Strategy Reflects Values
A perspective by Patrick C. Sommers
President, Gale, part of Cengage Learning
Based on social media activity and feedback we've received from our customers, exclusive licensing agreements are of increasing concern to the library community. My role at Gale is to set strategy, along with other senior management team members. In that role, I'd like to share with you my perspective on the values and strategy driving recent actions in the market.
Fair Access Facebook Group
Gale's open letter to the library community
Today there are two core strategies being employed by aggregators to gain competitive advantages and win market share. This summary attempts to provide insight into both:
One strategy is to lock up and limit broad access to content through exclusive licensing agreements in full-text periodicals databases—which are foundational products for most libraries. It is an effective method of controlling distribution and pricing. Over the past year, proponents of this strategy have aggressively locked up magazines and journal content in the library market. On rare occasions, publishers have opened the bidding to other aggregators, but the majority of the time they have been approached by an aggregator and persuaded to quietly sign an agreement without seeking competitive bids. By limiting customers' options and making purchase decisions one-dimensional, it is possible to grow market share and, ultimately, profitability.
A second strategy is to differentiate products with more effective technology and engaging interfaces to enhance the user's experience. This approach assumes that a vendor's long-term success is intricately tied to the success of its customers. Proponents of this strategy believe that:
- It is healthier for customers if vendors compete on multiple factors: quality of content, accessibility, unique feature sets, price and customer service.
- The biggest challenge libraries face with aggregated databases today is not the "tonnage" of content, but rather improving usage of their resources to create greater value for libraries and end-users in their host institutions and communities.
- Improving the user experience will do more to drive usage and improve the value proposition for libraries than exclusive content deals.
Gale believes in the second strategy. We are steadily working to differentiate our products with unique functionality, user-focused interfaces, and, of course, high-quality content. We invest heavily in creating original, authoritative content in our role as a trusted reference publisher. Further, our new knowledge portals (such as Global Issues in Context, Career Transitions and GREENR) reflect Gale's drive to move beyond the traditional database and innovate, organizing content from multiple sources within context and integrating information into users' workflow.
Our goal at Gale is to drive usage of the resources libraries license and to double that usage every 18 months. We have, over the past year, built more than 1,000 library websites that drive increased usage for libraries, and we have done that as a free service. We've also developed and distributed hundreds of widgets, which increase usage by as much as 20 times. Additionally, we are investing in improving the technology that enables users to more effectively find what they are looking for – better search algorithms, more complete metadata and many new features that we are researching.
For us, supporting libraries is not a platitude. Our AccessMyLibrary service connects millions of users from the Web back to their local libraries every year. And because we know our relationships with libraries are long term, we partner with customers to overcome short-term problems. In the last 12 months, Gale has suspended price increases on all electronic resources. We have also worked with our library partners to help them keep their resources at a price they can afford, rather than forcing libraries facing drastic budget reductions to drop resources.
Yes, Gale is a business, and we seek to grow and thrive so that our customers, employees and stakeholders can succeed. But just as with individuals, companies operate from a philosophical position that drives actions and behavior. The values that drive our behavior include these core beliefs:
- Libraries are part of the very fabric of our society. The health of libraries directly impacts the quality of life in our communities and society at large by impacting education, the economy, cultural awareness and much more. Gale's objective is to grow our business by helping libraries meet these challenges through better tools and not by limiting options and artificially raising costs through exclusive content agreements.
- We believe that exclusive licensing agreements are bad for the market, especially given the extraordinary economic challenges libraries face today. While seeking exclusives is a plausible strategy for helping a company gain a competitive advantage, we believe the advantage is unfairly achieved on the backs of its customers and libraries' patrons, students and faculty. As many of our library customers have told us, we, too, feel that exclusives are counter to our shared mission of enabling "equity of access."
- We believe serving libraries is a privilege. We refuse to participate in exclusive licensing agreements for periodical content because the practice is bad for libraries. We participate in NO exclusive periodicals license agreements in our aggregated databases. And when we have been allowed the opportunity to offer publishers a competing bid for content, we have presented attractive offers, but always with the provision that we be allowed to offer sublicenses to all other aggregators in the market.
Gale stands behind these values and our chosen strategy to advocate for libraries, which we believe is a sustainable, long-term strategy that will enable both libraries and Gale to accomplish their complementary missions. We cannot be successful unless our customers are also successful.
I encourage you to give this issue serious consideration. Think, if you will, about the impact of exclusive licensing agreements on your library. If the trend continues and expands, your choices could be severely limited. You will need to decide if you are prepared to pay more to subsidize the high exclusive licensing fees for content that is more freely available now than ever on the Internet.
If you feel strongly, now is the time to make your opinion known.
February 10, 2010