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Vol. 29 No. 6 — June 2012

As Jordan prepares for retirement, it seemed appropriate that the two industry gray-hairs have one more conversation on the same topic. Here’s a summary of our conversation.

Q: Jay, 12 years ago when we talked, OCLC was serving 36,000 libraries. Now that number has doubled to more than 72,000 in 170 countries, according to your annual report. How did that happen?

A: I would say that there were two major drivers.

First, when I got there in ’98, we were running with a lot of proprietary code for our legacy applications and platform. It couldn’t accommodate non-Roman scripts—issues you run into once you leave North America. So, with the board’s approval, we embarked on a major investment to spend more than a hundred million dollars to develop a new OCLC computer infrastructure. Once that was accomplished, and it took about 5 years to do that, we could accommodate non-Roman scripts much more readily—not perfectly by any means, but much better than we had been able to in the past.

Second, when we looked at our global presence, we had one sales office in Canada and one office in Birmingham, U.K. But we had some opportunities to acquire some companies in Europe. We acted on those opportunities, and so increasingly, we had a larger presence outside the U.S., which obviously allowed us to accommodate other catalog metadata. We now have 20 offices in 10 countries.

I think those two factors drove the international growth, which in turn accounts for much of the upward trend in the number of libraries served that you referred to in your question.

Q: A lot of our conversation back then had to do with OCLC’s FirstSearch service, which is now mostly gone, a disappointment I must say to many content providers as well as many libraries. Why did you shut it down?

A: First, I should point out that we continue to operate OCLC FirstSearch with some 16 databases. Our plan is to migrate FirstSearch over the next several years to new functionality being developed for WorldCat.org, WorldCat Local, and WorldShare Management Services. Second, there are some very competent content aggregators in our space, and you know them very well. When we looked at our situation, we had FirstSearch, and we had an ebook company, NetLibrary, as you will recall. Increasingly, it was apparent to us that if we were a platform company with a concentration in metadata and moving to the cloud for library workflow services, we couldn’t focus on all those things simultaneously.

And quite frankly, the other aggregators had greater critical mass and ownership of databases. We watched aggregators move from licensing data toward actually owning the content. At OCLC, we couldn’t reasonably expect to acquire the critical mass required to be an effective player in that business. Moreover, it was consuming resources that needed to be allocated to our other, more strategic objectives.

Q: OCLC caused quite a stir in 2010 when it was announced that it was going into the integrated library systems business. You launched what became WorldShare Management Services or WMS. In fact, I believe there is a lawsuit pending on that. What was the reasoning behind this initiative?

A: Actually, we’d been in the library management systems business for more than a decade, starting with our acquisition of Pica in the Netherlands in 1999–2000. Pica was a major provider of library management systems in Europe. In 2005, we acquired Sisis and Fretwell-Downing Informatics, and in 2008, Amlib. Last year, we acquired BOND, a German ILS company. The 2010 announcement stated that we were going to move into cloud services, and we don’t view this as a typical hosted ILS. With WMS, the traditional ILS has been totally reengineered to assure that this set of services and the platform upon which it operates is robust enough to achieve web-scale so that it can accommodate huge numbers of libraries and huge numbers of transactions around the world, which none of the existing library management systems could do. They couldn’t scale, which is why we had to build it from scratch. So we made the 2010 announcement about our strategy for WorldShare Management Services, and I’m pleased to report that there are more than 200 libraries that have signed orders to move to this new OCLC cloud service.

Q: So the massive amount of data you’re talking about, that’s why you call it “web-scale”?

A: Yes, we think about libraries in the context that they serve a local constituency, so an academic library obviously serves its own campus; it collaborates at some level in a consortium perhaps. And a public library because of tax jurisdictions serves its population. So at that point, they’re really focused locally—they’re heavily tilted toward local service delivery, which is totally appropriate. So to get to web-scale, there has to be a cooperative model, which leads us back to OCLC.

In fact, [OCLC founder] Fred Kilgour’s original vision in 1967 wasn’t just about collecting metadata on a central hub and then facilitating interlibrary lending. His original blueprint included most library functions and services such as acquisitions and circulation. He foresaw all of those functions as cloud services, although they obviously weren’t called that back then. It’s just taken us a while to get there. Now, if that upset the balance of things and precipitated a bunch of allegations from one of the players in that space, then that’s what happened.

