Library-Services Companies Sue OCLC, Alleging Anticompetitive Practices

July 29, 2010

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.