The Australian Library Journal

Valuing libraries

Ian McCallum and Sherrey Quinn

Margaret Trask was the best lecturer I had at library school. She confirmed my choice of profession, and inspired me to try to make a difference. By the time our paths crossed at the University of New South Wales (UNSW) in 1969, Margaret was well grounded in the practice of librarianship. She had worked in the State Library of New South Wales, government and private sector special libraries, and in the Penrith public library. She brought experience to teaching in a way that captivated her students and illuminated all she taught. She convinced us that libraries were worthwhile, that they had demonstrable value. (Ian McCallum, November 2003)

Whilst the value of libraries is a perennial topic, their economic value has been challenged with increasing force in recent times. Disciples of management theories espousing greater efficiency through 'reduction of the cost base,' or worse: 'we don't need libraries now we have the internet,' overlook the value of authoritative information carefully collected and organised by librarians and (usually) no one else.

At the overview level, OCLC (2003) has produced an entertaining document looking at libraries as (amongst other things) economic engines, logistics experts, valued destinations, global information suppliers, and as home to a 'vibrant and sizable profession' (p 6). Whilst interesting from a (US) public relations point of view, the material presented below is more specific.

Public library value

There are 1510 public libraries operated by 505 local government organisations in Australia - plus the state and national libraries (Australian Bureau of Statistics, 2001). The ABS data demonstrates that public libraries in Australia are a popular and well-used community resource.

• During 1999-2000 there were 99.4 million visits to public libraries in Australia, an eleven per cent increase on 1996-1997. By comparison, there were 11.8 million visits to botanic gardens and 79.4 million paid admissions to motion picture cinemas in the same period.
• Public libraries hold 54.3 million books and other items.
• They record 162 million loans per annum; an average of 1.7 loans per visit, and
• they cost about $800 million, ninety-one per cent sourced from government funding.

Further evidence is found in the AustraliaSCAN surveys carried out by Quantum Market Research (2003). At the instigation of librariesvictoria, AustraliaSCAN included questions on public libraries in their surveys in 2001, 2002 and 2003. Findings include:

• fifty-nine per cent of the Australian population carry a library card in 2003;
• public libraries had the highest satisfaction rating of any public service queried and the lowest dissatisfaction;
• regional and rural library users are among the highest users of their local library service;
• many services are used at a library, but borrowing books remains the core service used;
• people visit their local library more often than the video store

The 2003 Report noted (p3) that:

In the context of other public services, public libraries rank with Australia Post and pharmacies as the 'gold standard'. There is also a gathering body of evidence which suggests that this reflects a growing distinction in the public's mind between those services which are seen to have retained their old-fashioned, human touch (good) and those that have discarded these values in favour of new soulless ideologies of de-regulation, privatisation and market forces.

Community support for libraries is also indicated in the submissions to the recent Senate Inquiry into the Role of Libraries in the Online Environment. This Inquiry (whose terms of reference included public, university and research libraries) attracted 155 submissions, held fifteen public hearings and heard sixty-seven witnesses (Senate Committee 2003).

Numerous studies attest to the social and community benefits of public libraries. The role of public libraries in society is broad - they provide:

• information resources for everyday use by individuals, for recreation, and to support formal and informal education and lifelong learning;
• access to government and other electronically-delivered information, available from sources beyond the walls of the library;
• information, referral services and facilities which contribute to community development;
• safe and welcoming places for social contact, and
• free, unfettered and equitable access to services and resources by all members of the community.

Public libraries:

• promote literacy;
• stimulate initiative and enhance quality of life;
• introduce and develop skills in using information technology, and
• foster research and information seeking skills.

Important recent studies of public libraries in Australia that should be noted include the surveys of users and non-users of public and State libraries for the Libraries Working Group of the Cultural Ministers' Council, and the subsequent strategic and policy framework (Mercer 1995; Mercer and Smith 1996). In that these studies do not deal with issues of economic value they are not discussed further in this paper. We summarise below some recent, specific studies into public library value, including reviews and research.

Griffiths and King Studies (1994, 2000)

Griffiths and King (1994) reviewed ten years' work in measuring the usefulness and value of special libraries and public libraries, and reviewed surveys of the information-seeking behaviour of professionals. They devised a framework for assessing libraries; the value and worth of library services; and the impact of library use. Among the data they collected were: value/price paid to use libraries; average time and dollars spent using various library services; use of public library services; cost and worth of public libraries; relationship of distance and number of visits to public libraries; impact of library use on achieving company goals; purposes of reading; journal article readings (various aspects); productivity of professionals; public library uses (purposes and consequences). From all these they derived values for library activities.

