Study on the economic and technical evolution of the scientific ...

5. BUNDLING
STRATEGIES
We have already underlined that the end user
wants to have access to a large portfolio of
articles and information. Bundling strategies
are therefore outcomes of competition between
publishers; they are also a source of efficiency
in the market. For instance, a journal is in fact
a bundle of articles, and has been until now an
efficient way to access new results in a field.
When there is more than one journal in a field,
end users will value having access to all the
journals, i.e., would value having access to a
bundle of journals, or a portfolio; libraries or
portals becoming then an efficient way to
satisfy these needs.
With the emergence of digital information, two
new products become valuable to the end
user: the digital version of articles published in
a journal, whether the “first copy” is printed or
electronic and also articles that are available
on the www but have not gone through the
traditional publishing process. The move to
electronics has happened in the late 90s and
has offered a large array of new and previously
unavailable services. For instance, in October
2005, Elsevier's ScienceDirect alone provided a
searchable database of 1,800 journals containing
over 7 million scientific research articles,
abstracts, the full texts and linked references.
A citation history is provided for each article
(not for all publishers, though). This will
probably get even more powerful with
CrossRef, whose aim is the linking of several of
such databases belonging to competing
publishers (like JSTOR, though unlike JSTOR, it
will contain the latest articles as well). 54 Today
CrossRef provides an infrastructure for linking
citations across publishers and counts 1496
participating publishers and societies. The
access to the full version of an article put on
these platforms depends on whether the
individual or his institution subscribes.
Big deals offer a library access to the whole
electronic collection of a publisher in exchange
for the library’s commitment to a given
expense. There are clear advantages to the end
user of having access to the whole electronic
portfolio, and publishers point out that big
deal contracts emerged as a response to the
demand of libraries. But there are reasons to
fear that the pricing strategy in big deals raises
barriers to entry and creates a lock in effect,
and the next subsections will discuss this in
detail.
We start reviewing the economic literature on
bundling. Some of the effects illustrated in this
literature apply not only to existing contracts
but also to partnerships between different
publishers for putting their collections on the
same platform. We then turn to the main
characteristics of big deal contracts, using
published work by Edlin and Rubinfeld (2004),
as well as presentations by publishers made at
a conference in Barcelona (2005).
5.1. ECONOMIC LITERATURE ON
BUNDLING AND DISCRIMINATION
The basic model in the literature allows a firm
three possibilities for selling two products A
and B:
• sell the goods separately ("standard option");
• bundle the goods and sell the bundle only
("bundle only option");
• offer the goods separately, as well as the
bundle ("mixed bundling option").
The existing literature (Adams and Yellen, 1976,
Schmalensee, 1984, Mc Afee et al., 1989,
Salinger, 1995, Armstrong, 1996, and Nalebuf,
2004) deals with both bundling options and
considers both the use of bundling as a price
discrimination device (in economics, ‘price
discrimination’ is defined as ‘selling the same
good or service to different individuals at
different prices’) and as an entry deterrent. 55
Early work has focused on the behavior of a
monopoly firm selling different products.
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