To:  AAA Members, Section Presidents and Treasurers
Re:  AnthroSource Financial Crisis
From:  Peter Biella, President of the Society for Visual Anthropology
Date:  November 18, 2005

ANTHROSOURCE FINANCIAL CRISIS – DOCUMENTS

CONTENTS

INTRODUCTION

My first essay below, AnthroSource Financial Crisis, underwent several drafts and reviews, as Sandy Berlin, AAA Deputy Executive Director / Chief Financial Officer, and Stacy Lathrop, Anthropology News managing editor, inspected it microscopically for accuracy.  Berlin and Lathrop told me that they would publish the essay in the prominent Commentary section of Anthropology News.  In the event, however, they relegated it to the newsletter's page 61 (December issue).  They justified this obscurity by saying that its content, the slide of the AAA's small publishing sections toward bankruptcy or endlessly increasing dues, would be of interest only to members of my section.

As is clear in Berlin's and Lathrop's reply to my essay, their Commentary on AAA's Publishing Program, which follows as the second document below, their deep(er) cover for not wishing my ideas to be read is that I am an alarmist and my conclusions are wrong.  If their intention had really been to correct alarming misconceptions, however, the most constructive approach would have been for them to identify errors in my argument.  Instead, their "commentary" barely comments on what I have to say.  This suggests their helplessness before the disturbing issues I identify.

The third essay, my Concluding Remarks below, summarizes my position and highlights seven problematic features of the Berlin-Lathrop commentary.  I have hyperlinked my critiques to specific paragraphs in their text.  One can read their ideas and click to my criticisms, or read my criticisms and click to what they have said. 

For my brief summary of the AnthroSource crisis and efforts of the administration to cover it up, click here.

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ANTHROSOURCE FINANCIAL CRISIS

By Peter Biella (SVA President)

The news is disturbing—declining memberships, declining fund balances, skyrocketing AnthroSource costs. Between 2004 and 2005, as the Hilton crisis struck [*see my remark, below] and section dues increased to offset rising fees, thousands allowed their AAA memberships to lapse. This vote of no confidence caused overall membership to fall substantially. An aggregate figure of 681 members lost was reported in the Monthly Membership Report: August 2005. AAA now says that the reported figures on its "lapsed members" were problematic, if not erroneous, although membership is down.

Contradictory Budget Predictions

Small sections like the Society for Visual Anthropology (SVA) have been charged unprecedented fees this year, primarily to cover rising AnthroSource and University of California Press administration expenses. In May, I asked Malcolm Collier, SVA ex-president and treasurer, to help me analyze our section's financial condition. We projected that, unless the SVA receives revenue offsetting AnthroSource/UCP administration fees, we would be bankrupt within four years. (For latest budget figures, see http://www.societyforvisualanthropology.org/svafinances.html.) 

I sent this disturbing prediction early last June to then AAA Director of Publications Susan Skomal, who is now employed elsewhere. Skomal responded with new budgets purporting to show that that our financial outlook was excellent. In Skomal's budgets, the fees were offset by a new "digital subscriptions" revenue, derived from UC Press' campaign to market AnthroSource. Skomal's budgets projected that the SVA would receive digital revenue of $4,127 in 2005, rising to $23,566 by 2008. These figures are intoxicating. If they were true they would prevent our bankruptcy. Unfortunately, the midyear digital revenue received by the SVA was only $212.

As a section president, I'm concerned that not enough is being done to protect small sections financially. I'm dissatisfied with UCP's marketing, and displeased with unannounced, repeated and substantial increases in AnthroSource/administrative fees. These factors make me skeptical about the viability of AnthroSource itself. In an October draft of this column, I expressed my concerns to AAA Deputy Executive Director/ CFO Sandy Berlin. She answered that UCP's AnthroSource marketing campaign experienced a "late launch." Digital revenue for the whole year, therefore, will surely be more than twice the midyear figure. UCP, Berlin concluded, provides "extensive professional marketing and promotion services."