And don’t ask me to comment on the lawsuit, because I can’t do that at this point.

Q: Over the past 12 years, OCLC has made quite a few acquisitions—PAIS, Pica in the Netherlands, Research Libraries Group, EZproxy, to name a few. You’ve made more acquisitions than most companies in the information industry, and yet OCLC is a not-for-profit organization. What is the motivation?

A: I don’t want to overuse the phrase, but I think it goes back to the notion of building critical mass so the cooperative can sustain itself into the future. Every one of those acquisitions had to fit the public purpose of the not-for-profit OCLC—to lower the barriers to information access and to help libraries keep costs down as much as possible. In every instance, those acquisitions were done with the full support of the board of trustees who understood they added some additional value to the broader cooperative.

As far as being a not-for-profit, there’s no violation of principle as far as our ability to manage a wholly owned for-profit subsidiary. Thus, while we are a not-for-profit here in the U.S., with our operating companies in the Netherlands, the U.K., and Germany, to name a few, we in fact pay taxes in those jurisdictions because they are for-profit entities.

Q: So if they make a profit, those profits, after taxes, flow into the OCLC cooperative.

A: That’s right, they consolidate up. So, if they generate a surplus, that money would be consolidated into the OCLC income statements.

Q: One of your acquisitions, NetLibrary, the ebook company, was recently divested to EBSCO. Why?

A: OCLC acquired NetLibrary out of the bankruptcy court in Denver, Colo. NetLibrary’s business model, as you know, was that the libraries would actually purchase ebooks and have access to them through the NetLibrary platform. If that entity disappeared, those libraries that had purchased ebooks would lose the money and be without the content. Our member libraries urged us to help them, and we thought it was the responsible thing to do to acquire NetLibrary and keep it alive. We paid a fair price for the company—$10 million—and set about to try to get it back on its feet.

We made some draconian cuts in head count and office space, and then we did everything we could to reestablish good relations with the content providers, the publishers. And we ran it for 10 years.

But we just couldn’t get it to the point where NetLibrary would generate a surplus with any consistency at all, and again, it goes back to my earlier comment, that if you can’t create enough mass in a certain sector, then you should probably turn it over to someone who has the focus and the mass to make it successful. So that’s why we wound up doing the transaction with EBSCO.

Q: As an aside, when NetLibrary was first introduced, the company quickly became our best customer at Information Today, Inc. The company was spending money like it was going out of style. But then we also publish books that we were funneling into NetLibrary, and the revenue we were getting was, well, you could hardly buy lunch with it—in the beginning anyway. So, on the one hand, I’m thinking these guys are fantastic customers of ours, they’re spending money on advertising, exhibiting, sponsoring this, and sponsoring that, but as a book publisher, we’re getting just a trickle. There’s something out of whack here.

A: Well, they burned $137 million of investment money before we bought them out of bankruptcy court. And frankly, we spent a fair amount of money annually on keeping the platform current, having a DRM system in place, and so forth. The ebook world is a complicated animal and getting more so with all the turmoil of late over whether libraries should be able to buy and lend ebooks and under what circumstances.

Q: Speaking of ebooks, it would seem to me that, to the extent they are adopted by libraries, ebooks might throw a bit of a monkey wrench into the core OCLC business of cataloging books. What’s at play here as far as OCLC is concerned?

A: We increasingly talk about representing a “collective collection” of library resources, including ebooks. We realized, especially after our acquisition of NetLibrary, that all ebooks needed to be represented in WorldCat. We have ongoing agreements with NetLibrary, with ebrary, with MyiLibrary, with Google Books, and others. As a result, we have more metadata on ebooks than anywhere else on the planet. And that remains a continuing effort at OCLC—to make sure ebooks are represented in WorldCat. For example, we have huge numbers of Chinese ebooks represented in WorldCat, thanks to our friends at Hong Kong University and elsewhere in Asia. We realize that whatever libraries are consuming on behalf of their patrons has to be well-represented in WorldCat.

And then there’s our syndication efforts on the search side. With Google, with Bing, with Yahoo!, now all those objects are discoverable out on the web. Through WorldCat, one can get to the library that holds the item.

