A Library Monopsony for Monographic eBook Acquisition?

In its antitrust lawsuit filed against OCLC on July 29 SkyRiver and Innovative Interfaces, Inc. (III) take the point of view that OCLC, a "purported member-based cooperative of libraries" is trying to monopolize the market for integrated library services.

If you're interested in the lawsuit, I recommend reading posts by two of my favorite Karens. Karen Coyle writes intelligently from an annoyed-at-OCLC viewpoint here, here and here, while Karen Schneider writes here with a deep familiarity with the library world's vendors.

What I find remarkable is the fact of the lawsuit itself. Here we have Innovative, one of the world's most successful library systems companies, claiming that OCLC, a creation of libraries themselves, is competing unfairly. It is no coincidence that the lawsuit was filed just two weeks after the announcement of a high profile launch of OCLC's "Web-Scale Management" system at the University of Tennessee at Chattanooga. OCLC's new service is clearly threatening to Innovative. While the lawsuit is ostensibly about OCLC's anti-competitive behavior in the cataloging market, it is motivated by OCLC's entrance as a potential competitor in Innovative's core library management system market.

I don't have much to say about the merits of the lawsuit. I am not a lawyer. I'm not even a librarian. But in general, I think it would be A Good Thing if libraries would find MORE ways to exert their market power. As far as I've seen, libraries usually act like marketplace doormats (enlightened readers of this blog excluded of course). The recent dust-up between Nature Publishing and the University of California would be a dog-bites-man story in almost any other industry.

One of my favorite words is "monopsony". It's one that every library director in the world should come to know, along with the related word "oligopsony". Everyone knows "monopoly", which is when a product or service is available from only one seller. In the SkyRiver lawsuit, it is alleged that OCLC has a monopoly on the provision of cataloging services to libraries. An oligopoly is when a monopoly is shared by a small number of sellers acting as if they were one. A monopsony is the converse of a monopoly, and occurs when a product or service has only one buyer. Sellers in such a market are at the mercy of the buyer. Although it's not often that purchasers amass such market power, it is at the heart of the success of large retailers and manufacturers such as Walmart and Dell. Their power as purchasers allows them to drive down supplier prices.

The ideal time to exert market power of any flavor is at a technological "tipping point". OCLC became a cataloging powerhouse in the 80's by taking advantage of the shift to computerized library catalogs, and its exertion of market power is so feared today because of the current technology shift towards cloud computing.

It's frustrating to a number of us in the library business that libraries are mostly sitting on the sidelines while technology is tipping towards ebooks. There is a very real possibility that the ability of libraries to lend books will not survive this transformation. The big publishers don't see libraries as a big part of their market; some publishers are openly hostile towards libraries.

That's not to say that libraries don't have significant market power in significant segments of the book  market. In these segments, I believe libraries could exert their collective power and reshape markets to their enduring benefit.

Consider the business of publishing scholarly monographs. Although some of these books find their way to readers through Amazon, the fact is that most of these books are bought by academic libraries. If academic libraries flexed their purchasing muscles, they could ensure the existence of a library-friendly ebook sales channel for these materials.

Here's the problem. Publishers of scholarly monographs have to spend real money to produce high-quality books. Today, they fund this activity by selling the books to libraries. The shift to eBooks presents new possibilities. If the production of scholarly monographs was funded directly by libraries, then perhaps the funded monographs could be made available to everyone, not just libraries that have chosen to purchase a book. The benefits would be universal access to the scholarship in question and the elimination of expensive and cumbersome DRM platforms.

If you think this sounds suspiciously like open-access publishing, you are  correct. Even before the creation of the World-Wide Web, many scientists used the internet to exchange technical articles, and many believed that the entire journal publishing industry would shift to an internet-enabled open-access business model. Yet, 20 years after the creation of the Web, the economics of scholarly journal publishing is roughly the same as it ever was. Is there a difference between ebook publishing and journal publishing? I believe there may be.