If the picture looks encouraging, it gets worse. I had dared hope that digital-subscription revenue would be sufficient to offset my section's financial crisis. Berlin responded that digital-subscription revenue is not guaranteed and that UCP is not contractually obligated to provide specific digital-revenue return. Berlin added: "AAA and sections should not rely on digital subscriptions to sustain or grow fund balances." This statement flatly contradicts Skomal's budget figures from last June [ibid.].  It does affirm, though, something I was told by two AAA sources who asked to remain anonymous: no one in the association has any idea what digital revenues may be.  

The AAA's Proposals for Preventing Financial Crisis

In her October correspondence to me, Berlin included the AAA's official solution to the AnthroSource crisis. She said that sections must cope with increased fees in four ways. They must keep journal publications on time; raise membership dues; attract new members; and provide new services. I will discuss each.

I agree that unless journals remain current, they will lose library subscriptions and revenue. Visual Anthropology Review, long behind, is finally up-to-date, thanks to its editors Najwa Adra and Andrea Walsh.   

Last year our section raised dues 60% to offset the increase in AnthroSource/UCP administration fees. A second increase of 60% would offset new fees unilaterally imposed on us this year. Given the pattern, I'm reluctant to raise dues again. AAA budgets are contradictory and erroneous; AnthroSource/UCP administration fees have only gone up, and AnthroSource guarantees no revenues. We need better solutions. If we let AnthroSource survive, it must either become less expensive or guarantee adequate revenue.

AAA administration wants sections to raise funds by acquiring new members. Given the recent defection of members, I cannot see where sections will find new people unless they steal them from one another. Multiple-section membership is increasingly expensive and reshuffling members into different sections does not increase absolute revenue. In any case, passing financial crises to underlings and having them compete for inadequate resources is unacceptable. A cynical administrative email last summer observed that raising dues had never yet caused a decline in membership. Let's not celebrate. The fact that an organization can bleed its members dry does not mean it should do so.

Administration proposes that sections provide new services. Here again, administration asks members to donate more unpaid labor to the AnthroSource cause. Unfortunately, new services would be far more attractive if the AAA were instead the AMA and we all had extra money to spend. But membership dues, hotel rooms, airfares and conference fees are already expensive enough, and we already provide enough free labor.  

For the sake of argument, assume that sections were unwilling to keep raising membership dues, unwilling to steal members from each other, and unwilling to donate more hours to AnthroSource/UCP administration. On those assumptions, unless UCP can deliver annual digital-subscription revenue in amounts near those predicted by Skomal in June, many AAA sections will find themselves unable to continue publication. Intended to benefit scholarship, AnthroSource would instead have ended section scholarship. I reject all but the first of the administration's solutions to the AnthroSource crisis. Following are alternative ideas.

Alternative Proposals

First, if digital-revenue returns are not part of the AAA's contract with UCP, they should be. Sections should receive monthly updates on UCP's marketing progress to insure adherence to contract.

Second, AnthroSource/UCP Administration fees must stop going up. Substantial annual increases, unilaterally imposed, are not acceptable.

Third, the entire AnthroSource collection should be put on DVDs, distributed to all members and all under-funded, Third World libraries. At the 2003 AnthroSource colloquium, the AAA promised that the AnthroSource collection would be made cheaply available to Third World universities and would thus benefit anthropological scholarship worldwide. We should keep this promise and expand it. Right now, policy is that only current members and subscribers are allowed online access to publications. If we are trying to advance scholarship, then eligible libraries and all members should receive DVDs at cost. (On this plan, First World libraries would continue to pay normal digital-subscription rates.) Sandy Berlin objected to the idea of DVDs, citing statistics that members like AnthroSource as it is. True, but members do not realize how expensive AnthroSource is. Berlin further claimed that DVDs lack functionality desired in the online environment. This is not strictly true. DVDs can be given high functionality. They are also infinitely cheaper than AnthroSource.

Fourth, an emergency plan. If—only if— AnthroSource cannot support itself through digital-subscription revenue, then the AAA should abandon AnthroSource. It should store only its most recent publications online. Distributing solely on DVD, the AAA could then update its latest disc annually for library archives and members.

Fifth, judging from the contradictions and errors I've found in trying to learn the AnthroSource facts, it is clear that more AAA members need to question section finances. Criticism about disturbing trends is the best chance we have of counteracting the association's slide to bottom-line-first management.

