), print monograph publishing is in a state of crisis worldwide. The roots of this crisis can be traced to the steep rise in prices of scholarly journals over the past three decades. For instance, the unit cost of journals purchased by ARL [6] member libraries rose by 180 percent against a rise in Consumer Price Index (CPI) of 86 percent, between 1986 and 2006. The resultant increase in spending on journals forced the libraries to cut their budget for monographs. In 1986, the libraries had spent 57 percent of their budget on journals and 43 percent on monographs. In the following two decades, this proportion grew more skewed. In 2006, the ARL member libraries had to spend 76 percent of their budget on journals, leaving only a lowly 24 percent for monographs (Association of Research Libraries, 2006).

Declining sales and rising prices: The vicious spiral

Scholarly monographs, generally used as reference books, have limited and uncertain demand. Therefore, each print run of monographs is for a few hundred copies and a decision on subsequent print runs is taken based on the initial sales (Dickens, 1979). Libraries that had to bear the brunt of rising prices of scientific journals resorted to cutbacks on monograph budgets. This led to a reduction in the average sale of monographs to libraries from 800 copies to 200 copies globally (Hitchcock, 1997). From 2,000 copies in 1970s, the worldwide market for monographs tumbled to about 500 copies in 1990s, while the processing costs increased (Strauch and Hunt, 1996).

 

The vicious spiral of declining sales in print monograph publishing
 
Figure 1: The vicious spiral of declining sales in print monograph publishing.

 

Declining sales, the resulting diseconomies of scale, and climbing production costs caused the monograph prices to rise. Higher prices, in turn, affected the demand by individual buyers, pushing the worldwide sale of monographs further down this vicious spiral (see Figure 1). According to Wasserman (1998), the single greatest reason for the financial problems of university presses publishing scholarly monographs is the declining sales to libraries.

Digitized monographs: The impact on costs and margins

The physical cost of production (paper, printing and binding) and the cost of distribution account for about 50 percent of the price of a scholarly monograph (Dickens, 1979; South African Book Development Council, 2007; Malhotra, 2008), meaning the price would be cut to half if these costs are eliminated. Despite having the potential for large cost savings, digitization does not seem to result in lower prices for monographs. For instance, Prentice Hall of India sells digitized monographs at the same price as that of their print equivalents.

Given the modest 10 percent margins from print monographs (South African Book Development Council, 2007; Malhotra, 2008), academic publishers sense an opportunity in selling e-books to offset the decline in revenues and profits from print books. John Wiley and Sons was a case in point. In 2011, Wiley registered a 74 percent growth in digital books which accounted for 16 percent of its scholarly book sales. Significantly, Wiley’s profits grew by 20 percent against a lowly three percent growth in total sales (Milliot, 2011). As the share of digital content in academic publishing steadily increases, examining the utility of emerging digital models for scholarly monographs is the objective of this study.

 

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Methodology

This study examines three digital models used for scholarly monograph publishing in India. To begin with, the study assesses the utility of digital printing based print on demand (POD) model in overcoming the crisis in print monograph publishing. Secondly, the study examines the profit margins for e-monographs by comparing the prices of print monographs and bundled e-monographs by a dual-mode academic publisher. Thirdly, the study investigates the pattern of price differentials for digitized monographs sold as subject collections and clusters on an e-consortium.

 

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Digitization, print on demand and the revival of print monographs

Digital printing refers to the methods of printing from a digital based image directly to a variety of media. Print on demand (POD) publishing, which works by digitally printing each copy of a book based on customer orders, provides an economically viable alternative to traditional offset printing [7]. In offset, if the demand for a book is less than 400-500 copies, the publisher would not be able to recover the initial costs involved in plate making (the cost of producing the first copy).

As the average library sales of monographs printed using offset technologies dipped to about 200 copies globally, publishers became increasingly reluctant to produce monographs. The higher prices ($US200 or more) publishers charged to avoid losses often created high access barriers for students and researchers, lowering the demand for monographs further. Besides, authors who spent years researching and writing monographs struggled to find publishers (Steele, 2008).

In contrast, printing even a single copy of a book is feasible in POD, as it overcomes the ‘minimum copies’ constraint of traditional offset. At lower print runs, POD incurs much lower cost per page than offset does. For instance, at 100 copies, the cost per page for POD is only about half that for offset (see Figure 2). In addition, POD helps minimize the cost of storage and eliminate losses from the return of unsold copies. Thus, POD offers publishers an opportunity to produce books for a smaller audience, when the budgetary constraints do not justify large-run printing.

