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Exploring Charging Models for Digital Cultural Heritage

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Simon Tanner and Marilyn Deegan discuss charging models.

This article will describe the results of a study to investigate some of the underlying financial and policy assumptions being made in the move from previously analog photographic services into the realm of digital capture and delivery in cultural heritage institutions. The study focussed upon libraries, archives, museums and galleries with particular emphasis upon investigating how marketable, cost efficient and income-stable the new digital services and resources are in comparison with previous methods. Cultural heritage institutions in the UK were investigated, with some other European institutions included—in total, 51 institutions were surveyed and 15 were interviewed during 2002. As far as the author is aware this is the only study to explore and report upon the pricing practice and policy for the transition to digital for a wide range of cultural and heritage organisations.

The Higher Education Digitisation Service (HEDS)(1) was invited to carry out the research study on behalf of the Andrew W. Mellon Foundation(2). Through interviews and comparative modelling of costs and fees charged, it was possible to see the differences in practice for analog versus digital formats. From this investigation the questions of why these should be different and what drives the pricing policy can be answered. This article will present those results.

Cultural institutions which hold valuable and unique/rare artefacts have been creating surrogate representations of these for centuries. Since the development of photo-reproduction methods, these institutions have made available a whole range of secondary images for many purposes: for scholarship, teaching, public enjoyment, publication, etc. Most large libraries, museums and galleries promote reproductions of their own images as mass consumer goods such as postcards or posters. Many institutions also offer on-demand services to create and supply very high quality photographs for scholarship and publication. With the development of top-of-the-range digital cameras and scanners, digital reproductions which rival in quality even the best of photographic images can now be supplied. So many cultural and heritage institutions are now turning to digital capture for some or all of their services. Throughout this article, the photographic reproductions are referred to as ‘analog’ and are compared with the newer ‘digital’ formats. The study also only dealt with cultural and heritage artefacts with significant image content, so contemporary text based formats (such as printed books and journals) were excluded from the focus of the work.

This article will show that:

  • The most powerful deciding factor for price was the perceived market value of the item (as defined by what similar organisations are charging) rather than the actual cost of creation and provision.
  • Digital is considered a cheaper product to create and distribute than analog, because of the low consumable costs in creating multiple copies.
  • None of the interviewed institutions were fully recovering the cost of creation, management, storage and service provision solely from the sale of the digital item itself.
  • Only those institutions that accounted for the revenue raised from the sale of commercial rights to use the materials as a part of their operation showed an actual surplus or profit.
  • All organisations surveyed placed their duty to provide low cost access to materials to the public above the need to make a profit from those materials.
  • The provision of services is driven by the public's desire to have access to the unique, rare and valuable collections available in European cultural and heritage institutions.
  • No institution was able to quantify accurately the cost of digital preservation and thus consider mechanisms to sustain the service in the sale price of the digital item.

The full report of this study is available at http://heds.herts.ac.uk/mellon/charging_models.html

Method

The method was firstly to use an email and web survey to identify and record information about services delivered digitally throughout the cultural heritage sector. HEDS then investigated these services to find the cost and pricing information that was publicly available. A number of institutions were then approached for a more detailed structured interview. This looked at how they came to their pricing policy and what their internal costs were in relation to the prices at which services were offered.

The following numbers and types of institutions were surveyed and interviewed:

  • 51 institutions were surveyed in total – of these 9 were surveyed through the Internet only.
  • 15 institutions were interviewed in detail (4 were from mainland Europe).

The breakdown of institutions:

Type of Institution

Surveyed

(excluding interviews)

Interviewed

University Library

16

3

Public Library

6

3

National Library

2

4

Museum and Gallery

7

5

Picture Library

1

0

County Council or Archive

4

0

Survey findings

The results from the 51 institutions give some indication of the overall maturity of the market for the sale of analog and digital items in the heritage sector. It also shows the state of the technical provision and integration of the business process with wider institutional goals. Obviously many services offer multiple methods of payment.

Payment options explored

 

Number of institutions

Percentage

Payment in advance

36

71%

Payment on delivery

8

16%

E-commerce

5

10%

Credit card

16

31%

Cheque/bank transfer

24

47%

Invoice

18

35%

Cash

15

29%

Other

2

4%

There are 20 institutions (39%) that do not state anywhere in their literature, on the Internet, via their price list or by any other means what payment methods are acceptable. This demonstrates an interesting lack of basic information to their user base. It is not possible to draw many conclusions from this negative result, apart from to state that public and national libraries are proportionately better at informing their users of the payment methods than the other sectors.

Those that accept e-commerce as a mechanism of payment may again indicate a level of sophistication and the lead demonstrated by national libraries and museums in providing e-commerce does appear to be an indicator of market sophistication and possible future trends.

Further measures of sophistication of the service level were also made in terms of how the consumer could select the items they wanted and also what the turnaround time offered to the consumer was.

  • 74.5% of services required the consumer to select either from the library catalogue or from knowledge of the collection.
  • 25.5% of services offered the consumer a thumbnail or other Web view of the item in the collection to enable selection of the item.
  • 72.5% of services had a website offering the service in some manner.
  • The average turnaround time from order to delivery offered to the consumer in was 13 working days. However, 47% of the services surveyed did not offer any guidance on the turnaround time at all.