Many thanks for their help with this essay to Malcolm Collier and Sandy Berlin.  Email Peter Biella at biella@sfsu.edu.  [In fact, emailing the listserv will be more useful at this time.  For that purpose, click here. ]


[Next is the official AAA commentary on my essay.  I have linked a number of its paragraphs to my observations, which follow. The  commentary is a reproduction of the "almost final" draft I was sent by S. Lathrop on 11-16-05.  In it, I have corrected all of the errors that she later acknowledged.]


COMMENTARY ON AAA'S PUBLISHING PROGRAM:
Investing in AnthroSource and AAA's Publishing Program

By Sandy Berlin (AAA Deputy Executive Director/ CFO) and Stacy Lathrop (AN Managing Editor)

Is the AAA's publishing program sliding into a pit of crisis management? This is the picture Peter Biella paints in his commentary. He alarms readers to declining memberships and fund balances, along with increasing member dues and publishing costs. He sets members, sections and administrators against one another, competing for limited resources. He demands budgetary guarantees, while concluding with suggestions for counteracting "bottom-line-first management."  It is like staring at Edvard Munch's "The Scream."[See Biella's Comment 1 on this paragraph]

Should We Scream? 

While we might very much like to, we think it would be better to set a different canvas, stretched across a wide and delicate frame. First, the alarm bells Biella triggers are not only premature, but they don't apply consistently across the association's sections. As for membership levels, 28 of 34 sections, and the AAA at-large, reached their peak in 1999: multiple factors, not a single crisis, affect declining AAA/section membership.  [Comment 2]

Since 2004, 16 of 36 sections have increased their member dues. In 2006 [sic] sections that sponsor publications increased the percentage of their dues from 2 to 9%, or to the level of $33 to $46. Membership in AAA and a section is still more cost effective, as compared to the 16.97% increase, from the level of $52.63 to $61.56, that occurred in institutional subscriptions to AAA peer-reviewed journals between 1999 and 2003.  [Comment 3] 

Twenty-one of 36 sections are projecting reductions in their 2006 fund balances, the majority of which (18) sponsor a publication. Yet, eight of these 18 sections, including the Society for Visual Anthropology, have not reduced spending on non-publication activities, such as travel, since outsourcing much of the association's publishing services to the University of California Press (UCP) and the development of AnthroSource in 2004. During this same time period, four other publication-sponsoring sections have chosen to reduce non-publication expense, thereby increasing their fund balances. [Comment 4]

Responding to Disturbing Trends

Turning to the AAA's publishing program, it is important to point out that almost half of the aggregated budget is supported by institutional subscriptions. Thus, it is necessary to point to disturbing trends in scholarly publishing, as compiled by the Association of Research Libraries. From 1986–2002 the number of peer-reviewed journals published worldwide increased by 58%. In 2002 North American research libraries spent 227% more on journals than in 1986; the Consumer Price Index rose by 62% within the same 16-year period. Even though libraries committed substantial resources to preserve access to journals, they decreased subscriptions to titles by 5%. To preserve access to scholarly knowledge, librarians are turning to electronic publishing and seamless Inter-net portals, like AnthroSource. AAA is investing in a viable and marketable publishing solution, to a need driven by institutional subscribers. In doing so we are investing in the future of the association and its members, providing global access and exposure to our scholarly work, and ensuring its preservation in perpetuity. [Comment 5]

As with any investment in a new venture, there are risks and no guarantees. Yet, to do nothing in the face of the changing landscape of scholarship and publishing would put the core of the AAA at even greater risk. That said, the association's members and leadership have a responsibility to understand the impact of AAA/sections investment. AAA administration encourages more of this. [Comment 6]   

Analyzing Publishing Finance

It would be wonderful if a budget were a guarantee, but it is a roadmap, preferably based on existing prior history and anticipated plans. In developing a AAA/section-sponsored publishing budget, AAA staff collaborate with section leadership, consult experts in the field, like UCP, and analyze available historical data and trends. Methods and formulas for equitable cost and revenue-sharing have been adopted by AAA leadership, who provided input to the current allocation methodologies. [Comment 7]

Yet, analyzing finances and trends during this transition from print to digital publishing involves interpreting incomplete historical data; it is too soon to be certain how libraries, researchers and other users will continue to respond to the shift. This is why the AAA cannot request that its sections, staff or UCP, to whom it contracts for services, provide guarantees for revenue. AAA can and does, routinely evaluate UCP's services. UCP is charged with successfully performing their defined contractual services for all of AAA's publishing program, not the specific quantitative results of their efforts. Digital institutional subscriptions to 11 of AAA's journals began in 2005, and as is common with a startup year, there have been delays, unanticipated complexities in negotiating license agreements, timing issues related to different fiscal years between AAA and UCP, and difficulties in locating and digitizing all of AAA's legacy publications. 

