Chapter 3

The Association for the Study of International Business (ASIB) is an organization of researchers, professors, and business executives interested in the study, analysis, and promotion of business activities beyond domestic borders.

Mario Diponetti, ASIB's executive director, has hired you as a consultant to help him map out a future Web revenue strategy for the association.

The ASIB has about 3000 members located in countries throughout the world; however, about half of its members are in the United States. Each member pays an annual membership fee of $100, SO ASIB's dues revenue totals about $300,000 per year. ASIB sponsors two conferences each year; it also publishes a monthly newsletter and two journals. The conferences generate about $50,000 per year; that is, conference and exhibitor fees exceed the costs of running the conferences by that amount. This $50,000 is used to cover general ASIB operating costs. One of the journals, Annals of International Business, has an academic focus and is read by researchers interested in international business topics. All ASIB members receive a copy of this journal and ASIB sells about 300 subscriptions to the journal at $500 (a total of $150,000 per year). Most of the subscribers are university libraries. This journal is published four times each year. The second journal, International Business Today, is written for business executives. It includes articles and features that report on current trends in international business and is published monthly. All ASIB members receive a copy of this journal and ASIB sells about 1000 subscriptions to the journal at $50 (a total of $50,000 per year). The total subscription revenue from the two journals is $200,000 per year. International Business Today sells advertising that yields about $60,000 per year. ASIB uses that total revenue of $260,000 to cover the costs of producing and mailing both journals. The cost of producing one issue of either journal, which includes proofreading, editing, and typesetting costs, is about $2000. The printing and mailing costs, which have been increasing rapidly over the past several years, average about $3 per journal (the mailing costs to some members are much higher than others because they are located in distant countries). Each year, ASIB produces 16 issues (four of the academic journal and 12 of the business journal) and mails 61,200 journals (13,200 of the academic journal and 48,000 of the business journal) to members and subscribers at a total cost of $215,600 (16 x $2000 plus 61,200 x $3). Thus, ASIB's current journal operations yield a net profit of $44,400 ($260,000 - $215,600) that can help support other ASIB activities. ASIB has a Web site that it constructed at a cost of $30,000 three years ago. One of ASIB's staff members spends approximately half of her time managing the site. One-half of this staff 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 newsletter by e-mail. About half of the members chose to receive the newsletter by e-mail. The paper 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% x 3000 x $.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.

157 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 university 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 representative 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 subscription 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 evaluating 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.

REQUIRED:

1. Review the requirements for listing the Association's journals on Google Scholar. Prepare memo of about to Mario in which you outline what steps will be necessary to secure distribution of the journals' article abstracts through Google Scholar.

2. Mario and the ASIB face cannibalization issues in their decision to make the journals available online; however, the issues are somewhat different for the two journals because each is being sold to a different audience. In about , discuss these issues for the two journals. Be sure to note differences in these issues for the two journals.

3. Prepare comprehensive report for Mario in which you outline and analyze the possible revenue models that ASIB might use for its Web site. You should address the two journals as separate issues. Be sure to include the role that a paywall could play in one or more of the possible revenue models. Your report should provide the basis for a presentation to the ASIB executive board and should include specific recommendations where possible.