I'm sitting out here as a potential purchaser (a librarian) of the product your publisher is talking about. In a quick search I could not find anything that looks like the product, if you tell me the publisher I'll have better luck. The reality is that no one, authors, publishers, or librarians knows how these things should be priced. In the traditional economy you sold it to the publisher or got royalites, they edited, printed & sold, we bought & made it available to any of our users who might have use for it. It could sit there & never get used or it could circulate over & over. The publisers paid you & priced the book based on their past experience with how many copies in this series are usually sold.

You don't like the idea of it being sold over & over without fair payment. On the library side we don't like the idea of paying over & over for something we used to buy once & put on the shelves. We do like having reference materials in electronic versions because of the ease of getting through lots of material quickly. The publisher has a big upfront investment in taking this book, presumably combined it with others of a like nature, and turning it into a useful database for libraries to purchase. They have the costs of servers, etc. to make it available. They also have some risk costs because if it's not a good product both in content and the ease of use we won't buy it. Finally they are also undertaking to 'storage' costs that libraries have traditionally borne & that's why they want the 'perpetual' use.

I can't say what you should charge but if your publisher thinks they'll get 7,000 subscriptions at $1250, they are on something. The only way to approach that number is by saturating the secondary school market. It's going to have to be one great product for high schools to be willing to pay that kind of money for it. More likely there will be state wide & other consortial purchases that will take the price down to well under $1000 per institution. Then remember that your contribution is one article in one book that's being combined with a number of other books. Do you have any idea how many are involved? What proportion of the overall database will your contribution comprise?

I think the idea of a royalty to you based on usage is good. Maybe in a few years everyone will have a better handle on these things & guidelines will be reasonable & realistic. Right now we get all kinds of usage statistics about the products we buy & I can tell you we don't really have a clue what they really tell us. What's it mean that an article is accessed? Was it glanced at & further ignored, read on the screen, downloaded or printed for later use? There's a limit to what they can tell is happening.

Add to all this that the ordinary person using this stuff thinks it all free!

Good luck.