DATE: June 24, 1994
TO: John Lederer <74020.210@COMPUSERVE.COM>
FROM: Chris Wren <CGWREN@ACM.ORG>
Madison, Wisconsin
SUBJECT: CD-ROM Costs v. Print
For the benefit of LAW-LIB subscribers interested in this
issue but unfamiliar with the memorandum to which you refer in
your message (reproduced below), I'll provide some background.
A committee you chair for the State Bar of Wisconsin submitted
a resolution in January to the bar's Board of Governors proposing
further investigation and development of a vendor-neutral
citation system and a centralized repository providing electronic
access for Wisconsin appellate court decisions. The Board
approved the resolution, and your committee submitted its report
for the Board's approval on June 22. The report recommends
creation of a citation and publishing system tracking the one
sketched in the January resolution.
In April, my wife, Jill, and I submitted a memo questioning
the premises on which the committee rested its proposal for
reforming the citation and publication of Wisconsin cases. The
memo further highlighted drawbacks to designating electronic
forms of court decisions as the only official versions of those
decisions and to eliminating official case reports in print form.
In general, we expressed our doubt that the committee's proposal
would achieve the committee's stated goals, which are "(1) to
reduce the cost of legal research by attorneys and the public and
(2) to improve the quality and availability of legal research."
In your message, you quote part of a section of our memo
addressing your committee's complaint that the legal publishers
have priced their electronic products in line with their "book
prices rather than to reflect their costs." That section of our
memo set forth our belief that the transition from print to
electronic formats tends not to yield significant, if any,
savings.
Your LAW-LIB message suggests that our doubts are misplaced.
Jill's and my comments appear below.
1. UNITED STATES CODE ON CD-ROM v. IN PRINT
You note the price of $34 for the CD-ROM version and
the price of $1,700 for the print version. As often
happens, however, the bare numbers do not offer a true
comparison, as I found out when I called the GPO and
inquired further.
First, $1,700 reflects the cumulative cost of the print
version, not a single year's cost; the cumulative cost
includes the cost of the base volumes of the 1988 edition
of USC plus annual supplements. Thus, the average yearly
cost of the print version is considerably less than
$1,700. Although the annual cost of the print version is
still much greater than the $34-per-year cost for the
CD-ROM version, the difference is not nearly as striking
as suggested by simply comparing $1,700 to $34.
Second, the cost of the print version also reflects a
decision to have the U.S. Code published in an expensive
case-bound edition only, a decision Congress rather than
the GPO makes, according to a GPO representative who
explained GPO pricing to me. Thus, a good chunk of the
public selling price of the print version appears to
reflect a collection of bureaucratic choices rather than a
publishing necessity.
The choice of paper alone can raise or lower the
production cost of a book quite a bit, with cost
variations easily running in the range of 20 to 25
percent; the choice of binding and cover stock can have an
even bigger impact. Congress could cause a reduction in
the price of the print version of the U.S. Code by
requiring the GPO to publish the statutes in a version
using less-expensive binding and cover stock, as well as
less-expensive paper.
Third, GPO has a statutorily mandated pricing system
that shields the public from the true cost of publishing a
document. The pricing of GPO publications is governed by
44 U.S.C. 1708 (reprinted here):
The price at which additional copies of
Government publications are offered for sale
to the public by the Superintendent of
Documents shall be based on the cost as
determined by the Public Printer plus 50
percent. A discount of not to exceed 25
percent may be allowed to book dealers and
quantity purchasers, but the printing may not
interfere with prompt execution of work for
the Government.
The Superintendent of Documents may
prescribe terms and conditions under which he
authorizes the resale of Government publica-
tions by book dealers, and he may designate
any Government officer his agent for the sale
of Government publications under regulations
agreed upon by the Superintendent of
Documents and the head of the respective
department or establishment of the
Government.
The key to understanding the public pricing of the
U.S. Code (in either format) and other federal government
documents lies in understanding the phrase "additional
copies." The GPO's public affairs office referred me to
the GPO administrative and finance office, where I
received the following explanation.