Donald King continued this work, so that in the special libraries field there is now a substantial body of research into financial value. In 2000 the Special Libraries Association (SLA) published a landmark study on the transition from printed to electronic journals which included a chapter on the economics of libraries (Tenopir and King 2000). The authors found that in a scientific research context 'it actually would cost approximately 7.2 times more not to have a library than it does to have one' (p208).

The Florida Study (2001)

In a study of public libraries in Florida (McClure at al 2001), survey participants were asked to indicate in dollar terms the value to them of individual library programs and services. The study team then calculated overall user benefits by breaking down each service and deriving an average retail price for that service. The total of these calculations was taken to equal the total benefits received by library users. Taxpayer investment was subtracted from total benefits to give a total return on investment. The key finding was a return of US$6.27 for every tax dollar invested.

Canadian studies

Based on observations that people using public libraries also tend to include shopping with their visits to the library, research in Canada by Fitch and Warner (1997) focused on the role of libraries in promoting the economic well-being of local businesses. The main finding was that more than seventy-five per cent of library users combined trips to the library with the purchase of goods and services to an annual value of C$500-600 from retail shops close to the library. Fitch and Warner also found that public libraries increase the economic value of a community by their capacity to draw businesses, home buyers, tourists and others to the locale, and contribute to the local economy through their annual operating budgets and capital projects.

An earlier study (Sawyer 1996) demonstrated that Ontario public libraries have a direct and indirect impact on the Ontario economy, measured in terms of gross domestic product. Benefits included services and information for business, lifelong learners, and job seekers. Sawyer suggests a framework to help public libraries promote their economic impact and contribution to economic growth within the community.

In 1998 the Southern Ontario Library Service (SOLS) published The library's contribution to your community: A resource manual for libraries to document their social and economic contribution to the local community (dmA Planning and Management Services 1998). This manual:

• is designed for self-use by public libraries;
• identifies twelve social and nine economic benefits;
• describes the information which will document how the library delivers each of the benefits;
• provides tools for collecting the information needed;
• outlines a strategy for communicating value, and
• includes an extensive bibliography of related publications.

The manual has been distributed to all libraries in Ontario and is available for purchase by other libraries: http://www.library.on.ca/publications/LCTYC/

Case studies on use of this manual have been published on the SOLS website and in Kostiak (2002).

St Louis Public Library Services Valuation Study (1996)

The St Louis Public Library (SLPL) Services Valuation Study team produced a handy 'how to quantify the benefits of your library' guide, complete with a very useful table of priced individual services (Holt, 2001; Holt, Elliott and Dussold 1996; Holt, Elliott and Moore, 1998; Holt, Elliott and Moore, 1999). In applying the methodology the research team concluded: 'according to federally-sponsored cost-benefit research, SLPL patrons reported receiving at least US$2.53 to $5.00 in benefits for each dollar of taxes supporting library operations' (Holt 2001, slide 9). When considered from the point of view of the library (rather than the patron), Holt's team was able to claim that 'on average for every dollar the public has invested in library services, the direct benefits just to library users is $4. In St Louis, the public is getting a good return on its investment in its public libraries.'(Holt, Elliott and Moore 1999, p108).

Loughborough University assessment of value and impact (2001)

A year-long research project in the Department of Information Science at Loughborough University attempted a quantitative evaluation of the economic value of public libraries. The research included assembling and analysing as much evidence as possible from the mass of statistical circumstantial evidence that had built up over the years. The researchers were not primarily concerned with ways in which public libraries contributed to the local economy and provided business information. Instead, they saw 'economic value' as meaning the benefit of the whole library service in economic terms - how much better off are library users than they would be if no library existed?

The key finding was an estimation that 'public libraries produce £98m more value than they cost to provide - a net gain of 13.6 per cent' (before external benefits to society are taken into account).

Borrowing books, the dominant use of the public library, allows the user to get the benefit at a fraction of what it would cost to buy the book, or to read books that would be too expensive to buy. This takes different forms for people according to their education, wealth, age and personal interest. The result is a mixture of educational, informative, cultural and recreational benefit. (Morris, Hawkins and Sumsion 2001: p303).

The full report is summarised in Hawkins, Morris & Sumsion (2001a & b).

More recently, the authors outline the theory underlying the economic value of library benefits and review other research. They show that the methodology can be extended from public libraries to a parliamentary library and to the economic and social costs of crime (Sumsion, Hawkins and Morris 2003).