Cost study findings

Cost information was gathered from the survey. This was obtained by reducing the price offered to the non-commercial client to its core value by filtering out delivery charges, format costs and taxes for instance. The following results were found:

  • The average price of an analog item = £18.57 (from 48 responses)
  • The average price of a digital item = £17.09 (from 42 responses)
  • The average price differential = -10.51% (from 40 direct comparisons possible digital is cheaper than analog)

Digital is ~10% cheaper than the comparable analog item, based on the price offered the consumer. The ranging of the prices for digital and analog are shown in Figure 1.

{chart of digital versus analog pricing]}

It is worth noting that 15 of the 40 responses show a 0% difference in price. Therefore in 37.5% of comparable cases, the consumer was offered a choice of delivery medium without having to consider the economic ramifications of that choice.

{chart of price differentials}

Figure 2 shows the range of price differentials between analog and digital. In 82.5% of cases digital is either the same price or cheaper for the consumer than the analog equivalent.

Results and Conclusions

The Business Case

Many institutions felt that they were being pushed into massive changes without the systems to support them being properly considered. Very few institutions seemed to have a full appreciation of overall institutional strategies for the move to digital, with less than 30% of the institutions appearing to have done detailed planning or implemented the significant organisational change required for the move to digital delivery and access.

The maturity of business practice in the interviewed institutions seemed to divide neatly along the lines of the national libraries, museums and galleries having the clear lead, with public libraries and university libraries just starting to significantly develop their practices in this area. There is however a marked lack of clear commercially led business planning and control in most institutions surveyed. This is not to suggest they are badly managed, but that the financial exploitation of the medium is not the foremost priority.

The statistical results of the survey indicates a definite pricing trend, which suggests that digital items will continue to become cheaper for the consumer to purchase than the analog equivalent. There are several reasons suggested by this study for this:

  • The institutions are deliberately trying to encourage the consumer to purchase digital rather than analog.
  • This may be because the cost of creation (although not necessarily quantified) is perceived as being cheaper for digital than for analog.
  • The cost of making a copy for delivery of a digital item is distinctly cheaper to the institution than the consumable costs involved in delivering analog items.
  • Smaller institutions are entering the market for the first time because the option to create surrogates via digital means has become viable due to reducing equipment costs at the entry level. They can respond to consumer demand for the first time at lower cost.
  • Digitisation projects and external funding for digitisation are leading to a body of digital images being available for the first time, which can then be exploited with almost no additional outlay. For analog items every copy means a consumable outlay.
  • The institutions are not yet passing on the cost of data storage or digital preservation as these are not yet understood well enough to become part of the financial accounting chain.

The Web Case

The fact that 72.5% of the surveyed institutions had a website offering the service in some manner and that 25.5% are showing thumbnail views to aid consumer selection is an indication of the growing confidence in the Internet and digital means of delivering services. This seems bound to expand and to mature with better information for the consumer available online to aid their purchase decisions and possibly more e-commerce to speed the sale of items. Indeed the provision of images on the Web does not seem to reduce the potential income of those interviewed, but has been beneficial to the sale of rights to use and to the user base in promoting the cultural collections of the institution.

The results clearly suggest that digital provides a better platform to promote the collection to a wider national and international audience than analog. Most institutions interviewed planned to increase the number of thumbnail or screen sized images available at no cost to the user. Co-operative strategies between institutions was also promoted as a way forward. All were concerned to retain the rights to the high quality, high resolution images and to assert their rights in any items available on the Internet.

Amongst the clearest conclusions it is possible to draw from this study is that for a service unit to operate at a surplus they have to account for the sale of rights as part of their operation. Very few of the institutions interviewed made more money from the sale of the medium, whether analog or digital, than it cost in creation, management or service provision. The only apparently profitable part of the transaction was the sale of the right to use the material in a commercial publication. All institutions sold rights, but only a few allowed that revenue to be directly linked to the actual service provision of creating, managing and delivering the media to the consumer. This suggests that, at least in financial terms, the message is more valuable than the medium.

The full report of this study is available at http://heds.herts.ac.uk/mellon/charging_models.html

About HEDS

The Higher Education Digitisation Service is funded by the Joint Information Systems Committee and run by the University of Hertfordshire. HEDS was initially established in September 1996 as part of the Electronic Libraries Programme (eLib), and following a successful period as a project, HEDS became a JISC Service in August 1998.

The Service provides advice, consultancy and a complete production service for digitisation and digital library development. HEDS serves not only the education sector, but also provides services to public libraries, museums, archives and other non-profit making organisations.

See http://heds.herts.ac.uk for more information.

References

(1) http://heds.herts.ac.uk

(2) http://www.mellon.org

Author Details

Simon Tanner is Senior Consultant for HEDS at the University of Hertfordshire.

Marilyn Deegan is Director of the project 'Forced Migration Online' at Oxford University.

Simon and Marilyn are co-authors of the successful book, Digital Futures: Strategies for the Information Age which was recently reviewed in D-Lib Magazine (see http://www.dlib.org/dlib/april02/04bookreview.html).

 

Date published: 
15 January 2003

This article has been published under copyright; please see our access terms and copyright guidance regarding use of content from this article. See also our explanations of how to cite Ariadne articles for examples of bibliographic format.

How to cite this article

Simon Tanner, Marilyn Deegan. "Exploring Charging Models for Digital Cultural Heritage". January 2003, Ariadne Issue 34 http://www.ariadne.ac.uk/issue34/tanner/


article | by Dr. Radut