Q: Over the last decade or so, it seems you’ve placed a high priority on developing business outside North America. What drove you to do this? Trying to build up your frequent flier accounts?

A: [Laugh] No, I have enough wear and tear from travel. I’d like to stay put for a while.

I should point out that when I attended my first OCLC Users Council meeting in May 1998, the theme of that meeting dealt with global information trends and the value of OCLC membership.

Also, I think part of it comes from personal bias. My almost 24 years at Information Handling Service was consumed with global activities of various sorts. So it’s in my DNA. But beyond that the notion was, “How can WorldCat be called that if it’s basically a lot of English language content from North America?”

Q: Like the World Series in baseball?

A: Yes, there’s something oxymoronic here. And I don’t think this was arrogance on our part at all. We just realized there are some amazing collections out there that are not represented and therefore not discoverable. So why don’t we get busy and do something about it. The only way to do that is to get everything into one big catalog.

With the Pica acquisition in the Netherlands, we automatically had better reach in Europe. I believe that it’s the obligation of OCLC to create as rich a resource as possible on behalf of the member libraries and then continue to enhance it over time.

Q: For the past 2 years, we’ve conducted a research study called the “Library Resource Guide Benchmark Study” through our Unisphere Research division and sponsored by ProQuest. It’s a study primarily on library spending. This year, 30% of the libraries surveyed said their budgets are going up in 2012, and 25% said their budgets stayed the same. Only 30% said their budgets went down, and most of those said their budgets went down by 5% or less. That’s not exactly a rosy picture of library spending, but it’s not horrible either. How do you see the future of library spending, both short term and longer term?

A: Quite frankly, I’m kind of surprised that those numbers are that good. The point is that there seems to be compression, not just in the U.S., but in many other countries as well, on library operating budgets, whether it’s academics or publics. So, where we’ve seen years of expansion, now we’re seeing contraction. Even here at Columbus Metropolitan Library, which is a great public library system that has won all kinds of national awards, it still had to cut its operating budget. In the case of academic libraries, there has been some stabilization. But I don’t see a lot of upside so far.

I noticed in your March issue of Information Today, you had an interview with Cliff Lynch, where he talks about the changing landscape of libraries, and I think what he said is correct. He said that libraries have to shift—change management if you will—in consonance with the city in the case of publics or with the academy in the case of academics. Unless libraries can demonstrate their value proposition, there will continue to be pressure on their budgets.

Q: How do they do things in the future to improve their value to their communities if they don’t have sufficient cash assets to work with?

A: Well, for one, if they can figure out how to leverage economies in one part of their operation, then they can redeploy assets and create net value for their constituency. For example, public libraries need to collaborate more closely with school systems. In some cities, they work quite nicely together, while in other cities, they are rivals. When they’re in the mayor’s office, they’re rivals for funding. In my mind, that’s grossly inefficient.

Q: But when you refer to the value proposition, how much of it is about real value and how much of it is marketing—building a constituency, letting people know what it is that the library does contribute, even at current funding and service levels?

A: Well, I’ve remarked any number of times about what they don’t teach in library schools. I know there are only so many teaching hours available in an MLS program, but some things that generally aren’t taught are marketing, messaging, business plans, and so forth. I think that’s a very important part of the proposition. “You mean I have to convince the mayor and the city council to keep our funding?” So someone’s got to get the message out that libraries are important.

But then, I think it’s triply important that you can really demonstrate ROI. Did you move the needle? So, in the case of an academic library, for example, did you help us move up the rankings in whatever metrics we pay attention to? Did you help improve the learning outcome? Did you digitize a very, very special collection of materials and bring accolades and recognition to the institution? Those demonstrables are not marketing hype, but real value delivered.

Q: But you still need to tell the story, correct?

A: Right, you need to tell the story, and you have to tell it effectively. For example, if I come to you, and you’re the provost, and I say, “If you give me $2 million, I will digitize this absolutely precious collection. And here’s what it’s going to do for the university: It’s going to attract greater scholars and teaching faculty, the dean of that particular school is going to be elated, and we’re going to have much more collaboration from other institutions around the world. And … we’re going to move up the rankings three positions.”

It sounds like I’m being a little flip about this, but I think that’s the sort of value proposition that libraries need to offer more often. But then, of course, you need to deliver on your promises.

