Page 193 - Electronic Commerce

Chapter 3

member’s salary and benefits, along with other recurring expenses, such as software licenses and
computer upgrades for the Web site, totals about $40,000 per year. Mario explains to you that one
of the ASIB’s greatest cost reduction successes was last year’s decision to offer the monthly news-
letter by e-mail. About half of the members chose to receive the newsletter by e-mail. The paper
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newsletters cost 50 cents each to print and mail, but creating and sending the e-mails took less than
$50 worth of staff members’ time. Thus, ASIB realized an immediate savings of about $700 (50% ×
3000 × $.50 of mailing costs saved, less the $50 cost to send e-mails) each month, or $8400 per
year. The newsletters are also placed on the Web site so that members can check there if they
happen to miss the e-mailed newsletter. This success prompted Mario to think about ways to
reduce the cost of distributing the journals. He wants to make sure, however, that ASIB continues
to receive as much of the journal revenue as possible under any new revenue model.
One of the companies you learned about in the chapter, EBSCO, approached Mario with an
offer to handle electronic distribution of the academic journal. EBSCO will take a copy of the journal
when it is published, convert each article into Adobe Portable Document Format (PDF) and into
HTML format, index the articles, and place them into several of EBSCO’s databases. Many univer-
sity and research libraries subscribe to EBSCO databases. The EBSCO representative explained
to Mario that most of the libraries would continue their print subscriptions to the journal, but that
about 30 percent of the libraries would stop subscribing and rely on their electronic access to the
journal through the EBSCO database. Mario called some of his friends who are executive directors
of other associations and confirmed that this percentage was correct in their experience. EBSCO
would pay ASIB a flat annual fee of $10,000 for access to the journal plus $50 per year for every
library that subscribed to an EBSCO database that included the journal. The EBSCO sales repre-
sentative estimated that the number of subscribing libraries would be about 1000.
Mario outlined an alternative to the EBSCO contract. In this alternative, ASIB would itself
scan the journals into PDF files and make them available on the ASIB Web site for a subscrip-
tion fee. Mario estimated that it would cost about $1000 to create the PDF files for one issue
and place them on the Web site. He also estimated that managing the accounts and passwords
would consume about $500 per month of staff time and related costs. Mario believes that
arranging for distribution of article abstracts through Google Scholar would increase the visibility
of the organization and could possibly lead to additional subscription revenue. Note that Mario
intends to make the abstract for each article available, not the entire text of each article.
EBSCO was not interested in purchasing access to the business journal, but Mario is eval-
uating ways to make some or all of the content from that journal available on the ASIB Web
site. He is considering offering reduced-rate “Web access only” subscriptions to business
executives. He is also thinking about offering some of the best stories from the print edition on
the Web and including ads offering full subscriptions on each page. He is even considering
placing the first part of the best stories on the Web site and offering readers a chance to
subscribe so they can read the rest of the story.
Several companies that sell products and services to international businesses currently run
ads in the business journal. These companies expressed an interest in placing ads on ASIB
Web pages that contain content (such as stories from the business journal). Mario estimates
that ASIB could earn between $3000 and $9000 per month from these ads, but he is concerned
that having the best content from the business journal on the Web site might convince some
business executives to drop their subscriptions to the print edition.

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