Home 9 Against the Grain 9 ATG Interviews Patrick C. Sommers

ATG Interviews Patrick C. Sommers

by | Jun 18, 2010 | 0 comments

President, Gale, part of Cengage Learning
by Katina Strauch (Editor, Against the Grain) kstrauch@comcast.net

ATG: We have read all the press reports about EBSCO’s exclusive licensing agreement with Time, Inc., and Forbes. We have also read Gale’s open letter about the exclusive agreement. As I understand this, Time, Inc. asked for the exclusivity via an RFP? Is that correct?

PS: Time Inc. was looking for a single partner with whom to distribute their content into the library market. In our discussions with them, it was clear that it was immaterial to them whether the winning bidder sub-licensed the content to other information providers. This is the key differentiator in the bids they received. Gale submitted a bid that exceeded their “asking price,” and it included the rights for us to sub-license to other information providers. Our intent was to share content with our competitors to ensure fair access for all library users. The winning bid, as we understand it, was well in excess of what the publisher requested in its RFP, and access, as has been announced, will be restricted to one aggregator. As for Forbes, we did have the opportunity to bid for the content, but it was late in the process and we pushed our way into the process. Another information provider proactively approached the publisher with an exclusive bid and attempted to preclude others from bidding. To Forbes’ credit, they did not seek an exclusive agreement, and they did allow us to bid as we did for Time — for rights to redistribute their content to all information providers to ensure fair access for all. Unfortunately, the other aggregator bid an even higher amount to keep the content for themselves. As we’ve stated, we believe this runs counter to fair-access principles that libraries value so much.

ATG: Does Gale have any exclusive contracts with any publishers? Do other aggregators? Is the need for exclusivity increasing or decreasing? Why or why not?

PS: Gale has no exclusive licensing agreements for periodical content in our aggregated databases. There is no “need” for exclusive agreements in this part of the market. Publishers are certainly looking to augment their falling subscription and ad revenues, and we understand that. We believe that, with education about the impact of exclusives and careful execution of non-exclusive agreements, all parties — publishers, information providers, libraries, and users — can win. But not if the interests of one or more of those groups are not addressed.

ATG: I understand why exclusivity is not good for libraries. It limits competition. Is there any alternative for the databases that do not have exclusive agreements for specific titles once an exclusive agreement is in place at a competing aggregator?

PS: When this issue first arose more than a decade ago, academic libraries were forced to work with certain vendors or publishers to get access to high-end STM content — in many cases at an extreme premium. This eventually led to the creation of the Open Access movement. Libraries and researchers realized that allowing one publisher or a collective of publishers to have that much control was detrimental to their respective missions. However, while Open Access content has created new opportunities, it did not solve the problem. Libraries are still seeing tremendous price increases for content they feel they need to have and cannot get anywhere else. For public and K-12 libraries, this practice is new — and it’s definitely new for popular magazine content licensing. The timing is interesting, because newspapers, magazines, and information sources are changing rapidly. For many popular magazines, decades of content (up to current day) are posted freely online. At a time when libraries are choosing between laying off staff and cutting resources, libraries are very likely to find ways to access this freely available content over being forced to purchase additional products.

ATG: Are the publishers who insist on exclusivity signing their death knell? They are definitely limiting their distribution channels. Will they just be forgotten or out-competed (if that’s a word)?

PS: First, to clarify, it’s our experience that very few publishers request, let alone insist on, exclusive agreements. Most have been pursued aggressively with very lucrative agreements that would be difficult to resist. Once an exclusive licensing agreement is in place, these publishers certainly receive less exposure. And, in some cases, their content will no longer be deemed relevant. In others, we believe that users and libraries will find workarounds to use content from publisher Web sites, and the value of the titles’ presence in an aggregated file will be diminished. Interesting note: Many of the publishers who locked up in exclusives in the past are now working with Gale and the other aggregators on a non-exclusive basis. The allure of the initial revenue wore off once they realized that there was more revenue and visibility in the non-exclusive model.

ATG: How many of the journals covered in the various aggregator databases are “exclusives?” Can you make a guess? Does Gale have any exclusives in its databases?

PS: Gale has NO exclusive periodical licensing agreements for titles in its aggregated databases. When you look at the other vendors, one in particular has made this their main strategy for many years. To fully understand why they took this approach, it’s worth looking at their business as a whole, which includes not only database products, but also subscription services. For example, nearly half of the content in their journal and business database products is licensed exclusively. It’s no coincidence that more than half of their content is also under a one-year embargo as well (meaning that the content does not appear in their databases until one year has passed from publication). The larger part of their business is, after all, subscription services. Because these titles are available from only one database vendor, and because that information is restricted by a one-year embargo, customers buy both print and electronic journal subscriptions for the same titles from the subscriptions business unit. Customers do this because they want the full run of the publication on the same platform. They buy duplicate access to content from the same vendor — at a cost that is set by that vendor — because they have no other choice.

ATG: Do any of the other database aggregators have “exclusive” titles? How rampant is this? Has it escalated in recent years?

PS: The practice began more than ten years ago, and, until now, has been restricted to marquee academic and STM journals. The problems created by consolidated and restricted access to STM content and its impact on prices for academic libraries have been welldocumented. The practice was bad for libraries then, but it’s even worse now, because now the titles being targeted are popular general and business periodicals that are considered foundational for public and school libraries. The number of libraries impacted — especially those with less funding — is significantly greater, and, in this economic climate, they are the ones least able to afford content duplication and rising costs. In the last year we have seen a rapid escalation of the practice. Again, this practice is rarely initiated by the publisher, but, instead, by a single aggregator looking to control and restrict access to content. This is why we have been so vocal recently. We want librarians to be informed about actions by others that will impact their choices and pricing. We believe that libraries — the economic buyers — have the power to determine if the practice is rewarded … and expands.

