Transaction costs

I just did an entry on the new report [PDF] on licenses and the re-use of digital materials in the cultural heritage sector from the Eduserv Foundation.

Reading the report, it occurred to me that a major rationale here is to reduce the transaction costs involved in using resources by making the conditions of re-use available. Transaction costs are the costs in effort or money involved in making a transaction. These may include the costs of finding stuff, of figuring out whether it can be used, of finding people to talk to about re-use, and so on.

High transaction costs present barriers. One of the main goals, for example, of the major web hubs is to reduce transaction costs. They want to make discovery as rich as possible, finding the best ways to let you discover stuff of potential interest, and then they want to reduce the number of steps you have to take between discovery and fulfillment. It is very easy to buy something on Amazon, and they give you a lot of help in finding stuff! High transaction costs for the user translate into lost revenue.

Much of the focus in library systems in recent years has been on the reduction of transaction costs: resolution (trying to streamline the discovery to fulfillment chain), metasearch (trying to reduce the effort of searching many resources), and newer discovery environments (finding better ways of letting people discover things of interest).

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