 

Offset printing vs. digital printing: cost per page
 
Figure 2: Offset printing vs. digital printing: cost per page (200 pages book in 70-80 GSM paper with B&W interior and coloured cover). Source: A higher education publisher and a printing firm.

 

To learn how academic publishers perceived the utility of POD for scholarly monographs, we interviewed 11 key informants from the higher education book publishing industry in India. All respondents except one were aware of the utility of POD for monographs. Some of the key responses are: “POD is useful for meeting small demand for foreign higher education books in India”; “POD is useful for out-of-print higher education books”; “We use POD for reference books and monographs”; “POD is used to reprint foreign higher education books in India”; and, “We use POD for selling higher education books in foreign markets”.

The responses indicate the growing utility of digitally enabled print on demand (POD) in print monograph publishing. For instance, several Indian publishers use the POD route to sell print monographs in foreign markets by sending digital copies to distributors abroad who, in turn, print copies based on customer orders received online. In essence, the flexibility of digital printing combined with the rise of the Internet as a global communication platform is beginning to revive the traditional print monograph publishing.

 

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Monograph prices: Print vs. digitized

For a comparison, we analyzed the prices of print and digitized monographs sold in India by a foreign dual mode academic publisher (name concealed). Prices quotes for 57 digitized monograph titles in business management by the publisher were obtained from an institutional library which subscribed to those titles. The books are sold in bundles directly to the institution through an online content management system (CMS). Under the arrangement, the institution has to buy a minimum of 25 titles, besides paying an annual maintenance fee from the second year. The books can be accessed online by multiple users (as specified in the contract). No downloads are permitted and a limit is fixed on the number of pages that can be printed by users.

The publisher sets the price (in U.S. dollars) of a digitized monograph as equal to that of its hardcover equivalent in the international market. Ten of the 57 titles are sold also as paperbacks, priced in Indian rupees. Comparison of the prices (converted to U.S. dollars) of paperbacks with that of their digital editions provides startling results (see Figure 3). On average, the paperback prices are only 8.02 percent of the e-book prices, meaning e-monographs would help boost revenues manyfold. Moreover, the minimum bundle size of 25 titles helps the publisher sell backlisted and out-of-print titles, along with those in demand.

 

Price comparison for digital and paperback editions of 10 select monograph titles
 
Figure 3: Price comparison for digital and paperback editions of 10 select monograph titles. Source: Price quotes by publisher.

 

Digitized monographs: Costs and margins

To examine costs and margins, we obtained the break-up of value chain costs for a digitized monograph selling 500 copies, from the publisher. The publisher’s margin at an astounding 40 percent for digitized monograph compared to the average 10 percent margin for print monograph is not entirely unexpected. While the cost of production for print monograph (design, typesetting and editing plus paper, printing and binding) is about 20 percent of its price, the comparable cost for digitized monograph (design, typesetting, and editing plus digitization) is only about 10 percent. While the distribution cost (wholesale and retail margins plus marketing) for print monograph is about 40 percent of its price, the comparable cost (marketing plus distribution) for digitized monograph is only 25 percent. A detailed break-up of the value chain costs for the digitized monograph is provided in Figure 4. This would explain why academic publishers make larger profits by selling digitized content when revenues have flattened out due to declining print sales.

 

Cost breakdown, on average, for a digitized monograph selling 500 copies
 
Figure 4: Cost breakdown, on average, for a digitized monograph selling 500 copies. Source: Publisher’s internal records.

 

 

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Monograph prices in an e-consortium

Further, we examined the prices of e-monographs on an online consortium. The National Library and Information Services Infrastructure for Scholarly Content (N-LIST) is an e-consortium initiated by the Government of India. N-LIST makes e-monographs from several publishers available for universities and colleges in India. The consortium covers about 100 universities, 34 technical institutions and more than 3,000 colleges and has about 75,000 monograph titles listed for sales to member institutions.

N-LIST does not sell individual titles online. The consortium sells e-books as subject collections and clusters to member institutions. For instance, the subject collections in ‘Business Management’ and ‘Decision Sciences’ combine to form ‘Cluster A’. Four subject collections, namely ‘Engineering’, ‘Chemical Engineering’, ‘Material Science’, and ‘Energy’ together form ‘Cluster B’ (see Table 1).

