0.9 Financial analyses  (Page 14/5)

Establishing a financial performance baseline

To evaluate the financial implications of offering an online edition, a society should establish a financial baseline against which tocompare the journal’s projected future performance. This baseline analysis should include:

• Revenue sources and trends, including institutional subscription fees, allocated member dues income, and other income sources;
• Expense sources and trends for the journal’s print edition, including both variable costs (including printing, binding, and fulfillment) andfixed costs (including first copy costs, marketing, and administration);
• Membership dues trends for individual members and pricing trends for institutional subscribers; and
• Operating margins and surpluses or deficits for the journal.

The baseline analysis provides a basis for assessing the financial risk that a society might incur, and the benefits that it mightenjoy, in moving to online distribution of its journal, whether via outsourcing or self-publishing . Most of the elements of a journal’s financial history are straightforward, and many societies monitorthis data as a matter of course. Below, we have provided some observations on additional revenue and cost analyses that a society may want to take intoconsideration. Some of this data will be necessary to support the analyses described in the previous sections.

Member and subscriber analyses

Individual member information

Detailed and reliable data on its membership will allow a society to evaluate the potential effect of an online edition on itsmembership. Much of this data the society may already have at hand, including individual membership data by:

• Member type (for example, regular, student, life, emeritus, etc.), including membership trends over time. Understanding the composition ofthe member base will often help a society anticipate the prevalence of member behavior and preferences.
• Institutional affiliation (for example, four-year college or university, two-year college, commercial firm, private practitioner, etc.).Developing a membership profile by institution type will help the society to determine the extent of its exposure to online site licenses (see “AssessingExposure to Online Licenses,” in Chapter Three). Ideally, a society will be able to correlate the institutional affiliations of its individual members with itsinstitutional subscriber base.
• Geographical region (for example, North America, OECD developed countries, LDCs). Analyzing member geographical distribution can allow a societyto estimate the potential cost savings from online-only distribution options, as well as the potential effects of different prices by region.

Sometimes this member data will need to be mined, cleaned, and normalized. The amount of effort that a society should expend onthis effort will depend on its ability to tolerate risk in projecting member behavior.

Besides the basic member data, more detailed behavioral and preference information may prove valuable in assessing the effectof online availability on membership. This information includes: