• December 19, 2014

Library-Services Companies Sue OCLC, Alleging Anticompetitive Practices

Two library-services companies have sued a major nonprofit library organization, accusing it of monopolistic practices and violating antitrust laws.

The companies, SkyRiver Technology Solutions and Innovative Interfaces Inc., filed the lawsuit in U.S. District Court in San Francisco Wednesday against OCLC Online Computer Library Center. Both companies were started by the same entrepreneur, Jerry Kline, and both sell cataloging services. OCLC is a membership organization that runs WorldCat, a vast catalog with records from 72,000 libraries in 171 countries, and it sells a variety of services to members, including a tracking system for interlibrary loans.

The lawsuit argues that OCLC charges extra fees to libraries that decide to forgo OCLC's cataloging services and buy SkyRiver's instead, effectively blocking competition. OCLC is "unlawfully monopolizing the bibliographic data, cataloging service, and interlibrary lending markets, and is attempting to monopolize the market for integrated library systems by anticompetitive and exclusionary agreements, policies, and practices," the companies' complaint argues.

A dispute between OCLC and Michigan State University is given as an example of the group's alleged anticompetitive practices. Last year, the library was one of the first to try SkyRiver, which had just begun operations. The company's main selling point was lower cost, said Nancy W. Fleck, the library's associate director of technical services and systems. "We save the equivalent of two staff positions—about $80,000" per year, she said. "That's significant."

Unexpectedly High Fees

When the library decided to try SkyRiver, Ms. Fleck asked OCLC whether the library could still upload its catalog records to the organization's interlibrary-loan database—something that happened automatically when the library used the OCLC catalog services it planned to discontinue. The library remains a dues-paying member of the organization and wanted to fully participate in the lending program.

OCLC said that it could, but it would be charged a service fee of about $31,000 every few months. "That's a far cry from what we expected," said Ms. Fleck. "We were expected between $6,000 to $10,000 a year—$31,000, that's huge! We said, Listen, we're from the State of Michigan; we don't have this kind of money."

In the lawsuit, the companies argue that such fees are punitive, and "an attempt to force MSU to continue to buy OCLC's cataloging services and to send a signal to all libraries not to use SkyRiver's cataloging service."

But Michigan State's library did not pay the fee, and officials there were not even aware that the lawsuit was going to be filed. It is still a customer of SkyRiver, but it decided not to upload its records to OCLC's interlibrary-loan service—meaning that researchers at other universities that use the service will not be able to find out what new books the library has available to lend.

A spokesman for OCLC, Bob Murphy, declined to comment on the lawsuit or on the group's dispute with Michigan State. "We're just receiving the complaint now," he said. "Once we've had an opportunity to review this with legal counsel, we will have a response."

The group did issue a public letter to members in February, however, urging libraries to stick with OCLC's cataloging service rather than switch to cheaper alternatives. "Viewed at the individual library level, these alternative services may provide practical and economical sense in the short run," said the letter, signed by Larry P. Alford, chair of OCLC's Board of Trustees and dean of university libraries at Temple University. "Unfortunately, they also hold the potential to undo the work that libraries and the OCLC cooperative have done together these past 40 years, since the subscriptions to the cataloging service support far more than just access to easy-to-locate bibliographic records."

Valued Services

Ms. Fleck said that her library remains a member of OCLC, and pays for other services from the organization—it just doesn't want to buy the cataloging anymore. "I don't want to see OCLC go away—I think they provide some good services," she said. "I just resent the fact that they were trying to charge us too much."

Leslie Straus, president of SkyRiver, said in an interview that her company hopes for "immediate relief of the pricing issue."

The lawsuit also asks the court to force OCLC to share its giant database "on such terms as are just and reasonable."

Karen Schneider, library director at Holy Names University, said the lawsuit appears to capitalize on the dispute between OCLC and Michigan State University, but may face an uphill battle in court. "That was an OCLC misstep that made them very vulnerable to this suit," said Ms. Schneider, who runs the blog Free Range Librarian. "What OCLC should have done at that point was to cozy up to MSU and say, How can we make this better? It was a strategic error, but I don't think it was unlawful."

She said that while libraries have been grumbling about some of OCLC's practices, few of those complaints go as far as the two companies'.

"I don't see many other OCLC members complaining about monopolism," she said.

Comments

1. mrsb83 - July 30, 2010 at 09:30 am

How many libraries have the resources to challenge the "non profit" giant OCLC? Ms. Schneider was correct, this was an error on OCLC's part. Hopefully, a lawsuit will bring to light those practices that hold libraries hostage, and perhaps encourage some changes in OCLC's policies. How sad that this has to be played out in the courts, where the real winners are usually the lawyers.

2. mbelvadi - July 30, 2010 at 10:05 am

Many librarians like myself are deeply conflicted about OCLC lately. For those not in the "biz", OCLC was the first global demonstration of the power of what we now call "Web 2.0". Decades before the web existed, it offered a technology platform that enabled thousands of librarians, each contributing a little of their expertise to a central system, to benefit from the enormous centralized pool of work that results. But just like wikipedia, the key is that central platform, which means that in the functional worlds of cataloguing and interlibrary loan, there are natural monopoly situations (as well as enormous synergy in having both in the same platform). As long as OCLC's non-profit management kept its vision on its core mission, no one felt any need to challenge those monopolies. But in recent years, many librarians have felt that changes in OCLC's policies are starting to resemble those of a rather predatory for-profit monopoly-holding company, and the resulting discontent is opening doors to competitors. Splintering the natural monopoly platform is not in the best interest of libraries in theory, but unless OCLC changes its management strategy back to what it was for most of its existence, the splintering may be necessary. It's just a shame to see such a wonderful system ruined by a handful of shortsighted corporate-wannabees on the OCLC board. I can't blame the for-profit arm of the library "industry" for smelling the blood in the water and responding as successful for-profits do.

