ECONOMIC MODELS

The economic issues facing digital libraries are huge, but fall into a smallnumber of categories:

  1. how to pay for the cost of creating and operating them
  2. how to pay for the necessary infrastructure (e.g., networks, Internetbackbone, multimedia displays)
  3. how to pay for content

Charging Structures

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:

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.

Priorities

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:

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