The economic issues facing digital libraries are huge, but fall into a smallnumber of categories:
- how to pay for the cost of creating and operating them
- how to pay for the necessary infrastructure (e.g., networks, Internetbackbone, multimedia displays)
- how to pay for content
The first problem is how to assemble money to finance digital libraries. Thesecond is how a portion of the surplus is to be distributed to content owners.The following are possible models for the financing of digital libraries:
- Microcharging. Because digital libraries are mediated by computer, it ispossible to obtain precise data on each type of usage made of material. Acharge can then be imposed on the user and paid directly to the content owner.While such a mechanism may have to deal with huge number of transactions eachof very small size, it is not unprecedented. After all, telephone companiesroutinely measure usage, although they have the advantage of having billions ofdollars in capital tied up in the measurement equipment and software. The realproblem with microcharging is that it dampens consumer interest in material. Ifone has to pay for each screen one views, one is motivated to browse less.Instead of learning, which is the primary reason for using a DL, one must spendtime worrying about how much the material will cost. An effective plan shouldeliminate this effect.
- The utility model. A first step away from microcharging is the electricalutility model. Each use is measured in "clickls" (to use a phrase coined byfinancial writer Andrew Tobias), and the user pays a monthly bill based on (butnot necessarily proportional to) the number of clickls. As with an electricbill, discounts can be offered for higher usage and payments spread out overthe year.
- Subscriptions: the HBO model. A problem with the utility model is thatthere is no cap on the potential cost of information. More use means higherfees. The solution used by Home Box Office is to charge a fixed rate per monthfor unlimited usage. Heavy users are subsidized by the occasional users, all ofwhom pay the same amount. Such a structure allows users to access contentfreely without worrying about costs, but generates very large revenues to bedivided among content owners. How the division should be accomplished is amatter for separate debate.
- Public subsidy. A government may decide that access to information is soessential a component of ordinary life that it makes such access "free" to allcitizens. The word "free" is in quotation marks because it of course is notfree, but is paid for invisibly through taxes. An example is the U.S.Interstate Highway System, financed by the federal government through taxrevenue. No charge is imposed (directly) on individual users because the systemis thought to be so essential to U.S. daily life and commerce that tolls areregarded as detrimental.
Creation and Operation
It is difficult to assess the relative merits of the charging schemesdiscussed above because of a severe lack of real data. Japan is now engaged ina large-scale experiment to understand the economics of DLs. It's going to taketime, however. When asked how much it costs to digitize a scientific journal,officials at the Nara Institute replied that they had no idea. This suggeststhat the Nara Institute of Science and Technology (NAIST) was given a mandateto implement a DL, largely ignoring the cost, with the idea that its economicswould be studied later, once the technology has matured to a point thatmeaningful measurements can be taken. It is difficult to imagine a U.S. fundingagency taking such an approach; more likely it would insist on an advance studyto predict the savings to be realized.
Which works are to be digitized first? If everything will ultimately bedigitized, it is tempting to say that order does not matter, but digitallibraries must achieve a critical mass in order to be useful, attractadditional funds, and grow. The matter of prioritizing is difficult because ofcompeting objectives. These objectives include:
- Offering essential materials. Users expect a DL to have what they want, orthey will turn to other sources for it. This suggests that the best use ofresources is to input the most commonly referenced books, such as dictionaries,almanacs and encyclopedias.
- Gathering the classics. The idea of a large library without Moby Dick islaughable. However, that novel can be found in every library and bookstore inthe United States. It is unlikely that anyone would read it sitting at a CRTscreen, so is it important to digitize it? The answer is yes. People expectlibraries to offer certain items, and the decision to omit classics becausethey are available elsewhere is harmful because it represents the erroneousvalue judgment that introducing the essential works of a culture can bepostponed.
- Preserving fragile materials. We cannot afford to wait until manuscriptsdecay beyond recognition before scanning them.
- Archiving one-of-a-kind items. Of certain critical materials, such as theDead Sea Scrolls, only one copy exists, which means that only a selected fewscholars are even able to access them, and then only under restrictedconditions. At what rate should we be digitizing such items so they may bestudied by the entire world?
- Avoiding duplication. With so much digitizing going on, it is important toeliminate wasteful duplication occasioned by the failure of institutions toexchange materials.
Paying For Content
It is axiomatic, and required by the legal system of all developedcountries, that authors be paid for their work. With few exceptions, it is apipe dream to imagine that even the inexpensive publishing outlet of theInternet will motivate authors to create and disseminate their works forfree.
Professor Makoto Nagao's proposal is to allow the author of each work to sethis own price for a menu of uses and allow market forces to operate as anatural regulator (Nagao n.d). He also asks the author to renounce any feewhere only a small amount would be charged, thus avoiding the inconvenience andoverhead of dealing with small numerical quantities. The notion of creating afree market is sound, since any attempt to subvert supply and demand is notlikely to survive for long. However, there is no requirement that an ownerallow his work into the marketplace at all, which is a significant obstacle.The recalcitrant owner can keep his work bottled up by setting an exorbitantprice. It seems better to combine free negotiation with an appeal to anarbitration body if the owner and user cannot agree. Overall, it seems betterto have a universal compulsory licensing scheme with fixed costs similar to theU.S. phonorecord provision.
Published: February 1999; WTECHyper-Librarian