 

Prices of individual titles, subject collections and clusters on N-LIST

 

The prices of e-books in a subject collection are negotiated with the publishers, depending on the number of colleges purchasing the collection. Comparison of the average prices of individual titles, subject collections and clusters shows significant price differentials. When sold as subject collections, the average prices of e-books are about 10 times cheaper than that of individual titles. The prices fall further when subject collections are combined to form larger clusters. The average e-book prices in clusters are about 15-20 times cheaper than that of individual titles.

A detailed comparison of average prices for four subject clusters is provided in Figure 5. Thus, the scale economies resulting from the sale of e-monographs in collections and clusters allow publishers to offer extremely low prices, leading to a win-win situation for publishers and users.

 

Average prices of individual titles, subject collections and clusters on N-LIST
 
Figure 5: Average prices of individual titles, subject collections and clusters on N-LIST. Source: Computed and plotted using data obtained from N-LIST.

 

 

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Conclusion

Digital printing and Internet publishing models are beginning to transform the crippling traditional print monograph business, as this research indicates. Print on demand (POD) model provides the flexibility to print even a single copy of a monograph, based on customer orders. In a bundled e-monograph model, the publisher charges prices that are 20-25 times higher than that of paperback editions. The publisher’s margin at an astounding 40 percent for digitized monographs underscores the profit potential of digital publishing. In an e-consortia model, academic publishers sell digitized monographs in subject collections and clusters to hundreds of colleges. The resulting scale economies lead to average prices that are 15-20 times cheaper than that of individual titles, benefitting publishers and users alike. Besides, the digitized monograph models enable publishers to bundle backlisted and out-of-print titles with those in demand. In summary, the flexibility of printing even a single copy, the potential for earning larger margins and the possibilities for achieving scale economies enhance the utility of digital models in reviving the crisis-stricken traditional monograph publishing. End of article

 

About the authors

Rojers P. Joseph is an Assistant Professor in the Strategic Management Area at Indian Institute of Management Rohtak. He obtained his Ph.D. from Indian Institute of Technology Bombay. His research interests include strategy and IPR, business models in a digital/knowledge economy, and internationalization strategies of emerging market multinationals.
Direct comments to: rojers.joseph [at] iimrohtak [dot] ac [dot] in

Shishir K. Jha is an Associate Professor at the Shailesh J. Mehta School of Management, Indian Institute of Technology, Bombay. He also taught at Ithaca College, New York as an assistant professor. He received his MBA and Ph.D. from Syracuse University. His research interests include copyright and the public domain, new business models in the knowledge economy, and international business and the WTO.
E-mail: skjha [at] iitb [dot] ac [dot] in

 

Acknowledgements

We are grateful to the firms that provided us vital data for carrying out this research as well as to the top industry executives who graciously participated in interviews.

 

Notes

1. A value chain consists of the full range of activities required to bring a product or service from conception, through the different phases of production, delivery to final customers, and final disposal after use.

2. Digital publishing or electronic publishing (e-publishing) is about the creation, aggregation, distribution and management of digital content. Digital publishing could also mean carrying out the publishing process using new technology, but not necessarily producing an e-book.

3. A textbook addresses a specified curriculum, whereas a monograph is a treatise on a particular subject with more advanced level content, such as collection of essays on a topic.

4. One U.S. dollar ~ 63 Indian rupees as of 3 January 2015.

5. The gross enrollment ratio is the total enrollment within a country at a specific level of education, regardless of age, expressed as a percentage of the population in the official age group corresponding to this level of education, according to UNESCO.

6. The Association of Research Libraries (ARL) is a non-profit organization of 125 research libraries at comprehensive research-extensive institutions in the U.S. and Canada that share similar research missions, aspirations and achievements.

7. In offset printing the inked image is transferred from a plate to the printing surface.

 

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Editorial history

Received 8 November 2013; accepted 2 October 2014.


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Digitization, Internet publishing and the revival of scholarly monographs: An empirical study in India
by Rojers P. Joseph and Shishir K. Jha.
First Monday, Volume 20, Number 1 - 5 January 2015
http://firstmonday.org/ojs/index.php/fm/article/view/4932/4203
doi: http://dx.doi.org/10.5210/fm.v20i1.4932





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