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close this bookExpanding Access to Science and Technology (UNU, 1994, 462 pages)
close this folderSession 2b: The technological experience: information resources and networks
close this folderDatabases and data banks
View the document(introductory text...)
View the documentAbstract
View the document1. Introduction
View the document2. Some figures and definitions
View the document3. Typology of world databases and data banks
View the document4. Cooperation among database producers
View the document5. Database production
View the document6. Use of databases
View the document7. Bibliometry applied to STI or scientometry
View the document8. Hypertext
View the document9. Multimedia
View the document10. Economic problems
View the document11. Ownership, legislation, and copyright problems
View the document12. Conclusion
View the documentBibliography

10. Economic problems

10.1 The Position in the Economy

Activities related to database production and distribution were for a long time considered as scientific activities managed by an exchange system, but the current situation is very different. The explosion of information technologies and their rapid distribution into every aspect of economic life has put back onto the agenda a thought already raised in the 1960s. The emergence of new skills, creating many jobs in the database field, has kindled research and discussions. An American researcher, M.V. Porat, carried out a significant statistical study in 1977 in which he estimated that by 1967, 46 per cent of the American GNP was already related to information activities. Using Porat's method, J. Voge estimated that in 1984, information workers represented between 40 and 47 per cent of the workforce of the major industrialized countries. It is true that information production includes not only activities of design and transmission, but also of identification and integration by the user. It is at the same time process and product. Database production and distribution are integral parts of these analyses. Numerous studies have been carried out on the value of information and its special features since it is considered to be an economic connection.

The difficulty of agreeing on some basic concepts and the amount of work carried out on controlling the use and duplication of information demonstrates very well its special features. The flow of international exchanges in the DB field is also the subject of major economic studies carried out by the IMO and certain countries. It is also interesting that in the United States, American DB are mainly used, with only 10 per cent of foreign DB; in Japan, however, 75 per cent of the databases are foreign; in Europe the proportion is 18 per cent.

10.2 The Costs

Regardless of the discussions and studies on the place of databases and data banks in the economy, their production and distribution represent a significant cost. DB production costs fall into four categories: direct production costs, manufacturing costs, indirect costs, and administrative costs.

Production costs include very large staff costs for the library-related and conceptual processing of documents. Analysis and indexing are operations requiring scarce, highly qualified staff that generate high costs. It is in these areas that producers are trying to achieve savings by using author abstracts and by encouraging studies on assisted or automatic indexing techniques.

A significant element, possibly the largest, of production costs is allocated to the purchase of sources. Some producers try to minimize these costs by agreements with publishers or libraries in order to acquire the sources free or in exchange for their own products. The data-processing costs involved in database production vary according to the techniques used and on the size of the base. They also vary with the complexity of the system in the case of various types of cooperation on database creation, which require numerous interfaces.

Manufacturing costs essentially include magnetic tape production and the operations required to put them into the different formats of the hosts, the production of derivative products, such as publications containing all or part of the DB, CD-ROM, and diskettes.

Indirect costs include the development costs of new methods and products, promotional costs, marketing, user training and assistance, staff training, and user documentation.

Overhead, as for other activities, varies according to the facilities offered.

10.3 Pricing

Although most of the participants in the information world agree in considering information as a resource, a product, pricing problems are still treated outside real economic considerations. One of the proofs of this is that most database producers, except for business databases, are not-for-profit organizations, and many of these databases are government-subsidized. Pricing problems are also treated differently depending on the products produced from the databases. In fact, what tends to be called the "market price" still plays a role in determining prices.

On-line pricing is most often determined by the hosts, whose own pricing policies are also developing. For some years the division of revenue between database producers and hosts has been the subject of discussion, sometimes acrimonious, and has led to confrontation between the major participants of the two professions.

It is not the object of this paper to enter into the details of pricing, which are extremely complex. It can simply be noted that one of the critical points for database producers is the establishment of a sales and pricing strategy. Whether the strategies are defined by market sector or by product group, or whether price reductions are foreseen for particular users or to create the market, database pricing needs a clear definition of the target revenues by the producer. This requires, evidently, an exact knowledge of the cost elements for each product, and a full knowledge of the market, the competition, and the cross-relations between different subproducts of the same database.