Sciacca study of public libraries and economic development (1998)

A research study involving 100 randomly selected public libraries in Illinois found a transformation in the level of awareness and change in attitude towards public library involvement in economic development (Sciacca 1998). Sciacca comments (p80) '...it has become somewhat commonplace to hear of librarians working closely with local governing officials, small business owners, entrepreneurs and economic development agency officials, providing needed information in support of the economic advancement of their communities.' With libraries' well-being linked to the economic success of the communities they serve, it makes sense for them to seek involvement in economic development initiatives.

Several opportunities for public libraries to increase their support of local economic development activities were identified (Sciacca 1998, p81-2):

• library administrators should formally recognise the library's role and endorse and recognise staff involvement;
• libraries should be assertive in ensuring that their contributions are recognised and take credit for successful outcomes;
• direct contact with the local business community places the public library in an excellent position to work with small business (and expand employment);
• libraries have an important information clearinghouse role where communities have multiple bodies working on economic development;
• libraries should develop basic reference collections of materials useful to the business community. In many case it was found that such materials were already held;
• libraries have good locations, knowledgeable staff, convenient hours, adequate parking, comfortable work space - all amenities making the library an attractive place as the community focal point for information for business and economic development.

Australian research - public libraries

In an earlier project we stated that 'Determining and promoting the value of public libraries is a chronically underdone activity in Australia' (McCallum and Quinn 2001, p18). There is at present no concerted or single national focus for this, though some initiatives, including local and regional ones, do exist. The nascent Public Libraries Australia (PLA) may provide the focus. (Further information on PLA may be found at its website.)

The Australian Library and Information Association (ALIA) is an advocate for all libraries - including public libraries. In its submission to the recent Senate Inquiry into the Role of Libraries in the Online Environment, ALIA stated its belief '... that it is in the national interest that Australian governments support and facilitate the role of libraries as providers of public information in the online environment,' and provided evidence to support this position (ALIA 2002, Covering letter to the submission: http://alia.org.au/advocacy/submissions/online.environment.html).

It remains to be seen whether any of the eleven recommendations in the Senate Committee's 2003 report result in better funding for Australian public libraries.

Haratsis' analysis (1995)

Although many writers discuss the social and economic value of public libraries, there is little Australian research applied to the expression of the value of libraries in dollar terms. Brian Haratsis (1995, p98) commented that 'the economic value of public libraries has been so under-researched that even if the theoretical valuation problems could be overcome there would be little data available to calibrate models or provide input to cost benefit studies.' Nevertheless, he estimated that 'for every $1 in operating costs invested in the public library sector there is at least $2 of benefit created.' (p103)

He covers direct economic benefits:

• costs saved from avoiding book purchases (In 1990 it was estimated that at any point in time, public library books accounted for thirty per cent of all books being read);
• 'free' value added derived from cataloguing (easier choice);
• below marginal cost access to materials (audio, CD);
• below marginal cost access to photocopiers, computers, CDs;
• below marginal cost access to facilities;

as well as indirect economic benefits:

• human capital/knowledge gained from public libraries leading to economic benefit;
• community interaction;
• skills transfer;
• below marginal cost recreation and entertainment;
• education (he estimated twenty per cent of all public library usage is related to education);
• risk aversion, for example, technological risk;
• social welfare role.

Johnstone's study of public libraries and shopping centres (1998)

Laurelle Johnstone in 1998 reviewed issues associated with the location of public libraries in shopping centres. Based on a literature search and interviews with public librarians from several library services in four Australian States, she presents a general summary of social and economic benefits of public libraries to their communities. Economic benefits relate to support of the local business/community economy and include:

• information services and support to business;
• assistance to the unemployed in finding jobs;
• opportunities for skills development and transfer, with consequent increases in productivity;
• introduction of new technology to the community;
• increased attractiveness of the community to business (both because of the services provided by the library to business, and because of the traffic generated by the library);
• savings to ratepayers because the library's material resources, if well-organised and accessible, can be used and re-used many times, without being consumed by the process.

In addition, Johnstone identifies the specific benefits that accrue to libraries, the community and the shopping centres concerned, and discusses mutual benefits to library users and shopping centre management:

• the convenience to the consumer of combining shopping with library visits including opportunities for partnerships with other tenants such as bookstores;
• easy parking in suburban shopping centres;
• ready access to public transport;
• proximity to cafés and childcare facilities;
• opportunity for extended opening hours within the umbrella of shopping centre security services, and
• opportunity for additional book returns elsewhere within the shopping centre (for traders, returning library materials means return visit to retail precinct and usually, repeat sales).