Let's set aside current reality for a moment and consider how libraries might accomplish the funding of ebook creation and distribution. I imagine the creation of an ebook acquisition collective. Libraries joining the collective would spend a specified fraction of their book acquisition budget through the group. The collective would offer to buy ebook rights from monograph publishers, with the understanding that the selected ebooks would be made available on an open-access basis. Collective members would decide which books to acquire. Access to this decision-making power would be a strong reason for libraries to maintain their membership; for example, the collective might favor works written by faculty members of participating institutions.

The incentives for publishers to offer books to the collective would be strong; they would get a financial payoff immediately instead of waiting years for the books to sell; a shift to demand-driven purchasing by libraries would have the opposite result. Many publishers would move timidly at first, offering only backlist titles or books that have poor commercial prospects. But publishers have to follow the money, and if the money spent by the collective grew to be large enough, publishers would have little choice but to participate.

The market for any individual scholarly monograph is not very large. For example, Princeton University Press publishes about 200 new books every year, at a cost of about $10 million. So as a very rough average, it needs about $50,000 to produce a book. University publishers that focus more closely on scholarly works produce books for significantly less. The University Press of Colorado, for example, produces 30-35 books a year at a cost of about $550,000, or less than $20,000 per book.At $20,000 per book, an acquisition collective could acquire a significant number of books.

The incentives for library participation are less certain. As libraries face budget pressure, many will be tempted to benefit from access to the acquired titles without contributing their share of funding. The most effective counter-incentive may be prestige. An effective ebook purchasing cooperative would try to maximize the prestige and publicity for the books it chooses to acquire.  This is a factor that has not worked so well for open-access journals, which are almost uniformly of lower prestige than traditionally published journals. A library can't fail to subscribe to a top journal because the faculty will insist on it; a well-marketed purchasing cooperative might provide the same sort of access to prestige as a top journal.

Given the current concern about monopolies in the library world, you might be wondering whether the sort of purchasing cooperative I describe here would be legal. While monopsonies can run into antitrust issues similar to those of monopolies, it's much rarer to for this to occur. That's because its quite easy for a purchasing cooperative to avoid antitrust violations. For example, any purchaser that represents 35% or less of a market can generally assume that its actions aren't impacted by anti-trust. If a library purchasing cooperative found itself getting too big, it could easily limit a member's contribution to 35% of its book acquisition budget. (For background on how antitrust affects group purchasing, see "Antitrust and Group Purchasing", by Michael A. Lindsay, in Antitrust 23 (3), Summer 2009. PDF, 220KB)

Libraries spend quite a bit of money on books. According to ARL Statistics, the 124 ARL libraries spent $330 million on monographs in 2008 at an average price of $55.44. If they spent 10% of this amount through an ebook cooperative, they could purchase ebook rights for 1,650 books at $20,000 each. These ebooks would really be owned by libraries, not merely rented, the way ebooks are handled in libraries today. A collective with monopsony power (or a group of collectives with ologopsony power) could force lower pricing and give strong incentives for cost-efficient publishers. Both monopolies and monopsonies can be perfectly legal if fairly obtained- copyrights and patents are good examples of monopolies created and rewarded by society.

It's interesting to compare this vision for the future with the recently announced University Press eBook Consortium, which has won a modest planning grant from the Mellon Foundation. This group imagines building a university-press-branded delivery platform for its ebook offerings and expects to launch with "over 2000 new titles and 23,000 older titles in subject-area collections, as well as a complete collection offer." The subscription business model will presumably be imported from the scholarly journal business, which is to exert the monopoly power of copyright to optimize revenue. Libraries need to think seriously about the e-journal subscription model, whether it has worked out well for them, and whether they should try something different.

If you think that an ebook acquisition collective is a good idea for libraries, please leave a comment, and spread the word. Lenders of the world, unite!