While Biella points out the Society for Visual Anthropology's feat in catching up its publication, Visual Anthropology Review (VAR), he neglects to explain the financial impact of not having published it for several years. For one it contributed to the 7% decline in VAR institutional subscribers between 1999 and 2004. Secondly, SVA's fund balance increased because it did not incur the editorial and production costs during those years. Finally, it meant that when the SVA produced two double issues, rather than its normal two single issues this year, the 2005 editorial and production budget increased twofold. 
 
Just What Is AnthroSource?

AnthroSource, the digital component of the association's publishing program, is currently a portal designed to house and archive legacy and current AAA digital publications, while also providing functionality to facilitate quick and comprehensive scholarly research. Over time, AnthroSource will evolve into a comprehensive scholarly and practitioner portal. The AnthroSource Steering Committee is responsible for assessing user needs and recommending its future content and products. Yet, each member's perception of AnthroSource varies, meaning it has arguably become both a floating signifier for the hopes and dreams of the tech-savvy visionary and the scapegoat for the more down-to-earth accountant-type needing to explain budgetary woes.

In an effort to ensure AnthroSource isn't made a scapegoat, let us set out some terms for interpreting publication budgets. AAA/section-sponsoring publications have three types of expense: print publication costs, UCP management fees and digital operating expense. Print publication costs, incurred by each publication whether it uses UCP or not, include copyediting, composition, printing and distribution. In 2004 print publishing costs comprised 57% of Visual Anthropology Review's budget.

UCP management fees, charged to publications using UCP, include the labor cost for fulfillment, production control, and marketing and administration. Publications were similarly charged overhead when AAA staff handled editorial and production activities in-house. What is different, however, is UCP's extensive expertise in marketing and promotion. They are using this expertise in developing and implementing a marketing plan. In 2004 UCP management fees consisted of 41% of Visual Anthropology Review's budget.

The expense related to print publishing and management fees has been, and will continue to be, incurred for traditional publishing activities. AnthroSource and AAA's transition to digital publishing has created a new type of expense for AAA/section-sponsored publications. This new expense includes digital operating costs to host and archive both legacy and new pages to the portal. In 2004 these costs comprised 2% of Visual Anthropology Review's budget.   

Acknowledging Value

There have been bumps for all involved in outsourcing the association's publishing program— given economies of scale, partnering with a publisher like UCP is necessary to develop and launch a whole new digital scholarly resource. Despite those bumps, AnthroSource is well received by institutional subscribers; and, in a recent membership survey, AAA members viewed AnthroSource as a top member benefit.

Leaders of anthropology associations around the world have also commented in AN that online portals—not DVDs—are an answer to building bridges in international collaboration and equitable, seamless access to anthropological scholarship. They understand that in a Google age, with the Internet and electronic publishing, a portal is the way to move forward. There will be challenges surely in realizing this goal. But pulling the plug on our investment in AnthroSource is not only premature, but it is not justified given scholarly publishing today.
 

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CONCLUDING REMARKS

By Peter Biella, SVA President

My essay did not advocate that the AAA precipitously pull the plug on AnthroSource.  It drew attention to the financial crisis precipitated by AnthroSource.  The essay went on to outline breaches of faith:  the AAA has proposed unworkable solutions to the crisis, delayed the fulfillment of an important promise, covered up the problem with imaginary and misleading data.

A commentary of "No comment"

Berlin and Lathrop contribute little that is new.  The authors hazard a moment of levity when they claim that AnthroSource is a floating signifier;  it means anything to anybody.  Maybe so, but in 2005 this floater meant a bill to the SVA of more than $16,000.  Moreover, since we want to publish a new volume of the journal each year instead of simply paying to keep the old ones online, we have to spend another $7,000 per volume.  Unfortunately, our 2005 revenue is only about $19,000.  (See budget.)  The problem is serious.

