Serials Prices 2002-2006 with Projections for 2007      July 11, 2006

Serials Price Projections and Cost History

2007 Price Projections
EBSCO uses recent information received from publishers and historical price data to project price increases for the upcoming year. As always, it is prudent to be cautious in price projections as we must rely primarily on historical trends and current estimates. In general, the pricing information received as of the date of this release indicates price increases for 2007 will be similar those of 2006. The projected base-price increase (before currency impact) for academic and academic medical libraries is 6 to 8 percent for U.S. and non-U.S. titles.

Pricing Factors
Many factors affect serials prices each year - currency exchange rates, increased content, postage and handling costs related to print titles, electronic hosting costs for online titles, subscription cancellations and general inflation. As mentioned last year, forecasting price increases is becoming increasingly difficult as publishers consolidate and titles continue to move between publishers. The take-over of titles and the acquisition of one publisher by another can significantly impact journal pricing in the following years.

In addition to price projections being more difficult to develop, it is becoming increasingly hard to classify a publisher by nationality. Societies in one country may have their titles published by a publisher in another country. Large publishers often have significant operations in both the U.S. and Europe and, as a result, their foreign currency hedging techniques are increasingly less transparent.

The shift toward electronic information continues to affect journal price increases. In addition to the costs of online hosting of e-journals and other technology, prices are also impacted by packaging of online journals, changes in pricing models and customized pricing for online journal collections or packages. These factors can often mean large effective price increases overall but smaller effective price increases at the individual journal level. This concept of "more for less" could mean a lower price per journal, but if the journal usage is poor, the journal does not match an institution's collection development needs or the journal not a quality journal and is simply not wanted at all, the price per journal can be misleading as overall spend is also a consideration.

Currency Impact
Currency markets are volatile, making this factor difficult to project. The U.S. dollar has weakened against both the euro and the pound over the past twelve months. In fact, the U.S. dollar is roughly 7 percent weaker today against the euro and the pound than in the fall of 2005 when customers were invoiced and publishers were paid.

Opinions among economists appear mixed regarding the near- to mid-term future of the U.S. dollar versus the euro and pound. The U.S. dollar has slumped in recent months due to a number of factors. One factor is the trend of the Federal Reserve Bank increasing the short-term borrowing rate of interest, and the uncertainty of when these increases will cease. Likewise, there are questions regarding the future of key European rates and the impact that any changes in these would have on currency exchange rates. Also, the continued instability of some of the world's regions has affected the U.S. economy and in turn, the value of the dollar. The current situation in Lebanon as well as continued uncertainty in other parts of the Middle East and Venezuela and the impact on oil prices and inflation are key concerns at this time. Whether the dollar will continue to drop remains a big question. If it does, then this could result in higher price increases on material priced by publishers in non-U.S. currencies. Conversely, this is positive news for customers purchasing U.S. journals whose purchasing currency is euros or pounds. Customers paying in euro and pounds could likely see price increases below the base for U.S. dollar journals.

Customers in Canada and Australia should see price increases at or below the base increase for materials priced in U.S dollars due to the strengthening of these currencies. However, customers in these markets and in New Zealand and South Africa should see price increases for European materials at or above the base increase due to the value of the euro and pound.

Based on the value of the dollar now (mid-July 2006) against the euro and the pound versus the values last fall when orders were sent to publishers and last summer when many of the larger non-U.S. publishers set U.S. dollar prices, we estimate overall price increases of 12 to 14 percent for customers paying in U.S. dollars for non-U.S. dollar-priced titles. It is important to note that a relatively small proportion of non-U.S. titles are priced by the publishers in non-U.S. currencies for the U.S. market. Most of the large international publishers that have been traditionally thought of as "European" now set their prices in U.S. dollars for the U.S. market. Therefore, their price increases have been less impacted by the rise and fall of the U.S. dollar versus the euro and the pound each year. Additionally, as stated previously, the globalization of publishers and the foreign currency hedging techniques these publishers employ make projecting prices more difficult.

See the following chart, Projected Price Increase by Customer Billing Currency, for more information. Generally, an increase of more than 6 to 8 percent reflects an adverse currency impact, and an increase of less than 6 to 8 percent reflects a favorable currency impact.

Projected Price Increase by Customer Billing Currency
Billing Currency	U.S. Journals%	U.K. Journals%	European Journals%
Australian dollar	4 to 6	10 to 12	11 to 13
British pound	0 to 2	6 to 8	7 to 9
Canadian dollar	-2 to 0	4 to 6	4 to 6
Euro	-1 to 1	6 to 8	6 to 8
New Zealand dollar	13 to 15	19 to 21	19 to 21
South African rand	12 to 14	18 to 20	19 to 21
U.S. dollar	6 to 8	12 to 14	12 to 14

Conservative Budgeting
As always, EBSCO recommends customers add 2 to 4 percent to the estimated price increases when budgeting to protect themselves from a weakening of the currency in which they are invoiced between now and the time subscription payments are paid. The currency exchange environment is difficult to project. EBSCO continually communicates with major publishers regarding projected price increases and monitors world currency exchange rates. Should we see major developments in these areas, we will update our information regarding projections.

2006 Historical Price Analysis
An analysis of 2006 subscription prices for customers paying in U.S. dollars indicates an average increase over 2005 prices ranging from 2.66 to 8.04 percent. Association of Research Libraries (ARL) institutions experienced an average price increase of 7.72 percent; college and university libraries an average increase of 7.92 percent; and academic medical libraries an average increase of 8.04 percent. These figures are based on a weighted average of the actual ordering patterns of a significant number of representative libraries purchasing both U.S. and non-U.S. titles in U.S. dollars.

Historical Price Data by Library Type
The chart Five Year Journal Price Increase History (2002-2006) (PDF file) shows price fluctuations over the last five years for typical library lists invoiced in U.S. dollars. Data for each library type is based on a merged list of titles ordered by representative libraries purchasing in U.S. dollars. Each list is based on the actual ordering patterns of the libraries in the sample.

Other Budgeting Tools
EBSCO provides price projections to assist customers in forecasting the effect of future serials costs on their budgets. These projections should be used as one tool in the budgeting process. EBSCO offers other budgeting and collection analysis tools that provide information specific to a customer's collection. Some of the serials management reports offered are:

• The Historical Price Analysis report, which tracks the cost of all titles ordered through EBSCO over a specified period of time and provides percentage-of-change comparisons;
• The Customized Budget Analysis report, which provides specific price projections for customers' titles ordered through EBSCO;
• The Online Availability Report (with estimated prices), which lists journals on order with EBSCO that are available online either in combination with or separate from the print subscription (displays each publisher's access requirements and the institutional rate for the online journal); and
• Collection Development and Assessment Reports, which allow customers to evaluate the importance of particular titles to their collections.

Please contact the EBSCO Regional Office nearest you for more information about these reports.