Thursday, July 29, 2010

SkyRiver Sues OCLC over Anti-Trust

(Full document now here! Thanks Marshall Breeding!)

The newly created competitor to OCLC's cataloging services, SkyRiver, is suing OCLC in federal court in San Francisco. (Press release, PDF) I have only seen the press release, so until someone figures out how to free up the actual legal document, what we know is:

SkyRiver is claiming that OCLC is attempting to "monopolize the the markets for cataloging services, interlibrary lending, and bibliographic data, and attempting to monopolize the market for integrated library systems, by anticompetitive and exclusionary practices." The press release refers to OCLC's "tax-free profits," and that OCLC has used those profits to purchase 14 for-profit companies.

The press release quotes Leslie Straus, President of SkyRiver, as saying:
“In the process OCLC has punished its own members who have tried to seek out lower cost alternatives like SkyRiver.”
Which undoubtedly refers to the Michigan State issue, which I reported on here. In that case, OCLC appears to charge MSU an unusually large fee for uploading records to WorldCat after MSU began cataloging on SkyRiver instead of OCLC.

Undoubtedly, a good part of the concern here is over OCLC's plans to provide Web services that comprise the full functionality of an integrated library system (ILS), thus competing with current ILS vendors. You probably know that SkyRiver was started by Jerry Kline, owner of Innovative Interfaces. If OCLC successfully launches a full-service option for libraries, Innovative and other ILS's will suffer. As the representative of a major ILS company explained to me a few years ago, the library market is a zero-sum game: every time one vendor wins, others must lose, because the number of customers is not growing. The library market is a pie that can be divided into any number of slices, but the pie remains the same. This makes the rise of any one company a threat to all. In the commercial marketplace, the vendors compete over functionality and price. With its non-profit status OCLC has a distinct advantage: it doesn't pay federal income tax on the revenues it brings in. That said, given its size and depth of its involvement in day-to-day library operations, it is plausible that even without its non-profit status OCLC would be a formidable competitor for ILS vendors.

I cannot comment on the charges of anti-trust because the press release does not give enough information. Hopefully we will get more details about this suit in the near future.

3 comments:

George D said...

I find this action a bit Orwellian, coming from an III affiliated company.

IMHO, III is the epitome of "Anti-Trust" in the library ILS marketplace. Their "best of breed" one vendor to do-it-all approach has been significantly market controlling and anti-competitive, as manifested in their 'black box' hardware/software solution.

OCLC needed to be taken on, but it's a bit of a joke coming from III's SkyRiver. OCLC's alleged behavior sounds more like something I would expect out of the III playbook.

MLB said...

Karen, The Skyriver, III complaint is online at http://www.librarytechnology.org/docs/14917.pdf

Ken said...

I see your point about the 'zero sum game'--to a point. However if we take a broader, more inclusive view of the 'library function' we'd see it's a *booming* market-and seems to be practically recession proof. Google's mission statement defines it squarely as a 'library' company. Interviewed in Wired their CEO proudly talks about how they are ‘good now at cataloguing and indexing stuff’. And it's not just commercial organisations like Google and Amazon that have 'disrupted' the conventional library market. Wikipedia and OpenLibrary are part of the growing 'social economy'. So I think the action is a symptom of a much wider change. 'Conventional' libraries and library companies are scrambling around trying to get their slice of the 'zero sum game' because they can't see beyond it and develop radically new services and products. They are leaving it to others. It's the 'Innovator's dilemma' if you like.