I have seriously tried to understand why Berlin and Lathrop chose not to tackle any of the frightening issues I've described.  Prominent figures in the AAA administration, they are in a difficult position.  On one hand, they have as individuals admitted their own fears about the AAA's financial stability;  perhaps too they are ashamed that I was sent a misleading budget.  Off the record, they have been helpful and frank.  On the other hand, when serving in their official capacities, they cannot acknowledge the problems I've identified and are obliged to repeat the unworkable solutions dictated by the party line.  No wonder they are tempted to practice the arrogance of power:  "Never apologize, never explain."

If the administration can make no comment on the problems I've identified, I invite discussion by the general AAA membership.  I've asked the SVA to volunteer its listserv for the purpose.  To join, send an email--which needs no title or subject heading--to  <listserv@listserv.jmu.edu>.  The body of the email must read:   subscribe society-visual-anthropology-l   Within a few hours your name will be added to the list and you will receive an informational email explaining how to post messages, etc.  I look forward to your contributions.

Following is a summary of the key points I've raised.

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Below is an elaboration of the points I have just summarized.  Each is linked to a section of the Berlin-Lathrop commentary. I have chosen to reply to it at length because, as the AAA’s official response to my essay, it continues the policy of denial that prompted me to write in the first place. 

1) Munch's Scream (response to Berlin-Lathrop paragraph 1).  

Berlin and Lathrop begin with a repudiation of my position--I am a screamer, an alarmist.  Berlin also recently repudiated her original response to my questions, the groundless digital-subscription revenue figures that she and Skomal invented last summer in the administration's first effort to quiet me.  The B&L commentary addresses many of the subjects that my essay critiques, but it ignores my arguments and offers no viable solutions to the problems I identify.

2)  Declining membership (paragraph 2)

B&L acknowledge that AAA membership has been in decline since 1999.  This disturbing fact is apparently cited to correct my misapprehension that AnthroSource alone is responsible for the membership crisis.  (For what it's worth, my essay not only names rising membership fees as contributing to the crisis but also a second factor, the Hilton fiasco.)

Lathrop admitted a more important fact about the AAA's lapsed membership numbers when I proposed to publish them.  She said I mustn't do that because the numbers were wrong.  I replied that, in that case, I would publish the fact that section leaders had been given information about membership that the AAA had discovered was wrong and had never corrected.  Lathrop urged me not to do that either.  She argued that bad data about membership was irrelevant to my thesis about AnthroSource.  I disagree.  My fears about AnthroSource stem in large part from the fact that I was intentionally given groundless and misleading data (see above).

It's a bad sign that the AAA sent me a budget that was misleading.  It's a bad sign that the administration never publicly acknowledged it had made mistakes in its membership numbers and never corrected them.  Section leaders need good information to make good decisions.  We cannot lead if we are misled.

3) Increased membership dues (paragraph 3)

In B&L's third paragraph, the mind-numbing barrage of statistics resembles much of the obscure budgetary data I had to wade through to discover the SVA's danger of bankruptcy.  Obscurity in AAA missives is not uncommon.  When monthly budgets are emailed to section presidents and treasurers, they arrive in unreadable, tiny font and are not formatted for intelligible computer printouts.  Each of the seventy-or-so recipients of the material is forced either to spend about twenty minutes reformatting the budgets so that they can be read, or trust blindly that the administration's obscured figures are good. The effect of delivering budgets that are unintelligible without a great deal of work is to send the message, "Keep away. This is all too much trouble for you."  When I mentioned this semiological effect to Berlin, her response was to laugh.  I do not see humor in administrative practices-–whether they be the distribution of imaginary and misleading data, obscure explanations, or virtually-unreadable budgets-–that discourage comprehension and honest critique of what the administration is doing.

