I have in hand a letter from Clifford H. Haka, Director of the Michigan State University Libraries, addressed to "ILL Partners" and dated February 24, 2010. The letter is a response to Larry Alford's document in my previous post. I will try to represent the facts he presents here as accurately as possible, and to distinguish those from my own opinions.
FACTS (from the letter)
MSU libraries chose to move their cataloging from OCLC to SkyRiver in a cost saving effort. They expect to save about $80,000 per year. Because MSU uses OCLC for ILL, they intended to pay to have their records loaded into OCLC. The OCLC service charge list gives the price for this service as $0.23 per record.
However, when MSU requested the upload service, OCLC offered them a price of $54,000 for five months (presumably end of fiscal year?), which would amount to $74,000 per year for 26,000 records, or $2.85 per record. (Some of this would be offset by cataloging credits.)
MSU has decided that they cannot afford this, and therefore will not be uploading current cataloging into OCLC. Haka says: "While we will continue with OCLC for ILL, I regret that our newer holdings will not be available for others to consult."
Now My Take
I find it astonishing that any corporation would choose to punish customers rather than to work to win them back. I also find it astonishing that OCLC is willing to keep current customers through threats and fear. Essentially, MSU is being made an example: if you move your cataloging to a competitor, we'll cut you out of OCLC services. This is a lesson for anyone else thinking of moving to SkyRiver or some other service.
As Haka points out in his letter, the OCLC database has a huge number of records that were not created through OCLC cataloging services. When the RLIN cataloging service still existed, many libraries that did their cataloging in RLIN uploaded those records to OCLC so that they could use the OCLC ILL service. They paid an amount similar to the $0.23 that Haka quoted from the current price list. This ability to upload (economically, I should add) is directly in support of the stated goal of maintaining WorldCat's value as a union catalog. The more complete the catalog, the more value it has for services like ILL, resource sharing, and collection development. Yet it is OCLC's action that is devaluing WorldCat by deliberately setting an upload price that MSU obviously cannot support economically. This tells me that the real issue is not the "value of WorldCat" but the revenue that OCLC receives from cataloging.
Business 101 would tell you that the existence of a competitor brings prices down in the sector. If you can't meet your competitor's price, then you can try to keep your customers through a superior product and better services, but for some price will be the main factor. If someone else can provide the same service at a better price, your customers will go there.
It seems to me, and Haka alludes to this, that OCLC's reliance on cataloging revenue may be in trouble, not just because of SkyRiver but also because of the Internet: it is now very easy for anyone to store and move metadata on the public Internet. The number of sites dedicated to the same materials that one finds in libraries in increasing rapidly. We have Amazon, Google Books, LibraryThing, Open Library, IMDB, and on and on. They all have metadata describing the things in their focus. It's not the same as library metadata, but the library catalog is no longer, and not by any means, an exclusive source of description for books, films, or music.
What OCLC has that is unique is not just the quantity of metadata but the library holdings information. And they seem to be aware of this as they load in both records and holdings from many libraries that do not do their cataloging on OCLC. OCLC's value is in the whole package, but it still relies on cataloging as its primary revenue (although shrinking as a percentage of the total income, as you can see in their annual reports).
The services, like ILL, that OCLC provides for libraries are incredibly valuable and it would be a great detriment to the library community to lose them. It does appear, however, that there has been shift in the marketplace; a shift that has nothing to do with library loyalty to the OCLC collective, but one of changing technology and economics. OCLC is trying to push water upriver, when it should be seeking a new balance in its revenue stream. Instead, OCLC is making a real mess of its relationship with its members -- first with the horribly botched record use policy (which isn't going to solve this problem anyway), and now with acting punitively toward members who make the kinds of economic decisions that we all make every day. I believe the "collective" can be saved, but only if OCLC decides to work with, not against, its members.
More thoughts (added later)
I realize now that I have many other questions about record loading on OCLC. For example, many libraries get some of their records from their book vendors, and those do get loaded into OCLC. Is that charged as cataloging, or as record loading? Are there different fees for loading records if you are doing your cataloging on OCLC vs. if you are not? Are there "load only" libraries who load their records in order to participate in ILL and other services? If so, what are they charged for record loading?
I say this because it makes sense to me that libraries that do not do their cataloging on OCLC would be encouraged to load their records so that they can participate in other services. It also makes sense that the price for this would be commensurate with that of adding your holdings online (or maybe a bit cheaper if it's more economical for OCLC to batch load rather than provide cataloging online). In fact, what difference does it make how you get your records into OCLC? The most important thing is that your records are there as part of WorldCat.
What the MSU letter tells me is that the OCLC economics are such that cataloging on OCLC is paying for other services, like record uploads, which may be under-priced. A different upload charge for non-cataloging libraries makes sense, and if that's the case then OCLC needs to make that clear. However, it wouldn't surprise me if that wouldn't make alternative cataloging services unmarketable, because as the MSU case shows, the total for cataloging elsewhere plus loading on OCLC would favor doing cataloging on OCLC. This makes perfect sense to me, but it appears that members haven't been informed of this pricing practice. Really, a little more transparency about pricing could go a long way toward avoiding situations like the MSU one.