Agreement III: Strategic Planning Framework

This version dated August 5, 1997

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This document identifies assumptions fundamental to establishing the feasibility of the Consortium, and outlines a framework for within which the Founding Members will define a fully operational organization, that offers works for license and services to members.

1. Purpose and Goals

1.1. Framework for Projections

Establish a framework for projections necessary to assessing the operational viability of the consortium.

1.2. Principles for Development of an Organizational Structure

Delineate principles for the development of a full plan consonant with the values and objectives of members.

1.3. Educational Goals

Support the evolution and growth of the consortium within an environment of fostering the educational use of digital cultural materials.

2. Shared Assumptions

A common understanding of the a shared benefits that derive from collaboration will govern our activities as a Collective. Among these assumptions are:

2.1. Costs of Processing Requests

Dramatically increased use of museum licensed content for educational purposes should not impose additional administrative burdens on museums. Museums incur significant costs in negotiating licenses for use on a work-by-work or use-by-use basis. If use increases dramatically, as we hope it will, such requests could become a considerable burden to museums, eroding whatever income could be gained from licensing individually. AMICO will offer unlimited use licenses based on periods of time and numbers of users.

2.2. Difficulty of Monitoring Use

Museums are also poorly equipped to monitor uses or pursue violators, and risk their reputations by doing so too aggressively.

A Collective can put in place regular monitoring programs and prosecute violators independent of its members, and learn about uses to develop more effective educational products

2.3. Basis For Cost Recovery

Schemes for calculating and collecting license fees should be designed to control the level of overhead associated with income collection. An efficient and cost effective system is a goal.

2.3.1. Make Fees Predictable

Fixed cost licenses that encourage use should be offered instead of pay-by-use options.

2.3.2. Base License Fee on Size of Library

AMICO licenses will be priced based on the size of the Library and the number of users. The per student price will be low enough to encourage licensing and use.

2.3.3. Encourage membership

AMICO benefits from having many members and a broadly representative Library. Museums should be encouraged to contribute to The AMICO Library even if they use other avenues to distribute digital images and license use.

2.3.4. A Basis for International Reciprocity Agreements

The most valuable resource would be one in which North American art museums, art museums elsewhere in the world, and non-art museums, contribute to make a library of broad relevance

2.3.5. Build Partnerships with other Collectives

AMICO should make efforts from the outset to build partnerships with similar non-profit consortia of art museums in other countries and to create reciprocity arrangements of benefit to all. Reciprocal agreements to administer rights should be sought.

3. Operational Framework

A complete plan, based on sound market analysis and concrete corporate financing opportunities, will be developed by AMICO's Founding Members. The following is a framework for this plan. It will need to be supported by detailed market analysis and user needs study.

3.1. Relationship to other Initiatives

A variety of for-profit and not-for-profit entities will compete for this market. Alternative strategies for providing access to content are outlined below:

3.1.1. Locator Services

Academic Press is developing the Image Directory, a source for finding images. It differs from AMICO, because potential users will need to negotiate with the museums, museums will have to agree terms and arrange delivery. In addition, this service only licenses images, without associated documentation.

3.1.2. Rights Resellers and Commercial Relicensors

Corbis is acquiring rights to package museum intellectual property in publications, and may also be assembling a library of licensable material. Resellers, however, are generally interested only in the top works and are not willing to carry depth of documentation. These factors reduce the use of this kind of resource for university education.

3.1.3. Brokerages

While companies such as Picture Network International could broker museum properties in the same way they now broker intellectual properties of photographers, these currently have little relationship with either museums or educational users.

3.1.4. Museum Collectives

Collectives such as the VidÚomuseum Association in France or the Museum Licensing Collective and associated marketing and production companies are interested in licensing and could exchange libraries. There is potential for AMICO to collaborate internationally, if it is organized as a not-for-profit, which would enable it to work with government agencies.

3.2. Estimating Costs to Members

Joining AMICO will involve some costs on the part of its members.

3.2.1. Members Not Primary Source of Income

The Board may assess AMICO members fees. However, it is not assumed that Members will cover the costs of the Consortium alone.

3.2.2. Estimating Members Costs

3.2.2.1. Dues

AMICO Members will pay dues, not to cover the administrative costs of the organization but to ensure that participants recognize its value.

3.2.2.2. Staff Participation

Time and travel to enable participation in working groups on topics such as Standards and Technologies, Products and Licensing, as well as the time devoted by members to serving on the board and in other governance roles should be recognized as member contributions to AMICO.

