Saturday, May 14, 2011

Information vendors, librarians, associations and antitrust

I've been loathe to jump into this fray. Not because I don't have anything to say. I've spent a great deal of time actively involved with librarians/libraries and vendors relations since even before I joined this profession. I was a Westlaw Rep as a law student. That gave me an introduction to the vendor/library milieu. Later, as a reference librarian I gained a different perspective as a consumer. Now, in my 10 years with NELLCO negotiating with vendors on behalf of member libraries, and having served AALL as CRIV Chair, my perspective is, in my opinion, fairly well-balanced. The reason I've hesitated to enter the conversation is because there is such passion on both sides. I'd like to see us engage in a dispassionate, honest debate about what's at stake for all of the stakeholders. No fingerpointing, no fear mongering, just frank dialogue. So with that goal in mind, I offer my thoughts here. I'll start by identifying the stakeholders and their primary interests as I see them.

First, libraries/librarians, as consumers of legal information, have an interest in providing the most relevant resources to their user community at the most favorable terms they can negotiate. The obstacles they face in meeting this goal include increasing budgetary constraints, an ever-expanding array of information resources in the marketplace, constantly evolving technology, and limited staff time for vendor negotiations.

Second, information vendors/content providers (my focus here is primarily on commercial publishers) have an interest in providing the content to meet the demands of the marketplace while generating the greatest possible profit margin. What I mean by this is not that they're money-grubbing opportunists. They're good capitalists in a capitalist society. They may have shareholders to consider. They pay attention to the bottom line. That's business in America. But the bottom line isn't the only god they serve. As good capitalists they understand their reliance on good customer relations. In addition to profit, they need to generate and maintain good will and strong reputations with their customers.

Third in this triumvirate are the associations and organizations that support the relationships between the vendors and the libraries/librarians. These include professional associations, like AALL, and consortia, like NELLCO. Our interests lie in serving our members and generating the revenue necessary to do so. Therein lies the rub. As non-profit, member-driven, dues-reliant organizations we need to keep our revenues healthy in order to continue to provide the services members need. As we grow, members naturally ask us to do more. That's a sign that we're succeeding. And of course, it's a vicious cycle. The more service we provide the more it costs to operate the organization, so the more revenue we need to meet our operating costs.

AALL has been criticized for not taking a vocal enough lead advocating for law libraries around vendor issues. The creation of the Vendor Liaison position has been viewed by some as an attempt to usurp the role of CRIV. I don't agree. I think AALL was trying to respond to the members to the best of their ability as these issues were bubbling up . It makes perfect sense to me that CRIV would have an intermediary role to serve between libraries and vendors, while the Vendor Liaison would serve as ombudsperson between the association and vendors. There are completely different interests at stake. Now there is new movement among the AALL membership to create a caucus on consumer advocacy. I don't necessarily think this is a bad idea. In fact, it's great to see people acting instead of just complaining. However, I think there are some political realities that need to be aired. None of this is news, but I think it's worth saying.

In their 2008 Annual Report (most current posted on their site), AALL reported dues revenue in excess of $1m; almost 28% of their total revenues. This is fairly typical. Needless to say, most organizations want to keep their members happy. AALL has vendor members. The expansion of AALL membership to include vendor (and other) members goes back to the 90s and is well-documented. (Whether that was a good decision in hindsight is another discussion.) So AALL has an interest in keeping their vendor members happy as well those members employed in law libraries and information centers.

I would also submit that AALL's concerns about subjecting the organization to scrutiny for violations of antitrust laws are not entirely without merit. Having vendor members subjects AALL to even greater exposure to antitrust scrutiny. The antitrust provisions as applied to associations presume that associations are necessarily composed of 'competitors' in a given trade or profession. The intent is to preclude anticompetitive behaviors (collusion, price fixing, etc.) among competitive members that will result in a restraint of trade. Looking at AALL's membership prior to the inclusion of vendors the 'competitors' would be law libraries. I can't imagine much concern about market manipulation among that group, who, unlike plumbers or doctors or even lawyers, are not competing with one another in an economic market; law libraries serve their patrons. With vendor members AALL now has a class of members who are in fact 'competitors' as anticipated by the antitrust laws. Thus, AALL has taken a conservative, risk-averse stance on the advice of counsel. As a member I think they're tying to be responsible fiduciaries of the Association. However, based on  my research on this issue the question of precisely which association activities constitute violations of antitrust has not been definitively determined. There is no ready checklist. In the cases on point the fact patterns are critical to the courts' determinations. Who are the parties, what is the intent of their actions, what is their market power, etc.  I think some of the activities that have concerned AALL would stand up to scrutiny under antitrust analysis, but the association would clearly be taking a risk to find out. See Hillary Greene's recent article Antitrust Censorship of Economic Protest in the Duke Law Journal for an excellent overview of the issues. Ms. Greene also makes the case for an approach that would more carefully balance First Amendment interests with free market concerns.

In 2008, AALL also reported almost $1m in additional revenue from vendors (cash, non-cash, exhibits, and advertising). These are all typical non-dues revenue sources. Most associations avail themselves of these kinds of revenue opportunities. There is nothing inherently unethical about this and there is an obvious benefit to the Association and its members, as well as to the suppliers. There's a quid pro quo, a value exchange.

So given all of these complexities it's unrealistic to expect that AALL's interests will always be perfectly aligned with every member of the association. Especially given that the interests of the members themselves aren't aligned. So where does all of this leave us? It leaves us (me at least) wanting to have a more robust, transparent dialogue about what members REALLY want the association to do for them with respect to vendor relations, and what the Association is willing and able to do without putting itself at great risk. Many of us are lawyers and we can understand the complexities involved given the chance. We all need to be educated. Perhaps we could organize an open, scholarly forum around this in an effort to better understand the rights and responsibilities of all parties. Perhaps those organizing the caucus effort could start with this. Any other suggestions?

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