Note: SkyRiver also alleges that OCLC used its "tax-free profits" to buy up library industry companies to extend its monopolies.  One of those companies was the one that I founded. You may feel better knowing that in my case at least, a large chunk of that "tax-free" money went straight to the Internal Revenue Service!

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How Electronic Resources Really Get Priced

The recent letter (pdf) from the University of California Digital Library (CDL) about price increases  proposed by Nature Publishing Group (NPG) and the response from NPG have raised a storm of controversy and rebuttal (pdf). To me, the mess is symptomatic of a communications failure between publishers and librarians.

In the interests of promoting better library-publisher understanding, I've decided to reveal some secrets from both sides.

Libraries: Here's how publishers set pricing for electronic resources.

Once upon a time, pricing for library materials had a relation to the cost of their production. Even before the internet came along, this started to change. Printing costs fell, and more and more of the production costs of a good-quality journal were "first-copy" expenses. With electronic materials, the marginal cost of servicing an additional subscription became almost zero. Pricing then became a game whose object was to sustain existing pricing, along with "reasonable" annual increases of a few percent per year or so. (Nature Publishing translates "a few" to "7".)

The game was most difficult for very large or complex institutions. The value of a top medical journal to a US medical school is huge; the value of the same journal to a vo-tech school would be much smaller, but still significant. A medical school in a developing country will also need the journal, but it's not fair to ask them to pay the same as a US school. Differential pricing helps a publisher capture value while still extending access to customers who might otherwise be able to afford the journal. But how, then, to set pricing?

I learned the secret of e-resource pricing through long hours of research (spent mostly in bars). Here's how it works:

1. Find out how much money the customer has.
2. Set price somewhat higher than that.
3. After hard bargaining by customer, offer discount to closely match customer's available funds.
4. Swear customer to secrecy; you can't give that price to everybody!
   

In times of budgetary cutbacks, this pricing mechanism works to a library's advantage. A library that needs to cut its electronic resource expenditure in half simply needs to disclose to salespeople the fact that their funding has been cut in half, cancel the subscription...and wait for panic to set in.

The library's leverage will never be greater. It's much more painful for a digital publisher to lose an digital customer than it is to lose a print customer. That's because the publisher has to spend money on digital publishing infrastructure when its customer base grows, but doesn't get anything back when a the customers go away. If anything, the publisher will have to spend more on sales to try replace the customers.

Oh and by the way, libraries, this all works easier if things are quiet- when you agree to give a publisher a higher price than you wanted to, swear them to secrecy- you can't afford to give the same deal to every one of your publishers!

Publishers: Here's how to get libraries to cave on pricing

Many librarians suffer from feelings of powerlessness. They are prisoners of their patrons' needs and desires. They are captive to changing technologies and archaic standards. They are trapped in arbitrary budget gaps. And they are stuck in endless committee meetings.

Libraries are thus willing to spend a great deal on things which offer escape from powerlessness. They dislike monolithic packages that bundle content together, even if they save money. The current reality in libraries is that budgets have been cut. Publishers need to give their library customers options that help them deal with budget cuts. The smartest publishers can figure out ways to help libraries cut costs and free up funds currently spent in other areas.

When I was developing an electronic resource management service for libraries, I had this recurring nightmare that e-journal publishers would someday make it as easy for libraries to activate and maintain an e-journal subscription as Apple's iTunes makes it to buy and maintain a song. My software would instantly become worthless. Just kidding- I slept soundly knowing it would never happen in a million years.

Perhaps NPG confused powerlessness with weakness and saw an opportunity to force CDL to act like the other prisoners. Perhaps NPG never saw the movie "Cool Hand Luke".
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Publish-Before-Print and the Flow of Citation Metadata

Managing print information resources is like managing a lake. You need to be careful about what flows into your lake and you have to keep it clean. Managing electronic information resources is more like managing a river- it flows though many channels, changing as it goes, and it dies if you try to dam it up.

