Librarians and the terrible fix: Economics of the big deal

Abstract

The academic journal market is characterized by delegated purchasing, unreliable signals of demand and a complex, difficult to evaluate product. As a result, the demand for journals is highly inelastic to prices. Large commercial publishers have capitalized on this, by reducing competition through mergers and consolidations, offering 'big deals' and raising prices to levels far above average cost. We suggest that the demand for access to journal articles would be much more price elastic and the cost to the academic community would be lower if universities were to stop purchasing bundled site licenses at prices that greatly exceed average cost. While other libraries continue to purchase site licenses at inflated prices, a single university library cannot expect the price structure to change if it drops its big deal contract. Some libraries have saved money by hard bargaining. Others have saved even more by subscribing to only the most cost effective single journals.