The Online Computer Library Center, Inc., otherwise known as OCLC, is being sued by Jerry Kline, the owner of two companies attempting to compete with OCLC — SkyRiver Technology Solutions, LLC, and Innovative Interfaces, Inc. Kline is alleging anticompetitive practices, exclusionary agreements, and monopolistic market positioning.
But the lawsuit may not be the greatest threat to OCLC’s business.
According to the complaint, OCLC has become a huge company by aggressively acquiring non-profit and for-profit elements since the 1960s, locking up a tremendous amount of market power and making significant revenues coordinating bibliographic information between libraries. In 2004, OCLC’s equity was $138 million. From 2005-2008, OCLC was able to generate $17 million per year in surpluses on sales of over $200 million per year. By 2008, it’s equity had reached $211 million. In 2009, OCLC’s equity devalued in line with most investments in the market, but otherwise, the business performed well once again.
Because OCLC relies on submissions from its users to create it’s WorldCat database of card catalog entries, it’s also possible to see its troubles slightly differently in a world 40+ years older and more technologically developed. In the old days, it was expensive to coordinate the activities of hundreds or thousands of individuals through a computer network. Now, it’s cheap and trivial.
While OCLC’s collective database is not called “social media,” the bibliographic databases it controls are generated through the independent submissions of librarians everywhere, then resold to the same community at a high price. In 2005, OCLC added wiki features to WorldCat, a clear step into social media.
Much of the library community likes OCLC, at least judging from the comments on a related story in the Chronicle of Higher Education. It would take a precipitating event for everyone to take a second look at OCLC.
Everything was going along swimmingly for OCLC until the Michigan State University debacle, which sowed seeds of ill-will, some of which took root and sprouted. The events started when MSU decided to try to disaggregate OCLC’s offerings, buying only part while getting the rest from one of Kline’s companies for a substantially lower price. OCLC then apparently charged MSU a huge penalty, leading the head of MSU libraries, Clifford H. Haka, to exclaim:
The cooperative is being diminished by a financial decision. We’ve been OCLC members for 40 years — we’re the ones who built this database.
In a listserv posting earlier this year, Tim Spalding laid it out in a way that hints at a culture drifting toward realization that computer technology is no longer foreign and scarce, and one that is seeing cognates emerge from the land of abundance:
LibraryThing, a tiny little company with 9 employees and a rack of crap commodity servers, has a searchable, continuously updated store of unique records equal to half of the WorldCat database. . . . The real work here is done by librarians, not OCLC. . . . And all that tax money, love and diligence is coopted by an organization in Ohio so profitable that it lost its tax-exempt status because the judge couldn’t discern a charitable purpose in the business of selling data services to libraries. (OCLC’s tax-exempt status was restored by a “special bill” of the Ohio legislature.)
The presence of LibraryThing has arguably led OCLC to add social features to its site. As this convergence with social media inevitably continues, a future more akin to Wikipedia’s present, Apache Software’s present, or Linux’s present may be in the offing. Library catalogs seem highly amenable to the open source approach.
Is OCLC is a leftover from the era in which computing power and connectivity were scarce and expensive, and when contributing “love and diligence” into this rare bit of infrastructure was really the only alternative? Or is it something more?
How this case is decided may be less important than how users view OCLC — as a database provider with a precious resource that can’t be easily recreated, or as a social media collective that can be moved if needed. If the latter, OCLC’s story (and Kline’s as well) may take a dramatic turn in the months and years ahead — a more radical shift than any court could ever impose.