While the largest companies tend to garner the most headlines, it's important to remember that the library automation industry consists of a very diverse group of organizations. Players in this industry range from tiny firms of with a handful of employees to the larger international companies with hundreds of personnel that do business around the world. I'm glad to see this kind of diversity and I believe there is room in the industry for the success of many different companies and organzations. These companies differ in size, but they also represent many different types of organizations, ownership arrangements and niches within the market. This mix of companies helps ensure that there will be technology for all types of libraries at a broad range of price points.
The largest of the companies develop products that appeal to a broad class of libraries, usually within a given set of library types. While some of the systems find use in many different types of libraries, these large companies do not necessarily want to channel resources into developing versions of their products for any given product niche, nor are they likely to find it worthwhile to offer products at price points within the reach of small libraries with very limited budgets. Fortunately, other companies are able to step in and address the smaller niches and the needs of small libraries. In general, I observe that larger companies focus their marketing energy on larger libraries and consortia, though it is true that some of the consortia they serve include some very small libraries.
Perhaps unsurprisingly, it's the smaller companies that find themselves in a better position to find the business of small libraries worthwhile. Biblionix, for example, has built a strong business by placing its Apollo ILS in small public libraries across the country. In this month's feature, we'll look at Auto-Graphics as another example of a company able to find an growing set of business opportunities by providing its ILS to mostly small libraries, and, as we'll see in the article, at very affordable pricing. Other companies exploit niches that larger companies don't find worthwhile. Keystone Systems comes to mind as an example, having designed its KLAS automation system primarily for libraries that serve persons with visual and other disabilities.
As open source automation systems entered the picture over a decade ago, a variety of companies have emerged that base their business model on providing services for this type of software. Because these companies are not able to charge license fees, they generate revenue from services, including hosting, sponsored development, conversion or installation, and ongoing support. These companies represent a growing segment of the industry, both in terms of their business and the number of libraries that they serve.
The industry also includes companies with a mix of business configurations. Most are privately held for-profit corporations. OCLC stands out as the one non-profit, even though it competes head-to-head with the for-profits in the library automation industry. Auto- Graphics, as we'll see below, holds the unique status as the only public company (that I am able to identify) which participates in the library software industry. All of these different types of companies share a great deal in common in the way that they develop and market their products.
From my perspective as a person who follows the industry closely, the most important difference between these companies lies in how they make information available regarding the details of their business practices. Specifically, non-profits such as OCLC and publicly traded companies such as Auto-Graphics are required to file and make available detailed financial reports. OCLC, for example, just released its 2011 annual report, which includes interesting financial details. We can learn, for example, the specific amount that it paid to acquire the German company BOND last year. Even more information is available through the organizations 990 federal tax form, which non-profit companies are required to file and make available to the public.
Private companies, on the other hand, have no such obligation to share financial data or other information that they may deem proprietary. Fortunately, most of the companies in the library software industry are reasonably generous with the information that they choose to share. Since these companies do business with a large proportion of public institutions, some additional information can be inferred regarding the extent of their operations and revenue. Companies in Europe are also subject to required reporting, even if they are privately held. In most cases, financial information can be obtained from official registries of companies maintained by each country. This combination of reporting scenarios makes the process of tracking and analyzing the library automation industry very interesting.
This month, we look at a new statewide consortial automation project in Tennessee. This gives us the opportunity to take a closer look at another example of the growing national trend toward shared library automation systems at a statewide level, with a few interesting twists, and also to highlight a company for which we have not previously provided in-depth coverage. We also note the passing of the company's founder and one of the pioneers of the industry, Robert S. Pope.