3. upstate - July 30, 2010 at 10:56 am

I heartily agree with mbelvadi's (poster #2)analysis of the situation. Librarie's used to think of OCLC as an ally; that feeling exists in fewer quarters these days - especially given OCLC's role in undermining regional network providers. Right now OCLC is spending energy developing an integrated library system when that market is already saturated and open source seems to be the wave of the future.

4. kgschneider - July 30, 2010 at 12:53 pm

I agree/disagree with posts 2 and 3. As noted in my blog post, OCLC's relationship with its membership is imperfect at best. But on the idea of wasting money on an ILS... well, WMS is different data architecture. Not to get all gooey and fangirl, but it completely makes sense that we move to a one-record-many-holdings model. If you were designing it today, that's what you'd do.

5. warmaiden - July 30, 2010 at 01:15 pm

If you read the suit, III & SkyRiver are complaining that OCLC's innovation hurts them. Which is fascinating, since librarians have been *begging* III and other traditional ILS vendors to innovate - and making recommendations on how they could do so to fit our changing workflows and services - for decades. Now that they've found themselves behind the curve they want free access to what librarians & OCLC have built over decades. Also, the ILS market is *not* saturated with webscale implementations - I'd argue that what OCLC is doing with it's cloudware is completely different than traditional ILS-ware.

Full disclosure: My library's a development partner for the OCLC WMS. We are already seeing how we can save immense amounts of staff time in Acquisitions/Cat and Access with not having to duplicate work in multiple systems, as well as a better patron-side experience. And the thing isn't even fully built yet.

I've worked with 3 traditional ILS systems (VTLS, Sirsi, & Voyager), and the development cycles, responses to feedback, and customer service when things break have all been abysmal. This looks a whole lot like those folks running scared of something that will meet libraries' needs.

Yes, OCLC is a behemoth and there are issues, and the Michigan pricing thing was a complete misstep. But I haven't heard of any librarian who doesn't understand how valuable OCLC has been for us. What III fails to state in their paperwork is that they ALSO bilk libraries out of huge sums every year via lock-in contracts, except they request no input from clients nor do they respond to rapidly changing needs. That they frame OCLC asking members to participate in development of products as a *bad* thing boggles me.

6. elizabethmewshaw - July 30, 2010 at 02:05 pm

I must agree with Warmaiden. III and its sister company, SkyRiver are hardly in a position to cricize OCLC. III seems to believe that in-your-face glitz is a substitute for antiquated and cumbersome functional modules, e.g., acquisitions and cataloguing.

I have yet to experience SkyRiver but will soon because the consortium of which my Library is a member,has dropped OCLC in favor of SkyRiver; I certainly look forward to searching publications issued by the Conference Board using keyword.

I have worked with OCLC since 1973. In all of that time. I never thought that the original cataloguing I contributed to the bibliographic database was intended for the use by anyone other than members of OCLC. I certainly never expected that any of those records, stripped of their OCLC record numbers would end up in a commercial product. Unethical is the only adjective that comes to mind use. To believe that III/SkyRiver have, not profit but the public good, as their foremost concern, ...

P.G.Obuchan


7. upstate - July 31, 2010 at 08:41 pm

One point here is that OCLC ceased to act like a non-profit a long time ago. Which is not to say that III and SkyRiver aren't profit motivated. OCLC was a pioneer but it's record when it reaches beyond being a supplier of SHARED cataloging and ILL services in is not encouraging. OCLC bought WLN killing off a truly innovative authority control system in the process. It puchased and then dropped Bibliomation, the dominant authority control vendor at the time. It's original acquisitions system went belly up. It bought and has now sold NetLibrary to Ebsco. It sued a hotel that dared to use a Dewey decimal system motif. OCLC "owns" the Dewey decimal system BTW. It punished a long time member for daring to get its bibliographic records elsewhere even thought the Library was perfectly willing to pay normal tape loading fees. The original idea behind OCLC was truly innovative but, at this point, its status as a non-profit seems dubious at best.

8. susandel - July 31, 2010 at 09:58 pm

Remember the old story about Abraham Lincoln, upon hearing that Ulysses S. Grant was a heavy drinker of whiskey, asked what the brand was so that he could send it to all his generals?

There is a parallel here which is that most all of the scores of thousands of OCLC-using librarians would say let any company, or as OCLC is, any non-profit cooperative, support the superb, innovative and cost effective endeavors that OCLC has provided and continues to provide!

OCLC, a membership organization, is a godsend to librarians and libraries which are its members, and, without question, is the greatest cooperative venture in the history of the world in making information available thrughout that world as as low a cost as possible.

As a librarian associated with an OCLC member library; a library which has successfully implemented the well-received and heavily used WorldCat Local; and a library enthusiastically awaiting OCLC's planned integrated library system, I say "Bravo, OCLC", keep on drinking General Grant's whiskey!

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