Measuring the Economic Impact of the British Library August 2004, IFLA/CDNL Lynne Brindley Chief Executive, The British Library

‘Helping people advance knowledge to enrich lives’ The British Library holds unsurpassed collections and offers a great range of services based on them One of the five largest research libraries in the world £14.9m annual acquisitions budget 250 years of collecting – across time, space, disciplines, languages, cultures, formats & materials Accommodation for over 1200 readers at St Pancras 150 million items (books, serials, newspapers, microforms, philatelic, sound, manuscripts, graphic & electronic materials) The largest document supply service in the world ‘Helping people advance knowledge to enrich lives’ Legal deposit worth £10m per year – and now e-legal deposit Serves researchers, business, libraries, education and the general public

What do we know about the value of the British Library? We have an incredible range of information resources and we know that they add value (culturally, socially, economically) And we have very considerable staff expertise and we know that this adds value But just how much value does the British Library add? How do we go about demonstrating our value, and communicating that value in a meaningful way?

We wanted to obtain a composite measure to reflect the total value of the British Library to the UK economy … TO OUTCOMES How much value, in monetary terms, does the Library add to the nation as a whole? What benefit does the Library bring relative to the funding it receives? What would be the economic impact if the Library ceased to exist? FROM OUTPUTS … 8,000,000 items supplied remotely & consulted in Reading Rooms 382,000 visits to our exhibitions FROM ANECDOTES … ‘ Contemporary publishing depends upon the research and scholarship of the past. Bother publishers and authors relay on the British Library’s unrivalled collections …’

Our reasons for wanting to measure our value like this were four-fold Confirm our own belief in the value the Library brings Validation To government and to the taxpayer Accountability For continued investment A mandate To help us understand our impact more clearly To inform our thinking about our products and services To inform strategy

So we undertook a quantitative assessment of the value generated by the Library to the UK economy We commissioned work to provide an independent assessment of the value of the British Library to the UK economy The study was undertaken jointly by Spectrum Strategy Consultants and Indepen Consulting. There was also substantial input from BL staff, led by our Head of Strategy and Planning, Caroline Pung. The core of the work took place over the three month period, August to October 2003

There were two main valuation methods available – we used the consumer surplus approach Consumer surplus approach measures economic impact through the value individuals directly gain above the price they pay Macro-economic impact analysis measures economic impact through macro-economic variables such as expenditure, GDP contribution and employment The macro-economic approach is not well suited to un-priced goods such as the BL where value is not adequately reflected in macro-economic impacts Therefore, this study selected the consumer surplus approach

Consumer surplus represents the value under a demand curve above the price paid The net benefits consumers enjoy from consuming a good/service Captures the benefits created for non-users and future generations Measured through either revealed preference or stated preference techniques Quantity Q* Consumer surplus Supply curve Demand curve Price P* P1 Q1 The diagram shows an illustrative demand and supply curve The demand curve represents the consumers’ demand. That is the price they are willing to pay for a given quantity of product/services. At a high price consumers are willing to buy less products and a lower price consumers are willing to buy more products The supply curve represents the Library’s supply. That is the quantity they are willing to supply for a given price. In the case of the Library, the Library supply of services is not as strongly dependent on price. The point at which demand and supply meets is the Price of the good in the marketplace. However, consumers’ are willing to pay more than the price they pay. I.e. they place a higher value on the good than they actually pay. This is known as the consumer surplus, the value of the good above the price paid for it. Represents the net benefits consumers enjoy by using a service above the price paid for it

We primarily adopted a leading stated preference technique known as ‘Contingent Valuation’ Involves the construction of a ‘hypothetical market’ within a questionnaire Interviewees asked a range of questions and asked to provide a monetary estimate of the value of the Library to them directly measures consumer surplus captures use value, option value and existence value Cross checked against values derived from investment in access and cost of alternatives

Contingent valuation has been used for decades within the environmental and transport fields Emerged in US when used to quantify damages in legal disputes over environmental damage Major review in early 1990s by Nobel prize winners Arrow and Solow provided backing for the technique Now commonly used recommended by institutions such as the World Bank and OECD has been used by UK Government departments in setting policy 1,000s of studies completed in academic literature

There is also a handful of studies using Contingent Valuation in the library and cultural fields Application of Contingent Valuation methodology: Valued at: Between 2 and 10 times the costs 3.5 times the cost An amount equivalent to the costs St Louis public libraries in the USA National Bibliographic Database & National Union Catalogue of National Library, NZ The Royal Theatre in Copenhagen

The aim of the project was to place a monetary value on the British Library Objective was to derive total value of the Library – use value, option value and existence value But not all the Library’s services could be valued. We focused on Reading room access to collections Remote document supply and bibliographic services Public exhibitions and events Indirect value of existence and option to use the Library to wider society We did not include Emerging products and services Products and services generating low value Overseas users No precedents for a National Library – partial values for New Zealand national library and some work on public libraries

We derived estimates of the value of the Library through five main types of question Willingness to pay Willingness to accept Investment in access Cost of alternatives Price elasticity Asking individuals how much they are willing to pay to continue to access the service Directly measures the demand curve with a budget constraint Asking individuals how much they would accept in compensation to forego the service Directly measures the demand curve without a budget constraint Estimate the time and cost invested in accessing the service Services must be worth at least that amount to them Costs incurred if forced to use alternatives. Likely to be an upper-end estimate as may alternatively forego use Change in demand with a change in price

Examples of these different question types… Investment in access How much do you invest, in terms of time and money, to make use of the Library? How much would you be willing to pay for the Library’s continued existence? Willingness to pay Price elasticity How much would your usage change if the price went up by 50%? Willingness to accept How much would you be prepared to sell your readers pass for, assuming you could not then replace it? Cost of alternatives How much would you have to pay to use alternatives to the Library, if such alternatives could be found?