Cram's discussions (1992-1998)

Some discussion of the value of public libraries, including anecdotal evidence of the short- and long-term financial benefits that municipal libraries bring to their communities is presented by Jennifer Cram in addresses to local government groups and the Country Public Libraries Association (Cram, 1992; Cram, 1995; Cram 1998). She makes some intriguing points about community benefits, for example:

• library staff salaries are recycled into the community;
• sharing library materials frees up personal discretionary expenditure providing an economic benefit to local businesses of $100 000 per 10 000 population;
• councils can save money by distributing their information through libraries rather than delivering it by other means;
• multiple use of the same library materials reduces waste and lowers council recycling costs;
• through library resource sharing schemes, Councils can provide access to resources they do not have to fund.

She argues for a 'reconceptualisation' of public library services - 'understanding the difference between the library's place as part of an organisation, the local authority, and the library's role in improving the long-term competitiveness [industry, investment and residents] of the local community' (Cram 1998, p14).

Special library value

Special libraries have a particular purpose: to meet the information needs of their parent organisations. Wherever located - in government departments, defence establishments, law firms, research centres, corporations - their objectives are the same: to understand, anticipate and meet the parent body's information requirements.

Since special libraries operate within directed organisational objectives, it is usually easier to measure their value than it is to measure the value of public libraries which have little choice but to attempt to be all things to all users. Special libraries provide value to specific organisations; public libraries provide value to whole communities.

Whitehall (1995) provides a useful review of recent writing on methods of measuring the economic value of libraries and information services (61 references). He makes the fundamental point that understanding the costs of service provision brings with it a responsibility for demonstrating service value and quality.

The Special Libraries Association (SLA) has long been a source of practical information on the benefits of library services, commissioning research such as Matarazzo and Prusak's 1995 study of the value of corporate libraries and publishing many useful items in its journal. For example Alison Keyes' 1995 Special Libraries article reviews the literature to that date on the value of special libraries, identifies methods for quantifying value and provides an extensive bibliography.

However, in the area of special library economic value three SLA publications stand out as texts: Griffiths and King (1993) Special libraries: increasing the information edge, Tenopir and King (2000) Towards electronic journals - to which we have already referred; and Portugal (2000) Valuating information intangibles.

Griffiths and King (1993)

This study summarised and presented accumulated evidence of the usefulness, value and impact of information, and of the contribution that special libraries ('organization libraries') make to the benefits gained from the use of information. The evidence presented is derived from twenty-seven studies of users and services of special libraries and information centres, and four national surveys of scientists and other professionals. The authors use the term 'information edge' to refer to the advantage or gain achieved through effective use of information and libraries.

Tenopir and King (2000)

The researchers found that the services and resources of special libraries contribute to organisational goals and lead to:

• improved quality of work;
• increased productivity;
• shortened lead time required to move new products from discovery to marketplace;
• the provision of information to researchers and other knowledge workers less expensively than do alternate sources, and no less effectively, and
• time reallocation for researchers by providing ready access to sources and materials, thus saving time that they can more appropriately apply to their work.

This last point, saving time, is a convenient place to pause and calculate value (Tenopir and King 2000, p207-8). For example, if a lawyer is able to bill her time at $300 per hour, and to base her advice, at least partly, on information provided by a legal information specialist who is paid $50 an hour, then it is much more cost-effective for the information professional to 'supply' the lawyer, than for the lawyer to search for information herself. The dollar benefits can be easily calculated: number of $300 lawyer hours saved by the information professional, minus the number of $50 hours expended.

This arithmetic can be scaled. If an organization has 100 researchers costing on average $90 000 per annum ($47/hr), and library staff costing on average $60 000 per annum ($31/hr), then each hour of researchers' time saved by the information specialist has a net value of $16. Moreover, library staff will find higher quality information faster, so the actual savings may well be larger.

Applied to the whole organisation the value of the library service can be striking. If the service saves just fifteen per cent of each professional/researchers' time, say 180 hours per year, then the saving per researcher is $2880 (180 x $16). Multiplied by 100 professionals or researchers the saving is approximately $290 000 ($2880 x 100).

Tenopir and King concluded that without a library it would cost approximately 2.9 times the cost of having a library to obtain the library-provided information absolutely required by scientists and others to do their jobs. They went further to conclude (p208): '...when factoring in the benefits that would be lost by not having access to the necessary information, it actually would cost approximately 7.2 times more not to have a library than it does to have one.'

Portugal (2000)

In 2000 SLA published the results of Frank Portugal's research into the indirect valuation of information resources (Portugal 2000). He came up with four different methodologies (pp x-xiii):

1. Return on investment and cost benefit analysis. Focusses on benefits to the organisation overall, rather than to the individual, often isolated, user.
2. Knowledge value added. Estimates the amount of embedded knowledge residing in or accruing to new products and services, then compares time investment to rank sub-processes in terms of their costs.
3. Intranet team forums track the flow of information into new products and services by monitoring discussions and individual information streams, loci and topics using specialised software. The value of new products and services can be compared to the costs and the usage of the information which produced them.
4. Intellectual capital valuation. Measures growth in and benefit of intellectual assets by monitoring five different perspectives: customer; process; development; human; and financial.

