“SkyRiver announced that it enters 2012 with a significantly stronger market position in terms of customer and database growth and an enhanced software client. Recent milestones include SkyRiver’s 50th installation, bringing the number of libraries served to more than 350. In addition, SkyRiver’s bibliographic database, with its associated open data policy, has doubled in size since the utility’s launch date.

In addition, SkyRiver continues to aggressively develop its client software, rapidly addressing client needs and functional enhancements. As clear evidence of this, SkyRiver’s first 2012 client software release (the fourth in as many months) has just been deployed.

With a continued focus on delivering an economical and productive alternative to legacy bibliographic utilities, the SkyRiver user interface continues to win accolades. “It takes minimal time to train new staff because SkyRiver is so easy to use and there’s a significant reduction in the number of ‘clicks’ from what was necessary with our previous utility to perform the same tasks,” says Carol McGeehon, Technical Support Manager at the Douglas County Library System in Oregon.”

See TheSkyRiver.com for more information

“Some time into the negotiations, OCLC presented certain conditions for how bibliographic records taken from WorldCat for cataloguing were to be used in Libris. These conditions could not be accepted by the National Library. A fundamental condition for the entire Libris collaboration is voluntary participation. Libraries that catalogue in Libris can take out all their bibliographic records and incorporate them instead into another system, or use them in anyway the library finds suitable. The National Library makes no claim of controlling how bibliographic records taken from Libris are used.”

Rapp’s article concludes with a reference to the pending SkyRiver v. OCLC lawsuit:

“OCLC’s restrictions on record use have long been a point of contention. In an unrelated, ongoing antitrust lawsuit filed in July 2010 against OCLC by SkyRiver Technology Solutions and Innovative Interfaces, the plaintiffs singled out OCLC’s prohibition on members sharing bibliographic data for criticism. SkyRiver, OCLC’s competitor in bibliographic services, “imposes no restrictions on subsequent use of bibliographic metadata that its customers obtain from the SkyRiver database,” according to SkyRiver’s online FAQ.”

The “Daily Report for Executives” story includes an extensive analysis of the charges leveled against OCLC by SkyRiver, including SkyRiver’s position that OCLC has misused its non-profit status to acquire for-profit companies and monopolize the market for library services.  While Senator Grassley does not single out OCLC or any other organization in his remarks, it’s clear from the article that the Senator’s staff is aware of the lawsuit. 

SkyRiver’s lawyer, Arthur Shartsis, is quoted in the article as saying that an IRS examination of OCLC’s activities, based even on current law, would be likely to conclude that OCLC does not meet charitable requirements and is operating like a for-profit business.
 
Experts quoted in the article say that the issue of tax-exemptions for “fee-for-service” nonprofits like OCLC is likely to remain on Congressional radar.  We’ll keep you posted when there are new developments.
 
 Source:  Daily Report for Executives, 3/14/11, “Exempt Organizations: Grassley Seeks Estimate of Nonprofit Tax Exemption, Putting Organizations on Edge.”  Since DRE is a subscription-only service we are not able to link to the article here.

Emeryville, CA — Lawyers for SkyRiver Technology Solutions, LLC have filed its opposition to OCLC’s motion to dismiss its Complaint, which alleges that OCLC has engaged in predatory and exclusionary business practices in violation of federal and state antitrust laws.

“OCLC’s motion to dismiss that was filed in December misrepresented the antitrust claims made in the original complaint and our February 4th filing sets the record straight,” said SkyRiver President Leslie Straus. ”We are seeking a level playing field for the development and marketing of products for libraries and an end to the anti-competitive behavior by OCLC that punishes its own members.”

Straus continued, “Non-member libraries around the world have loaded millions of records into OCLC’s WorldCat at minimal or no cost, while legacy OCLC members such as Michigan State University and California State University Long Beach are being asked to pay outrageous batchloading fees – simply because they decided to choose SkyRiver for their cataloging services.”

The introductory section in Friday’s filing addresses the deficiencies in OCLC’s motion to dismiss: “OCLC fails to address (other than to deny) Plaintiffs’ allegations of anticompetitive and exclusionary membership terms, policies and practices that have been imposed on its member libraries for years. OCLC also mischaracterizes its unlawful punitive pricing and tying arrangements.”

The filing goes on to say, “Since at least 1987, OCLC has demanded that its member libraries agree to terms of membership that prohibit sharing the metadata of their own library holdings contributed to OCLC’s bibliographic database known as WorldCat with any for-profit firms for commercial use and require member libraries to use OCLC’s services. OCLC has imposed these membership terms to prevent the development of competing bibliographic databases, cataloging services or ILL services by erecting barriers to entry in these three markets.” SkyRiver and co-plaintiff, Innovative Interfaces Inc., also claim that OCLC is using its monopoly power illegally in these three markets in its attempt to monopolize the ILS market.

David Rapp’s article in LJ on December 16 calls out the fact that SkyRiver, in its original complaint, requests that “competitive commercial interests be given access to OCLC’s WorldCat database at ‘just and reasonable’ terms.  What SkyRiver additionally says in its complaint is “Library records should be freely and openly available for use and re-use in the public domain or by reasonable means of access for all, including for-profit firms.” 