Q: The theme at our Computers in Libraries conference this year was Creating Innovative Libraries. On a scale of 1 to 10, with 10 being the highest, how would you rate OCLC in terms of being an innovative organization, and secondly, how have your programs helped libraries be more innovative?

A: One of my planks since I arrived at OCLC has been that we need to be more agile and faster at getting things done. How would I rate us as far as innovation is concerned? I’d probably give us a 7.5, but I think we’re edging upward with our WMS. You already mentioned that WMS may be somewhat disruptive in the marketplace. I like to think of OCLC’s role as a public service for libraries, and in that role we need to be what you might call “constructively disruptive.” Therefore, we should constantly innovate. That’s what good innovation does—it causes all sorts of other activities to ensue, disruptions, if you will.

We also have a great deal of really solid research at OCLC that doesn’t get a lot of press. Our Office of Research has a staff of 44, including top-notch scientists who conduct research on behalf of libraries. There’s a lot of innovation that happens as a result of their efforts. Going back to your comment about marketing, we quite frankly don’t make enough noise about what comes out of our research group. There are some 200 research reports up on the OCLC website that were done by our researchers and [are] available for free.

With respect to the second part of your question, if you think of our “Geek the Library” program that we created with the help of the Bill & Melinda Gates Foundation, for example, here’s something that has helped public libraries energize support within their communities.

We are also developing a number of mobile apps that libraries can offer their patrons. The mobile WorldCat Local makes it possible for users to discover items, check the shelf status, place a hold on an item, and so forth. This is available for use on a number of mobile devices.

To sum up, we have a ways to go to get from 7.5 to 10 on your scale of innovation, but that gives us a reason to get up in the morning. There’s still a lot of work to be done.

Q: What would you say your greatest achievement has been over these 14 years at OCLC?

A: Your question almost begs me to be boastful, and I don’t like arrogance in any form.

I’d have to say that the exceptional group of people we’ve assembled, both in the leadership positions and in every other position—some 1,275 souls today—is what I am most proud of. We, and I mean we, have done well in attracting and maintaining talent, even through acquisitions, which are complicated assimilation activities as you know.

Q: But what about all the internationalization you’ve accomplished during your time at OCLC, the expansion overseas, the building out of WorldCat to make it a truly worldwide service? Isn’t that to your credit?

A: Well, to me it was the only direction to take, to build a global platform as opposed to a very U.S.-centric platform. Yes, I’m passionate about that, absolutely, and I think we’ve made some progress in that regard. But, as I frequently say to our staff, “OK, we’re in 170 countries and 72,000 libraries, but how many countries and how many libraries are out there? And what about museums and archives? Add them all up, what would we have, 1.2 million or 1.3 million? And we’re in just 72,000 institutions?”We’ve got a long way to go.

The real credit must go to the OCLC membership and the cooperative’s partners. They have built WorldCat record by record over these past 41 years and created an incomparable resource used by millions around the world.

And, in the meantime, finding new ways for libraries to provide value to their constituents is important too.

Q: You’re pointing to all the work that still needs to be done, so why don’t you stay on another 14 years?

A: I’m a believer in rotation of leadership. No matter how clever we might think we are, you still get trapped and myopic at some point, and I think it’s time for someone else to come in.

Q: That’s actually a good segue into my last question. When you leave your post as CEO this summer, what advice will you give your successor?

A: I would suggest to him or her to stay focused and get the platform built out. Also continue to maintain the global obsession we have at OCLC so that the world’s great collections are represented in WorldCat.

Q: So, with respect to the general organizational strategy, you’re basically saying “Keep on keepin’ on.” You don’t see anything on the horizon that would suggest that the new CEO might want to go in a different direction. Is that what I’m hearing?

A: Well, maybe that’s my myopia and why it’s time for me to move on. Maybe I can’t see that 90-degree turn that may be lurking out there. But frankly, I don’t see a 90-degree turn. What I do see is the amazing promise of the WorldShare Management Services initiative, which is taking advantage of the technology that is available to us and the entire library community. We need to adapt and optimize those technologies to take advantage of the web.

Where we fit into the landscape is by going beyond what any one library can accomplish on its own and applying these technologies across the whole OCLC cooperative—the “strength in many” concept.

But I don’t think my successor will need me to point that out. It’s obvious in everything we do here at OCLC.