When a government agency directs the GPO to publish a
document, that agency bears through its budget all costs
associated with preparing and printing that document up
through the first copy printed or otherwise published.
All copies after the first copy fall into the statutory
category of "additional copies," the cost of which is
based only on the actual additional cost to produce each
copy; in effect, the cost of an additional copy is closely
linked to the actual cost of materials (e.g., ink, paper,
blank CD-ROM disc) required to produce that copy, to which
the statute requires the Superintendent to add a 50%
markup (mainly to allow as much as a 25% discount on sales
to book dealers).
So, for example, suppose an authorizing agency incurs
costs of $500,000 to get the first copy of its document
off the GPO presses, and the Public Printer figures the
additional cost of materials for subsequent copies at,
say, $2.00 per copy. The authorizing agency "buys" the
first copy for $500,000, and the public gets to buy any
"additional copies" for the statutorily specified price of
$3.00 ($2.00 plus the 50% markup of $1.00) -- except book
dealers, for whom the statute authorizes a price as low as
$2.25.
In short, the price the public pays reflects only the
incremental cost for the publication, not the pro rata
share of all costs of publication. So the public price
bears literally no relationship -- certainly no
relationship that any private-sector publisher would
recognize -- to the real cost of publishing that document.
Thus, in terms of the point Jill and I made in our memo
(i.e., that the transition from print to electronic
formats does not appear to yield significant, if any,
savings), the apparently devastating counter-example of
the U.S. Code in fact carries no weight. The price
disparity tells nothing about either the real cost of
producing the GPO's public-domain version of the U.S. Code
in each format or whether any significant difference
really exists between those costs.
As the authorizing agency for the U.S. Code, Congress
bears all the expense of producing the first copy of the
U.S. Code in print and on CD-ROM. To find out the true
cost of publishing the U.S. Code in each format, someone
would have to cull from Congress's own appropriation those
expenses associated with producing the U.S. Code in each
format.
Because a single GPO database supplies the content for
both the print and CD-ROM formats, and because (as the
fellow with whom I spoke at the GPO indicated) the CD-ROM
version requires additional pre-press work not required to
produce the print version, I strongly suspect that
apportioning the various costs in a more conventional way
(like a private-sector publisher would do) would show
that, even taking into account the difference in the cost
of raw materials (paper versus disc), the overall cost of
the CD-ROM version would not differ much from the overall
cost of the print version.
Finally, the $34 CD-ROM is current through January 2,
1992. The print version is current through volume IV of
the 1993 supplements, which bring the statutes current to
January 4, 1993.
2. WISCONSIN STATUTES ON CD-ROM v. IN PRINT
Chapter 35 of the Wisconsin Statutes deals with sales
of public documents, such as the state statutes. In
particular, section 35.91 seems to deal with your
observation about a "legislatively directed formula for
pricing (which makes no distinction on media)." Section
35.91(1) states that "the Wisconsin statutes shall be sold
at a price (calculated to the nearest dollar) to be fixed
by the [Department of Administration], based on cost plus
75% of the revisor's expenditures."
Because section 35.91(1) suggests that the price of the
statutes is, in fact, supposed to take cost into account,
I am puzzled by your suggestion that the legislature
requires that all versions of the statutes be priced the
same, without regard to the medium of publication.
Moreover, your suggestion appears at odds with the prices
Jill and I obtained in April from Document Sales and the
Senate Chief Clerk's office, the state agencies that sell
the available versions of the statutes. As we wrote in
our memo,
Document Sales offers a public-domain
hardbound version of the Wisconsin statutes
for $95 and a paperbound version for $84; for
updating the bound statutes, the Senate Chief
Clerk sells slip laws on subscription for $50
per two-year legislative session. The Chief
Clerk also sells the non-networked CD-ROM
version of the statutes for $95 for a single
disk or on subscription for $165 for a two-
year legislative session. So, a print
version of Wisconsin statutes kept up-to-date
over a two-year legislative session costs
$134 in paperbound format, $145 in a
hardbound format, and $165 in CD-ROM format.