SkyRiver’s published position regarding open access to its own database reinforces this point: “SkyRiver holds as a guiding principle that bibliographic metadata exist within the public domain. Thus, SkyRiver makes no claims to ownership of any bibliographic metadata and imposes no restrictions on subsequent use of bibliographic metadata that its customers obtain from the SkyRiver database.”

How different it is with OCLC.  Even before the lawsuit was filed, OCLC board chair, Larry Alford in an article entitled “The Value of the OCLC Cooperative” claimed that any library that didn’t use OCLC for cataloging would be freeloading on other cooperative members for ILL and threatening the very existence of WorldCat.  More recently, OCLC board member, Tony Ferguson, in the September issue of “Against the Grain”, says “Were it [OCLC] to allow for profit companies to grab the records without pay that my library and thousands of other libraries sent to OCLC, and then sell them to others, OCLC would soon go bankrupt.”

SkyRiver’s Straus says in her response to Tony in the same “Against the Grain” issue, “it shouldn’t be heresy to raise the issue of opening WorldCat to development by vendors other than OCLC.  As it stands, OCLC claims ownership over and uses the WorldCat database to leverage its entry to the commercial ILS market.  Why not have a world where the entire library community has open and fair access to WorldCat data?  This in turn could inspire technological advances from many directions and that could lead to new companies that produce valuable products for libraries.”

Straus concludes by saying, “If the SkyRiver lawsuit threatens the existence of OCLC and WorldCat, surely that’s ultimately due to the actions of the management and board of OCLC.”

“OCLC’s Motion deliberately mischaracterizes the allegations in SkyRiver’s Complaint for OCLC’s own public relations purposes.  Our legal team will respond in due course.  Our position remains as it was in July when we filed suit – that OCLC has engaged in business practices which ultimately will be found to be illegal.

As we’ve said in the past, the trigger for the lawsuit was OCLC’s imposition of punitive pricing for batch uploading of holdings against Michigan State University and California State University, Long Beach after those two institutions chose to move to SkyRiver for cataloging as a full service, lower cost alternative to OCLC.  OCLC’s action was taken with the intent of discouraging other academic libraries from moving to SkyRiver.

Innovative joined the suit because of OCLC’s attempt to move into the integrated library systems market through anticompetitive conduct and anticompetitive agreements, as well as by its restrictions against for-profit firms with regard to access to the WorldCat database.

The goal of our lawsuit is to create a level playing field for competitors in the library technology marketplace—opening the doors to competition will lead to greater innovation and technological advancement.  We look forward to proving our case in court.”

“A brief SkyRiver history lesson may provide useful context here.  The idea for a new, low-cost, highly functional alternative to OCLC’s cataloging services arose from a series of conversations with librarians who were interested in having a choice of bibliographic utilities.  From a business point of view, it was clear that to be successful, this product would need to achieve price points that would be truly attractive to libraries at a time when budgets have been stressed to the breaking point.”

“We came to market with our eyes open, knowing that changing cataloging services is not a step that libraries take lightly.  However, we didn’t anticipate that OCLC would introduce this additional roadblock and now that it was there, with no indication that OCLC would budge, we had no choice but to take action.  We’re simply not willing to stand by and see OCLC use its strangle-hold on WorldCat – a resource created by its members who continue to pay good money to use it – to create an unfair advantage for OCLC’s other products and services.”

“Since the filing, it has been widely noted that there’s an inherent conflict of personas in OCLC’s current business practices – on the one hand, OCLC is ostensibly a member-based, tax exempt cooperative working for the good of the entire community and, on the other, OCLC is a vendor selling services to its own members in competition with companies like SkyRiver.  It’s easy enough to see which persona thought up the batch upload pricing for MSU and CSULB.”

From the SkyRiver Press Release:

“John Riemer, PCC Chair, commented:

‘The PCC welcomes a new NACO Node member, SkyRiver Technology Solutions. Name authority records contributed through SkyRiver will carry the prefix “ns”.  The Library of Congress has been working with all NACO nodes to prepare for the new prefix in LC NACO Authority File (LCNAF) records. The first NACO records from SkyRiver will enter the shared database on November 17, 2010.’

NACO is the name authority component of the PCC through which authority records for names, uniform titles, and series are contributed to the LC Name Authority File. NACO participants agree to follow a common set of standards and guidelines when creating or changing authority records in order to maintain the file’s integrity. http://www.loc.gov/catdir/pcc/naco/nacopara.html)

SkyRiver’s PCC participation represents the culmination of a development process which involved rigorous testing with LC to ensure the efficient exchange of authority records on a daily basis. SkyRiver users already trained on NACO protocols now may send their contributed records via SkyRiver’s elegant user friendly interface.”

OCLC published their Financial Update for 2010 in a blog post on October 8^th which shows a healthy spread between revenue and expenses of more than $23 million for the 2009/2010 fiscal year.  See the table below for a look at OCLC’s financial results for the last seven years.  OCLC’s healthy balance sheet has enabled them to make a number of significant corporate acquisitions, including 14 for-profit companies.

Most telling, however, was their acquisition of a non-profit enterprise in 2006 — Research Library Group (RLIN), which effectively put an end to competition in the market for academic library cataloging services prior to the creation of SkyRiver in late 2009.  Factor in OCLC’s high rates of compensation for top executives and directors, their stance in regard to ownership and use of WorldCat data, and their aggressive development and marketing of new commercial products and you have an organization that’s acting a lot like a for-profit enterprise.