I have frequently applied this analogy to libraries and the challenges they face as their services move online, but the same thing is true for journal publishing. A journal publisher's duties are no longer finished when the articles are bound into issues and put into the mail. Instead, publication initiates a complex set of information flows to intermediaries that help the information get to its ultimate consumer. Metadata is sent to indexing services, search engines, information aggregators, and identity services. Mistakes that occur in these channels will prevent customer access just as profoundly as the loss of a print issue, and are harder to detect, as well.

A large number of journals have made the transition from print distribution to dual (print+electronic) distribution; many of those journals are now considering the transition to online-only distribution. As they plan these transitions, publishers are making decisions that may impact the distribution chain. Will indexing services be able to handle the transition smoothly? Will impact factors be affected? Will customer libraries incur unforeseen management costs?

I was recently asked by the steering committee of one such journal to look into some of these issues, in particular to find out about the effects of the "publish-before-print" model on citations. I eagerly accepted the charge, as I've been involved with citation linking in one way or another for over 10 years and it gave me an opportunity to reconnect with a number of my colleagues in the academic publishing industry.

"Publish-before-print" is just one name given to the practice of publishing an article "version of record" online in advance of the compilation of an issue or a volume. This allows the journal to publish fewer, thicker issues, thus lowering print and postage costs, while at the same time improving speed-to-publication for individual articles. Publish-before-print articles don't acquire volume, issue and page metadata until the production of the print version.

Before I go on, I would like to recommend the NISO Recommended Practice document on Journal Article Versions (pdf, 221KB). It recommends the use of "Version of Record" as the terminology to use instead of "published article" which is widely used in a number of circumstances:

1. Version of Record (VoR) is also known as the definitive, authorized, formal, or published version, although these terms may not be synonymous.
   
2. Many publishers today have adopted the practice of posting articles online prior to printing them and/or prior to compiling them in a particular issue. Some are evolving new ways to cite such articles. These “early release” articles are usually [Accepted Manuscripts], Proofs, or VoRs. The fact that an “early release” article may be used to establish precedence does not ipso facto make it a VoR. The assignment of a DOI does not ipso facto make it a VoR. It is a VoR if its content has been fixed by all formal publishing processes save those necessary to create a compiled issue and the publisher declares it to be formally published; it is a VoR even in the absence of traditional citation data added later when it is assembled within an issue and volume of a particular journal. As long as some permanent citation identifier(s) is provided, it is a publisher decision whether to declare the article formally published without issue assignment and pagination, but once so declared, the VoR label applies. Publishers should take extra care to correctly label their “early release” articles. The use of the term “posted” rather than “published” is recommended when the “early release” article is not yet a VoR.

"Version of Record before Print" is a bit of a mouthful, so I'll continue to use "publish-before-print" here to mean the same thing.

It's worth explaining "Assignment of a DOI" a bit further, since it's a bit complicated in the case of publish-before-print. Crossref issued DOIs are the identifiers used for articles by a majority of scholarly journal publishers. To assign the DOI, the a publisher has to submit a set of metadata for the article, along with the DOI that they want to register. The Crossref system validates the metadata and stores it in its database so that other publishers can discover the DOI for citation linking. In the case of publish-before-print, the submitted metadata will include journal name, the names of the authors, the article's title, and the article's URL, but will be missing volume, issue and page numbers. After the article has been paginated and bound into an issue, the publisher must resubmit the metadata to Crossref, with added metadata and the same DOI.

What happens if the online article is cited in an article in another journal during the time between the version of record going online and the full bibliographic data being assigned? This question is of particular importance to authors whose citation rates may factor into funding or tenure decisions. Since the answer depends on the processes being used to publish the citing article and produce the citation databases, so I had to make a few calls to get some answers.