In addition, as with the public selling price of the
print and CD-ROM versions of the U.S. Code, a simplistic
cost comparison does not provide a full picture. The
prices do not offer any insight into the benefits or
drawbacks one might discover on closer examination of the
two versions. For example, the licensing agreement that
accompanies the CD-ROM version prohibits printing or
electronically storing the text except for personal use by
the person licensed to use the disc. That text, of
course, consists of the public-domain text of the
Wisconsin statutes. The state's print version of the
statutes, however, does not carry any restriction in terms
of photocopying, scanning, or otherwise converting the
text for electronic storage.
In addition, as noted in the promotional brochure for
the March 1, 1994 release of the disc, the CD-ROM version,
unlike the print version, is not certified as an official
version of the statutes. The disc version does not
include all the material found in the print version.
Moreover, as you explained to me in person about two
months ago, the CD-ROM version comes with a proprietary
search engine (Folio PreVIEWS) provided by Folio under a
promotional arrangement that all but eliminates the
licensing fee other publishers would normally pay. If
that arrangement ends at some point, the cost of the
CD-ROM will, under the statutory requirement, have to
include the cost of that licensing fee.
3. WEST/HYPERLAW COMPARISON
Alan Sugarman, of HyperLaw, Inc., has already posted to
LAW-LIB a response to this comparison, which Jill and I
used (in a slightly longer form) as one illustration of
our skepticism that shifting a publication from print to
electronic media yields significant savings. Because Mr.
Sugarman's response reflects strongly felt personal views,
Jill and I consider it best to reply to him personally,
rather than to LAW-LIB, explaining why we are not
persuaded by his response. As to the question of the
appropriateness of whether Jill and I (or anyone else)
should harbor doubts about cost savings in an electronic
medium, we believe, based in part on examples such as
those in the previous two sections of this message, that
skepticism can serve as a useful analytical tool when
considering issues related to anticipated cost savings.
================================================================================
YOUR ORIGINAL MESSAGE
> From:IN%"74020.210@CompuServe.COM"
> To:IN%"law-lib@ucdavis.edu" "Multiple recipients of list"
> CC:
> Subj:CD-Rom costs v. Print
> Date: Tue, 14 Jun 1994 12:52:11 -0700
>
>
> In a memorandum regarding the Wisconsin citation system, Chris Wren stated in
> support of their being little difference in the cost of CD-Rom products and
> printed products the following:
>
> "A review in the July 1993 issue of Law Office Technology Review of a CD-Rom
> version of federal appellate decisions shows a similar pattern even between
> competing publishers. The review compared the cost of a West's Federal
> Reporter with the cost of the Cd-Rom product published by HyperLaw... Federal
> Reporter costs $632.50 per year (based on an average of 15 print volumes per
> year at $28.50 per volume, plus $205.00 for an annual subscription to the
> advance sheets). A subscription to four quarterly discs of the CD-Rom
> product costs $650.00. Thus, as with Wisconsin statutes, the cost of even
> the least expensive version of this Cd-Rom product exceeded the cost of its
> closest print counterpart."
>
> Are these prices correct? I checked the HyperLaw price ($650 is the
> multi-user price, $450 single user), but the Federal Reporter price seems
> low.
>
> The Wisconsin Statutes are priced the same on Cd-Rom and in paper because of
> the legislatively directed formula for pricing (which makes no distinction on
> media).
>
> Is it also generally the rule that CD-Rom products are priced at the same
> price as printed products? I can see that when the same publisher publishes
> both, the publisher might be concerned about protecting his print market, but
> I wonder if the general proposition holds true for products in general.
>
>
> My impression is that at least the raw physical media production cost for
> CD-Rom is two orders of magnitude lower than printing. I note that the
> United States Code from the GPO is $34 on disk and about $1700 in paper.
>
> Any comments?
>
> Regards
> John
> CIS: 74020,210
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