4) Sections must lower non-publication expenses (paragraph 4)

B&L next argue that a way to create positive fund balances, in the face of soaring AnthroSource costs, is to lower non-publication expense.  They write that if the SVA were to lower its travel [and accommodation] expenses, money would be saved that should be dedicated instead to AnthroSource. Here is the background.  For more than five years, the SVA has paid travel and accommodation expense for experts who jury the Annual AAA Film and Video Festival.  The jurors work for four days and are unpaid.  By 2005, the Festival had become sufficiently respected that its application fees brought in $2,650 in revenue, a net gain of $650 above the travel and accommodation expense.  (See budget (see budget.)  If we lose the expense, we will soon lose the revenue, because a respected festival requires a respected jury.  By creating net revenue, the travel expense strengthens the SVA's ability to stave off the AnthroSource crisis.

Even if the festival lost money every year instead of earning it, its costs could still be defended.  (It certainly made life more enjoyable at the Atlanta Hilton last year, when everything else was falling apart.)  Non-publication expenses that benefit the AAA have a right to compete for membership dues.  Publication is not the only legitimate expense.

5) Institutional subscriptions (paragraph 5) 

The most interesting aspect of B&L's fifth paragraph is its failure to mention one of the key points I raise in my essay, the 2003 promise of the AAA to provide Third World libraries, for a very modest fee, subscriptions to AnthroSource.  One year after the promise was made, I telephoned Suzanne Calpestri, Chair of the AAA's AnthroSource Steering Committee, to ask about her progress.  She told me that lowering fees to Third World libraries would not occur because "we're in the business of making money."  I was shocked to hear this: the library promise was one of the chief benefits I had repeated to my Board of Directors in order to justify the enormous new expenses of AnthroSource.  Had the promise simply been a case of bait-and-switch?  Testing that suspicion, I quoted Calpestri in a recent phone call to Berlin.  Berlin said that Calpestri was mistaken and asserted that she herself was working on the establishment of a low rate for eligible libraries.  That's good, because it has now been two years.  Third World libraries, and those of us who once lent support to AnthroSource because it would help those libraries, are still waiting for the promise to be kept.

6) Members and leadership are encouraged to take responsibility to understand the impact of AAA investments (paragraph 6)

The encouragement offered in this paragraph is particularly significant to me because understanding the impact of AAA investments is exactly what I have been trying to do for the last six months. Yet, when Malcolm Collier and I raised the alarm about the slide toward bankruptcy, the AAA response was to send us Skomal's misleading June budget. AAA President Liz Brumfiel joined in with an email telling me that Skomal's budget showed there was nothing to be concerned about and that I should turn my attention to the SVA journal:  its publication was seriously behind. 

When I told the administration that I intended to publish the fact that Skomal’s digital-subscription revenue figures appeared high enough to prevent SVA bankruptcy, Berlin told me not to.  She admitted that the revenue figures could not be counted on.  She told me, in effect, that the budget was not a "roadmap" at all, since at its heart the numbers were pure speculation.  As I mention in my essay, two administration sources confirmed on condition of anonymity that no one at the AAA had any idea what digital-subscription revenue would be.  A third anonymous source, speaking with SVA treasurer Stephanie Takaragawa, admitted the same fact.  An honest question mark, not the specious figure of $23,566, was what Skomal should have sent me in June.

7) Budgets are roadmaps, not guarantees (paragraphs 6-7)

Here, B&L describe the misleading information I was sent in June, along with other budgets produced by the AAA, as "roadmaps," not guarantees of success.  My essay proposes that the AAA should contractually require UCP to reduce the peril of the road by guaranteeing substantial digital-subscription revenue.  B&L dismiss this idea on the ground that guarantees are not part of their existing map.

When the AnthroSource contract comes up for renegotiation in 2007, the AAA needs to find a different road and a better map.  I believe that if UCP is not required to produce substantial subscription revenue it will threaten the survival of many sections.  Without this revenue, I believe, sections will be forced to raise dues beyond the breaking point or, with insufficient dues, terminate their publications and spiral toward bankruptcy.  The AAA cannot afford to defend the present AnthroSource contract at all costs.  The goal of the AAA must be to balance disadvantages of constantly-increasing membership dues with the advantages of digital publishing.  Neither should be considered fixed.  Section leaders may be wise to allow dues to go up by small increments, but only if they have reason to believe that administrative fiat will not force them to raise dues astronomically every year.  Likewise, the AAA's contract with UCP can be rewritten such that that the legacy of articles remains online or in DVDs in a less expensive way.  Since scanning the articles has now been paid for, relatively inexpensive options do exist.   We should explore them.