Portugal's conclusion (p xiii) is that 'The first three methods especially indicate potential cost-benefit values of hundreds or thousands of percent resulting from investment in library and information center services.'

Thornton (2000) and Mathews (2002)

Thornton shows how an annual electronic survey, together with user satisfaction surveys and management statistics have been used to assess the impact a special library has on the completion of and reporting on scientific research. Matthews (2002) discusses the different ways in which libraries add value, and the different evaluation techniques and methodologies used to assess this. He identifies various measures of input, output and processes, and provides advice on how to determine the impact of a special library on the organisation and its process, and means by which the resultant value may be represented and communicated.

Australian research: special libraries

As was the case for public libraries, there is little Australian research applied to the expression of the dollar value of special libraries. (Nevertheless, many papers discussing the benefits of libraries - and methods of advocacy, publicity, communicating and demonstrating value - have been published, but lie outside the scope of this paper.) 'The value of library and information services' was the theme of a seminar held in Melbourne in 1990 (Thawley, 1992). Australian and overseas speakers, representing state, national, university, public, government and corporate libraries, and academics not affiliated with libraries provided different perspectives.

Speakers from private enterprise concentrated on the importance of adding value to the parent business. Quality management techniques and themes from public sector management were addressed by speakers from government agencies. Accountability, strategic planning, aligning services with stakeholders' expectations were addressed by speakers from large libraries (state, national and university). Specific tools discussed at this meeting by the speakers from public and corporate libraries included performance indicators, project assessment, user surveys, marketing, and tracking the cost of service provision.

There have been other studies: Broadbent and Lofgren (1991) aimed to identify and estimate the benefits of information services, but did not seek to quantify the value in precise monetary terms. They explored two evaluation methods: priority and performance methodology and cost-benefit analysis. Tellis (1991) reviewed the literature relating to the concept of value in the context of information economics as presented in the published literature. He noted the difficulties involved in any discussion of the value of information, and the diverse opinions extant regarding any objective measure of the individual concepts of information and value.

In 1998 ALIA published the results of its study of the value of libraries and library professionals to Australia's top 100 companies. This study included a survey and a review of Australian and overseas papers on the topic (Walsh 1998; Walsh and Greenshields 1998). The authors noted (p62) that there '...is a paucity of Australian empirical data which identifies the perceived value of libraries and professional librarians.' Since then a number of Australian librarians have made valuable contributions to the literature on the perceived value of libraries to their organisations (for example Drum and Anderson 2003; Missingham 1998), but work on the expression of library value in dollar terms still remains to be done.

Whatever the measure used, whether it be time saved, value created in using information, benefit/cost of supplying information, perceived value of services, avoidance of risk through awareness of provenance, or simply accurate identification of an object or event, it is clear that special libraries can generate high rates of return for their hosts.

Conclusion

To date, public and special libraries are those most seriously challenged to demonstrate value in terms understood by financial managers. User communities are usually deeply appreciative of library services: we see this from the usage statistics for Australian public libraries mentioned at the beginning of this paper and from the various studies of individual government and corporate libraries. A large body of literature discusses the social benefit of libraries, but the economic benefit has been more difficult to quantify.

Our practical response has been to assemble information on methodologies that we and our colleagues can now apply. Papers published in the past ten years, including reviews of earlier work, present techniques which can help us to answer the question 'What value do libraries provide their funders?' There is awareness in the library world of the need to demonstrate value. Useful professional development opportunities cover topics such as strategic planning, alignment with stakeholder objectives, and 'moving up the value chain'. We need such discussions and we need continuing exploration of the social benefit of libraries.

However, what is most needed is the systematic collection of data which can be compared nationally. We would like to see Australian research applying methodologies such as those noted here to assess the economic value of Australian public and special libraries. We would like to see the resulting data and results stored and shared, to build up an information resource which will eventually enable Australian librarians to state objectively the economic value which our libraries generate, individually and collectively.

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Biographical information

Ian McCallum and Sherrey Quinn say they were fortunate to have been studying librarianship at UNSW at the same time Margaret Trask was teaching it. Thirty years on, Ian and Sherrey run the consulting company Libraries Alive! and are heavily involved in library leadership training through the Aurora Foundation. Like Margaret, they are committed to promoting the value of libraries, teaching what they practice, and contributing to their chosen profession.