As you might expect, journal production processes vary widely. Some journals, particularly in the field of clinical medicine, are very careful to check and double check the correctness of citations in their articles. For these journals, it's highly likely that the editorial process will capture updated metadata. Other publishers take a much more casual approach to citations, and publish whatever citation data the author provides. Most journals are somewhere in the middle.

Errors can creep into citations in many ways, including import of incorrect citations from another source, mispelling of author names, or simple miskeying. DOIs are particularly vulnerable to miskeying, due to their length and meaninglessness. One of my sources estimates that 20% of author keyed DOIs in citations are incorrect! If you have the opportunity to decide on the form of a DOI, don't forget to consider the human factor.

It's hard to get estimates of the current error rate in citation metadata; when I was producing an electronic journal ten years ago, my experience was consonant with industry lore that said that 10% of author-supplied citations were incorrect in some way. My guess, based on a few conversations and a small number of experiments, is that a typical error rate in published citations is 1-3%. A number of processes are pushing this number down, most of them connected with citation linking in some way.

Reference management and sharing tools such as RefWorks, Zotero, and Mendeley now enable authors to acquire article metadata without keying it in and link citations even before they even submit manuscripts for publication; this can't help but improve citation accuracy. Citation linking in the copy editing process also improves the accuracy of citation metadata. By matching citations to databases such as Crossref and PubMed, unlinked citations can be highlighted for special scrutiny by the author.

Integration of citation linking into publishing workflow is becoming increasingly common. In publishing flows hosted by HighWire Press' Bench>Press manuscript submission and tracking system, Crossref and Pubmed can be used at various stages to help copyeditors check and verify links. Similarly, ScholarOne Manuscripts, a manuscript management system owned by Thomson Reuters, integrates with Thomson Reuters' Web of Science and EndNote products. Inera's xStyles, software that focuses specifically on citation parsing and is integrated with Aries Systems' Editorial Manager, has recently added an automatic reference correction feature that not only checks linking, but also pulls metadata from Crossref and Pubmed to update and correct citations. I also know of several publishers that have developed similar systems internally.

In most e-journal production flows, there is still a publication "event", at which time the content of the article, including citations, becomes fixed. The article can then flow to third parties that make the article discoverable. Of particular interest are citation databases such as Thomson Reuters' Web of Science (this used to be ISI Science Citation Index). The Web of Science folks concentrate on accurate indexing of citations; they've been doing this for almost 50 years.

Web of Science will index an article and its citations once it has acquired its permanent bibliographic data. The article's citations will then be matched to source items that have already been indexed. Typically there are cited items that don't get matched - these might be unpublished articles, in-press articles, and private communications. Increasingly, the dangling items include DOIs. In the case of a cited publish-before-print article, the citation will remain in the database until the article has been included in an issue and indexed by Web of Science. At that point, if the DOI, journal name, and first author name all match, the dangling citation is joined to the indexed source item so that all citations of the article are grouped together.

Google's PageRank is becoming increasingly important for electronic journals, so it's important to help Google group together all the links to your content. The method supported by Google for grouping URL's is the rel="canonical" meta tag. By putting a DOI based link into this tag on the article web pages, publishers can ensure that the electronic article will be ranked optimally in Google and Google Scholar.

An increasingly popular alternative to publish-before-print is print-oblivious article numbering. Publishers following this practice do not assign issue numbers or page numbers, and instead assign article numbers when the version-of-record is first produced. Downstream bibliographic systems have not universally adjusted to this new practice; best paractices for article numbers are described in an NFAIS Report on Publishing Journal Articles (pdf 221KB).

In summary, the flow of publish-before-print articles to end users can be facilitated by proper use of DOIs and Crossref.

1. Prompt, accurate and complete metadata deposit at the initial online publication event and subsequent pagination is essential.
2. DOI's should be constructed with the expectation that they will get transcribed by humans.
3. Citation checking and correction should be built into the article copyediting and production process.
4. Use of DOI in rel="canonical" metatags will help in search engine rankings.

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