3.2.2.3. Preparation Of Contributed Data And Its Upkeep

Investments in preparing and maintaining quality data licensed to AMICO, including time required for rights clearance, data preparation, photography and documentation conforming to AMICO standards, should be recognized as contributions to AMICO.

3.3. Estimating AMICO's Costs

3.3.1. Start up Costs

The budget for the year prior to the first year of licensing should support all staff required for the collation of the Library and its marketing; only distribution costs should be excluded.

3.3.2. Operations Costs

Budgets should reflect the experience of other projects. Operations costs should not be presumed to grow in proportion to either membership or subscription base, but distribution costs should be calculated to rise in proportion to Library size. Operations costs include:

3.3.2.1. construction of a joint database

3.3.2.2. distribution of content to licensees/distributors

3.3.2.3. creation of the central catalog, including the development of enhanced indexing tools

3.3.2.4. the development of new licenses and products

3.3.2.5. training and support for members

3.3.2.6. negotiation with rights-holder agencies on behalf of AMICO members

3.3.3. Cost Recovery is Goal

AMICO should develop a budget that aims for self-sufficiency in a reasonable period.

3.3.4. Debt repayment and Interest Charges

AMICO should seek financing from sources willing to provide no cost loans (including by assessing its members dues during the early years).

3.4. Estimating Income

The following criteria should be used to estimate income:

3.4.1. University Licensees and Income

Founding Members will develop a budget and financial projections for the Consortium. Factors such as the following should be considered when defining estimates of the income available from Licenses.

3.4.1.1. Projecting Numbers of Universities

Although there are 3,500 accredited undergraduate institutions with 7.5M full time students in the United States alone, projected numbers of licensees should grow from a small number to no more than 20% of the eligible institutions over the first 6 years. The first fully operational year subscription target should be set at no more than 25 institutions, with subscribers doubling each year.

3.4.1.2. Projecting Numbers of Students

The average size of universities subscribing to the library should be presumed to decrease over time (since the larger universities will join first). Enrollment should be estimated at no more than an average of 15,000 students in the first year and should decrease by 1,500 per annum over the first 6 years to an average of 7,500 students per institution.

3.4.1.3. Projecting Income from Licenses

License fees should be set on a per student basis. The subscription fee should grow by increments based on the size of the Library with a target of $1.00 per student per year when the size of the library exceeds 250,000 works.

3.4.1.4. Incentives for Early Subscribers

In order to encourage early subscribers, the per student fee should be frozen at the time of an institution's subscription, and remain unchanged until the size of the Library reaches 250,000 works.

3.4.2. Museum Licensees and Income

Founding Members will develop a budget recognizing some income from museum licenses to non-AMICO participants. The basis for fees in these licenses and the fee schedule should be set based on findings of focus groups.

3.4.3. Income from Other Products

The following criteria should govern the estimation of income from products other than The AMICO Library licensed to University and Museum users.

3.4.3.1. Price levels should be set in consultation with users, and be perceived as reasonable.

3.4.3.2. Income only on Release

Income from a product should not be presumed in projections until the product has been commercially released, despite the fact that some charges may be applied to subscriptions to products in the testing and development stage (to test market assumptions about acceptable price levels).

3.4.4. Income from Reciprocity Agreements

International exchanges should be presumed to be in balance, rather than producing income, even though AMICO will be underway and gathering rights for several years before any other national/multinational museum rights collective.

3.5. Income Allocation

The AMICO board should allocate income in a reasonable balance towards covering costs incurred in creating and distributing The AMICO Library, and towards the provision of Services for the AMICO Members. Budgets may be in surplus or debit from year to year as long as the Board is satisfied with projections of ultimate cost recovery.

3.6. Estimating Growth

Founding members will establish how AMICO will need to grow and be structured in order to become self-supporting. Founding Members will have to consider such questions as:

3.6.1. Numbers of Museum Members

AMICO membership could expand to the full 160 members of the AAMD, and with a vote of the members beyond the AAMD. However, annual projections should be conservative.

3.6.2. Size of Library

Membership criteria will establish required contributions to the Library, based on levels of membership. These will allow Founding members to project the growth of the Library.

3.6.3. Incentives for Early or Targeted Contributions

AMICO's Members will explore mechanisms for rewarding specific types of contribution to the Library, in terms of quantity, and in terms of depth of documentation.

Copyright Archives & Museum Informatics, the Art Museum Network and the Association of Art Museum Directors.

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