200 users of the reading rooms Spectrum designed questionnaires and NOP (a market research company) carried out most of the survey work for us Reading room users 200 users of the reading rooms Weighted by academic, business and personal 29 users of the Colindale site(1) Remote document Supply & bibliographic service users 100 users of the remote document supply service 50 commercial and 50 non-commercial users Indirect value to wider UK society 2,030 members of the general public Randomly selected across GB, based on the population distribution Note: (1) Completed by Spectrum

A benchmark study was undertaken for visitors to exhibitions A less resource-intensive method of determining value was employed for exhibitions because it was anticipated that the value would not be nearly so great as the value for the other three areas A benchmark exercise was undertaken with major national museums whose visitor numbers increased markedly when entrance fees were abolished a few years ago The value of the Library’s exhibitions was estimated to be the product of the average entry fee charged by the national museums and the (lower) visitor numbers expected if charges were imposed

A range of values was obtained for reading room and remote services Willing-ness to pay Willing-ness to accept Invest- ment in access Price elasticity Altern -atives Approach Reading Room users Remote Document Supply and bibliographic service users Public exhibition visitors Indirect value to wider UK society Survey Benchmarks 4 2 3 1 5 1 2 3 4 1 1 Key: 1= highest value for each service Key: 4 = lowest value for reading rooms; 5 = lowest value for remote supply

For public exhibition visitors The value of the British Library was determined by aggregating the most realistic estimates from the four areas The highest estimate (WTA) was considered to be the most realistic as this was very similar to internal estimates made by the Library to represent the annual cost of replicating the remote document supply services For remote users One of the two middle values (WTA) was considered to be the most realistic estimate For reading room users In each case these values were scaled up to represent the total population The value of the Library was determined by aggregating the four values Only one value was obtained For public exhibition visitors For non-users Only one value was obtained

The study showed that the British Library generates value around 4 The study showed that the British Library generates value around 4.4 times the level of its public funding Total value relative to Grant-in-Aid For every £1 of public funding the British Library receives each year, £4.40 is generated for the economy If public funding of the Library were to end, the UK would lose £280m per annum Excludes value generated for non-UK registered users which is considerable £363m(1) Benefit cost ratio 4.4:1 £83m Total Public funding(2) Note (1) Net of BL revenues. (2) In 02/03 Library received £7m of donations/investments and £27m from its commercial services in addition to GIA

A significant part of the value is indirect value to the wider UK society Of the £363m of value generated by the Library each year: £59m comes directly from users of the services we tested £304m comes from wider society In other words, a key part of the British Library’s value: Reflects ‘existence’ and ‘option to use’ value for wider UK society (all regions of the UK) Reflects a wide range of positive impacts that the Library generates for society and that society recognises

The Library has derived many benefits from this study The study represents the first comprehensive evaluation of the benefits of the British Library to the UK economy It reinforces the Library’s position as a sound investment for public money By undertaking the study, the British Library has taken a clear lead in demonstrating public accountability To the best of our knowledge, the study represents the first time that the Contingent Valuation methodology has been used to derive a figure for the overall value of a national or major research library We have received a great deal of interest in this study and hope that our experiences encourage other libraries to think about new ways of quantifying their value

We are using this work in several ways We are using the results To inform our strategic thinking about where the Library should focus going forward To communicate the Library’s role and contribution to stakeholders To motivate all Library staff and remind ourselves of the importance of what we do To prompt ourselves to focus on adding value (economic, cultural, social) We expect to conduct further studies in future to build on this work, e.g. to enable us to develop an understanding of the value of emerging products and services

Key success factors for the study Invest time to find the right expert help - and get them up to speed on your organisation quickly Invest your own staff time into the study – can’t just outsource it to consultants Identify the right areas of your organisation to focus on (services, audiences) Test the questionnaires rigorously Engage with key stakeholders from start to finish Remember that economic value is one part of the picture – it supplements other ways of measuring performance and value but does not replace them

Caroline Pung, British Library Contact information Caroline Pung, British Library caroline.pung@bl.uk Spectrum Strategy Consultants Indepen Consulting Ltd Greencoat House Francis Street London SW1P 1DH T +44 (0)20 7630 1400 F +44 (0)20 7630 7011 www.spectrumstrategy.com Diespeker Wharf 38 Graham Street London N1 8JX T +44 (0)20 7324 1800 F +44 (0)20 7704 0872 www.indepen.co.uk tabitha.elwes@spectrumstrategy.com laurie.patten@spectrumstrategy.com phillipamarks@indepen.co.uk