The news of the Federal Trade Commission's closing its review of ProQuest's acquisition of Innovative Interfaces evokes questions regarding competitiveness in the library technology industry. Throughout my career, I have observed a continual succession of business acquisitions and ownership changes among the companies involved in providing technology products to libraries. The net impact of these events can be seen in the current business environment. Responsibility for strategic technology products is concentrated in a relatively small number of large organizations, though there are definitely important players in the mid-sized and small tiers of the industry. Recent transactions have attracted considerable attention. While the consolidation of the industry is not new, its depth is unprecedented. We should also assume that this process will continue. Multiple companies in the library tech industry are due for ownership changes and transitions in the next year or so. While delays in moves of ownership remain possible, it is more realistic to expect additional business concentration.
Libraries must set their technology strategies within this reality of deeply consolidated industry. Decisions regarding the acquisition or retention of strategic technology products must be made within the confines of the current business landscape. In some respects, the choices seem narrow, though multiple meaningful options remain for each category of library. Two important concerns involve meaningful choice and trustworthiness of vendors.
Do Libraries Have Meaningful Choice?
In previous times, a library in almost any sector could expect to see three to five qualified responses when they issued an RFP for a new automation system. Now, its more likely that the number of responses will be fewer, in some cases only two. In rare circumstances only one product may be realistically viable for a large-scale project. The menu of choices varies by sector, with more viable options available to public libraries and fewer for academic and school libraries.
- Academic libraries. New implementations of systems among academic libraries in the United States are dominated by Ex Libris Alma (66 new libraries in 2019), followed by OCLC WorldShare Management Services (16), Koha supported by ByWater Solutions (9), with 9 libraries making commitments to FOLIO (5 supported by EBSCO Information Services and 4 supported by Index Data). These choices are distinctive, including a proprietary system offered by a for-profit company (Alma), a proprietary product offered by a non-profit organization (WMS), and two open source products supported by for-profit companies (FOLIO and Koha). Its also interesting to see one sale made by TIND, a recent start-up company.
- Public Libraries. New implementations of systems in public libraries in the United States came from a more diverse set of products and companies. These included Apollo, provided by a small for-profit company (65 sales in 2019, mostly small public libraries); Evergreen, an open source product supported by two non-profit organizations, Equinox Open Library Initiative and MOBIUS (62 new libraries combined); the open source Koha ILS, supported by for-profit ByWater Solutions (23 libraries); and several proprietary ILS products offered by for-profit companies (Symphony 15, Carl.X 2 consortia, Polaris 26, VERSO 3, Atriuum 35 small public libraries, Library.Solution 6). Non-profit OCLC has made five sales of its proprietary Wise product. These 2019 sales statistics reflect a less concentrated business environment for public libraries relative to academic libraries. Several companies offer multiple products: The Library Corporation (Carl.X and Library.Solution); Innovative (Polaris and Sierra); and some open source products are supported by multiple vendors, such as Evergreen and Koha (both supported by Equinox and ByWater).
- K-12 School Libraries. Although less systematic data are available, Follett Destiny holds a dominant position in this sector, with other companies such as Alexandria, Book Systems, Mandarin, and LibraryWorld each representing smaller portions of market share.
I recently analyzed historic patterns of system implementations among ARL members for each year since 1990. Interestingly, the least competitive period was from 2008 to 2011, with only six products supported by three vendors. Implementations in 2020 show 12 products supported by six vendors.
Libraries naturally prefer technology vendors with demonstrated commitment and understanding of the library environment. Doing business with libraries differs substantially from other business-to-business sectors. As non-profit organizations with limited budgets, long planning cycles, and quite distinct operational requirements, libraries do not respond well to aggressive commercial strategies. Many of the major library technology products have endured through multiple ownership arrangements. It is often only in retrospect that we can assess the stewardship of each regime relative to product development, support, or general technology innovation.
Though subjective, business transitions can be assessed by whether the arrangement results in a positive or negative impact on perceived trustworthiness or stability. The following transitions can be interpreted as moving toward more stability or trustworthiness.
- Equinox Software, Inc made a transition to non-profit status as Equinox Open Library Initiative in 2017.
- SirsiDynix changed ownership from Vista Equity Partners to Inner City Ventures in 2015. Both owners were private equity firms. While Vista was notorious for its aggressive playbook for managing its portfolio companies, ICV values the positive contributions that its portfolio companies make to their communities.
- ProQuest acquired Ex Libris and Innovative. Both companies were previously owned by private equity firms. Ex Libris went through a series of ownership arrangements with each making investments to create new products and expand markets. Innovative's phase of private equity ownership reflected less productive outcomes. Its Inspire development initiative came late and did not succeed in positioning a major new product into the market. The move from private equity ownership to ProQuest, a wellestablished library-focused company, can be interpreted as positive movement on the trustworthiness scale.
- EBSCO Information Services' acquisitions and investments reflect positive movement toward trustworthiness. EBSCO is a family-owned business with longstanding involvement with libraries and a generous philanthropic program. Though EBSCO has not acquired any ILS companies, it has acquired important tech firms such as Zepheira, supported the FOLIO open source initiative, and made investments in organizations such as protocols. io and Code Ocean.
- OCLC's acquisitions likewise represent a move toward trustworthiness. Its multiple acquisitions of ILS companies in international sectors (HKA, BOND, Amlib, Fretwell-Downing) and the recent purchase of Capira Technologies have each involved a transition from forprofit to non-profit status and involvement with a longstanding library-focused organization. The transition of small or mid-sized companies into ownership by corporate giants in the industry may result in more trustworthiness and stability for the products involved, but it is less clear whether these are moves toward more or less competitiveness.
A much more in-depth treatment of this topic will appear in an upcoming issue of Library Technology Reports “Consolidation of the Library Technology Industry” (Vol. 56 No. 8).
This issue of Smart Libraries Newsletter continues the coverage of the most recent major business event, the acquisition of Innovative Interfaces by ProQuest after the resolution of a Federal Trade Commission review, which has been underway for the past nine months.