THE ECONOMICS OF DIGITAL LIBRARIES

Robert M. Hayes, Professor Emeritus

A Talk Presented at LIDA 2001

Dubrovnik, Croatia

OVERVIEW

Definition, Sources, Economic Roles & Properties The Macro-Economics of Digital Libraries The Micro-Economics of Digital Libraries Capital Costs of Digital Libraries Operating Costs in Distribution of Digital Libraries Income from Digital Libraries to Producers Value of Digital Libraries to Users Conclusion

DEFINITION OF DIGITAL LIBRARY

A Public Digital Library is a collection of publications which is distributed or made available in digital form (i.e., in which the symbols are recorded as bits and bytes – magnetic, electronic, or optical).

Unless otherwise qualified, the term "digital library" will be taken to mean "public digital library".

SOURCES OF DIGITAL LIBRARIES

Digital files used in production of current print publications

Retrospective conversion to digital form from prior print or microform publications

Digital files with no parallel in prior print or microform publications

ECONOMIC ROLES OF DIGITAL LIBRARIES

As support to decision-making and operational management

As a product, a commodity, or a basis for services

As a capital resource, an investment used for the production of other products and services

GENERAL ECONOMIC PROPERTIES OF DIGITAL LIBRARIES Easily transportable, easily and cheaply shareable Uncertain value and time affects that value Differences in perceptions of value, in use, in ability to use, in

assessment of costs, in ability to pay costs Value increases as size grows Expandable and self-generating Value independent of scale of application – indivisible in use –

with great economies of scale Cost independent of scale of application Difficult to appropriate or to exclude access Mixture of public good and private good Need to balance rights of ownership and rights of use

MACRO-STRUCTURE OF INFORMATION ECONOMIES

FULL-SCALE DEVELOPMENT FUNCTIONS

INDUSTRIES Non-Information Information Non-Information 50% 30%

Information 6% 14% SUBSTANTIAL DEVELOPMENT

FUNCTIONS INDUSTRIES Non-Information Information

Non-Information 60% 25% Information 6% 9%

PRIMITIVE DEVELOPMENT FUNCTIONS

INDUSTRIES Non-Information Information Non-Information 80% 14%

Information 3% 3%

MICRO-ECONOMICS OF INFORMATION DISTRIBUTION

FORMS OF PUBLICATION YEARLY SALES

PROJECTED TO 2000 CAPITAL

INVESTMENT DELIVERY EXPENSES

Book Publishing $15 Billion 30% 70% Journal Publishing $20 Billion 65% 35%

Database Publishing $5 Billion 37% 63% Software Publishing ? ? ?

Multi-Media Publishing ? ? ? MEANS FOR DISTRIBUTION

YEARLY SALES PROJECTED TO 2000

CAPITAL INVESTMENT

DELIVERY EXPENSES

Book Distributors Retail Outlets

$10 Billion 20% 80%

Academic/Research Libraries $5 Billion 57% 43% Public Libraries $5 Billion 46% 54%

Online Services (Internet, WWW) $20 Billion 80% 20%

UNDERLYING TELECOM INFRA-STRUCTURE

CENTERS NUMBER EMPLOY INCOME EXPEND CAPITAL '98 USAGE Principal Providers 553K $117B $88B $29B 22B min Other Providers $79B $69B $10B Total $196B $157B $39B AT&T Structure 1 Regional Centers 10 2 Sectional Centers 52 3 Primary Centers 168 4 Toll Centers 933 5 End User Services 18803

DISTRIBUTION OF TELECOM USE & INCOME

TYPE OF SERVICE USERS AVERAGE COST PER USER

TOTAL

Local Service, Residential 101M $19.54/month $19.73B Local Service, Business 46M $41.77/month $19.21B Long-Distance $81.67B Network Access $34.96B Cellular Phone $21.04B Other Income Sources $32.35B Total $208.96B

STRUCTURE OF THE INTERNET

LEVEL OF ACCESS NUMBER EMPLOY EXPEND ACCESS OPERATION CAPITAL Backbones 39 1K $35.00B $26.00B $9.00B Domain Servers 850K 235K $42.50B $23.50 $19.00B Service Providers 13M 130K $19.60B $14.70 $4.90B Hosts 26M Institutional Users 70M $30.34B Individual Users 70M $4.66B $2.80B Total $97.10B $35.00B $64.20B $35.70B

DOMAIN SURVEY DATA FOR JULY 1998

PRIMARY DOMAINS Hosts Level 2 Level 3 Level 4 WORLD-WIDE TOTAL 36.7M 1.0M 13.1M 23.6M U.S. TOTAL 25.7M 0.9M 10.1M 14.8M .com -- US Commercial 10.3M 0.7M 5.3M 4.3M .net -- US Networks 7.0M 2.4M 4.6M .edu -- US Academic 4.5M 1.5M 3.0M .mil -- US Military 1.4M 0.1M 1.3M .us -- US Generic 1.3M 1.3M .org -- US Non-Profit 0.6M 0.6M .gov -- US Government 0.6M 0.2M 0.4M Other Countries 11.0M 0.2M 2.9M 7.9M

DOMAIN SURVEY DATA FOR JULY 1999

PRIMARY DOMAINS Hosts Level 2 Level 3 Level 4 WORLD-WIDE TOTAL 43.2M 1.3M 14.9M 27.0M USA TOTAL 30.8M 0.9M 10.8K 19.1M com -- US Commercial 12.1M 0.9M 6.0M 5.2M net -- US Networks 8.9M 0.1M 2.9M 5.9M edu -- US Academic 5.0M 1.7M 3.3M us -- US Generic 1.6M 1.6M mil -- US Military 1.5M 1.5M org -- US Non-Profit 0.7M 0.1M 0.6M 0.2M gov -- US Government 0.7M 0.2M 0.5M Other Countries 12.4M 0.4M 4.1M 7.9M

DOMAIN SURVEY DATA FOR JULY 2000

Domain Hosts Level 2 Level 3 Level 4 WORLD-WIDE TOTAL 93.0 M 2.5 M 26.5 M 64.1 M U.S. TOTAL 68.9 M 2.0 M 21.1 45.8 M com 32.7 M 1.7 M 10.1 M 21.0 M net 23.4 M 0.1 M 7.5 M 15.8 M edu 6.7 M 2.2 M 4.4 M us 2.3 M 2.2 M mil 1.9 M 0.2 M 1.7 M org 1.1 M 0.2 M 0.9 M 0.1 M gov 0.8 M 0.0 M 0.3 M 0.5 M Other Countries 24.2M 0.5M 5.4M 18.3M

GROWTH IN USE OF THE INTERNET

Year Home or Work

Home Work Total

1998 46.3M 23.8M 22.9M 2091.0M 1999 83.6M 53.7M 38.9M 2175.2M

Access

2000 112.9M 77.6M 50.5M 2241.0M 1998 28.1M 19.8M 13.9M 2059.8M 1999 64.1M 44.9M 31.3M 2139.3M

Used in 30 Days

2000 86.3M 65.5M 40.4M 2192.2M