ATG: Can you tell me in general terms about the contracts Gale as an aggregator signs with publishers? Roughly how much money is offered by the aggregator to the publisher of a very popular magazine or scholarly journal or to the publisher of a magazine or scholarly journal that is not so popular? And what is the length of time in these agreements? Do most aggregators have standard terms?

PS: For the past 20+ years, there has been a relatively standard means for licensing and aggregating periodicals. Titles are typically licensed non-exclusively with “evergreen” agreements (renewed annually). Publishers are paid a royalty based on usage of their content. As a result, publishers with high-use titles tend to make more than those with low-use titles. It has been largely viewed as a fair system that provides broad and fair access to content and allows libraries to make purchase decisions based on which products have the right mix of content, interface features, and price for their user community. Now that model is being disrupted by aggressive tactics, which result in royalty payments 10 to 20 times the previous amount paid and give the vendor the ability to restrict and control access. One can’t necessarily fault the publisher for taking the money, but who is ultimately going to pay for this extreme cost escalation? We think it is clear that it will be libraries. If the periodical aggregation business moves to a monopoly, we believe the impact on libraries will be catastrophic.

ATG: How many publishers are out there for aggregators to sign agreements with? How many single publishers? How many publishing conglomerates?

PS: Globally, there are thousands of publishers whose titles make their way into aggregated databases. We seek to work with all publishers and work hard to maintain our relationships with them. Because Gale is a publisher too, we understand the issues publishers face. We’ve long held the position that exclusive arrangements are bad for publishers, as well as libraries. By restricting access to content, the usage and exposure of content is limited and, ultimately, its value is diminished. Most publishers understand this and license content to multiple vendors, but others base their decision on expedient, short-term financial considerations. However, some publishers have realized the negative long-term impact of exclusive licensing agreements on their business and have returned to non-exclusive licensing. We are working to educate publishers and libraries that non-exclusive licensing is best for both groups.

ATG: I have to show my colors here. I will put on my miniscule publisher hat. My husband and I publish Against the Grain which is a labor of love. I receive licensing agreements on a regular basis from all of the aggregators. They want my full-text content in their database. But the amount of money that I could recover compared to the revenue that I get from ads and subscriptions (not a fortune, mind you) allows me to continue to publish Against the Grain. If I were to license my fulltext content to aggregators, I could not afford to publish ATG anymore. Putting on my librarian’s hat, I would probably cancel the print subscription for my library if I could get the content from an aggregator online. So, the aggregator database scenario is generally not good for a small publisher like me. It is good for the library by and large. The irresistible force meets the immovable object. So, I am sympathetic with Time, Inc., and Forbes. They are bigger publishers but they still have to maintain their subscribers so that they can continue to publish their content. What’s the aggregator solution? Will we continue to have aggregator databases? Will the aggregators force some good publishers to quit publishing? None of us wants that, right?

PS: There’s a clear distinction to be made here. Users do not access the information in a database in the same way that they do when they subscribe and receive a print copy. That is, rarely does anyone use an aggregated database to sit down and read the latest issue of Time or People. The value of an aggregated database is the ability to, for instance, search by subject across a plethora of titles, search for a specific article or writer, or see how a topic was covered at a particular point in time, etc. Consequently, we believe that the subscription business is not impacted by a general-interest title’s inclusion in a database any more than free copies in a doctor’s office impact subscriptions. Licensing royalties are incremental revenue to general-interest publishers. In addition to serving users with quality information in the context of other searchable content, aggregated databases promote brand awareness for publishers. The value to publishers — smaller ones in particular — is that their brand is served up along with other quality publications and is highly visible to hundreds of millions of information-seekers annually. This exposure frequently leads to individuals seeking out subscriptions to a publication they were not aware of previously. We still believe there is tremendous value to aggregated databases. That said, we also see tremendous value to new product concepts that we are developing. Our portal products — Global Issues in Context, GREENR, Career Transitions, and more — take information delivery to the next level by providing information in context, with Web 2.0 community tools and Website-like interfaces. We base these products on scientific data we’ve collected about how users seek and use information. We are investing in ways to make information more accessible and usable rather than in trying to keep information away from others.

ATG: What’s a publisher to do? It’s interesting that we are seeing more and more publishers building their own content sites. We are also seeing more and more publishers making their content unique between electronic and print. We are also seeing distinctions about how the full text is presented in html, xml, pdf, etc. Also in the searchability and presentation of that content. What’s the next step? Will journals continue to be published in their current form (a package of related articles) or will content take on new forms like individual articles, tables, charts, graphics, etc.? Any predictions?

PS: We believe that publishing will transition into many different models and delivery methods. Popular publications will continue and will be accessed through a variety of technologies: electronically through e-readers like the iPad, PCs, the publisher’s Website and also print editions. Content from these publications will also be accessed through aggregated databases and the Web. Additionally, this content will be organized within context and available through knowledge portals and subject-specific Websites. The point is that publishing isn’t transitioning from “this” to “that” — there will be many different models designed to meet the needs of many different types of consumers.

ATG: I appreciate your frank answers. Thanks so much.

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