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Vol. 20 No. 4 — April 2003

As an information business owner, I may seem a strange choice to report on this meeting. However, myassociation with NFAIS goes back more than 20 years. For 10 years, my connection with the organization was a direct result of being an ISI employee. Bonnie Lawlor, hired last November as NFAIS's executive director,encouraged my participation in the group. The annual meeting especially is an excellent source for information on a wide variety of databases. The conference also allows me to stay current on the pricing, marketing, and legal challenges faced by this organization.

Since I've been on both sides of the industry—working for a database producer and then operating as a searcher—my scrutiny of NFAIS has changed over the years. While I understand and sympathize with the issues confronted by NFAIS members, at the same time I can't help but feel adversarial about the hurdles I contend with when accessing members' databases. It is with this dichotomy of viewpoints that I report on the conference.

Standards

After a warm welcome from Access Innovations' (and incoming NFAIS president) Marjorie Hlava, speakers from the American Institute of Physics, Library of Congress, and American Theological Library Association stressed the significance of standards to the publishing industry. While there may be too many standards, without such an infrastructure, online hosting would not work.

De facto standards important to publishers are the Digital Object Identifier (DOI) and CrossRef. Forthcoming standards include the replacement of HTML with XML, Standards for Scientific and Technical Information Exchange (STIX) fonts (to be completed in the first quarter of 2004), and standards for the interchange of headers and full text.

Two key library standards that need development are bibliographic data sharing and expanded access across dissimilar systems. Although MARC and the Z39.50 Information Retrieval Protocol are well-established, there are pressures for change. Existing standards must be brought forward to embrace SGML's maturation to XML, the proliferation of digital resources, the Web's potential for linking, and expanded retrieval expectations.

Technology

Key technology trends and statistics were reviewed by representatives from CAS, Thomson, and Really Strategies. They included the following:

• Computer processing power doubles every 12 to 18 months.

• Telecommunications bandwidth has doubled every 6 to 9 months.

• High bandwidth wireless is a reality.

• Projected data growth in the next 2 years is estimated to be 57 billion gigabytes.

• Although libraries are facing decreased funding, they are accelerating spending on electronic services.

• A 2002 Pew study states that 71 percent of school students use the Internet as their major source for information versus 24 percent who use the library; 73 percent of college students use the Internet versus the library.

• E-learning is the next big thing. By 2005, IDC forecasts that $9.75 million will be generated in corporate e-learning revenue.

• By 2004, 1.2 million K-12 students will be enrolled in virtual classrooms, and 80 percent of U.S. and European universities will offer online courses (according to a 2002 Brandon Hall study).

• Secondary services must change their approach, focusing on "content as king." Products will incorporate integrated, subject-specific targeted solutions; one-stop shopping with multiple media types and formats; proprietary and licensed content; and an emphasis on partnerships and linking. Since libraries are"bad marketers," companies must also help them "become better marketers to drive awareness and usage of the library."

Derk Haank's Keynote Address

Without a doubt, the most dynamic speaker (and most controversial, dependingon your point of view) was Derk Haank, chairman and CEO of Elsevier. In his keynote address, Haank expressed his opinion that in the paper world, the journal model is just fine. When journals cost $10,000, it's because few payers (mainly a few hundred large university libraries) are picking up the tab, with others relyingon interlibrary loan, document delivery, or photocopying. (Incidentally, Haank wants to get rid of document delivery altogether, but believes interlibrary loan will be around for a while.) Haank "doesn't care who pays,but someone must."

Elsevier's strategy is migration to the virtual world of electronic publishing as soon as possible. Journal brands will be kept, new content and features introduced, historical problems corrected, archiving addressed, and a new business model created.

A past problem has been journal price increases. Elsevier raised prices by 14 percent in 1999, but pricing has decreased in subsequent years to 8 percent in 2000, and 7 percent in 2001 and 2002. The 11 major publishers have kept price increases under 10 percent for the past few years.

The future problem is how to charge for electronic services. Elsevier is willing to increase costs by only 5 percent, while at the same time adding more searching capabilities and content. Such increases are "a bargain," since no storage is required and savings can be made on interlibrary loan.

According to Haank, "enemies" are not publishers and secondary services. The enemies are Google and the "lazy student" who primarily uses Google, thereby relying on "inferior" services. Elsevier's free Scirus Web Search is a Google-like engine for scientists. It searches the Web, internal data (searching behind firewalls for university information), and ScienceDirect, which leads to more usage of Elsevier journal products. Elsevier's main job is to make sure primary material is used. The company would even give away secondary databases as navigation tools as long as journals are purchased.

Haank contends that the "world would be better" if e-only services were implemented and paper was eliminated. The business model to be applied first for new markets and/or new products is to migrate current customers to more content and additional functionality. Long-term agreements/partnerships (including 10-year contracts) are possible with customers. The model is changing from payment for ownership and a single price to payment for access and price based on value for customers.

Global Challenges

Understandably, database protection is a constant theme of the annual NFAIS conferences. Two attorneys and one aggregator reviewed the problems, recent litigation, and forthcoming legislation. Each speaker pointed out the flaws in current business models and urged the development of new prototypes.

The importance of licensing can't be emphasized enough.Although laws to expand patent, copying, and trademark rights have been enacted, licenses protect databases and digital materials. They define the product by limiting liability and controlling simultaneous access, interlibrary loan, and databases not covered by copyright (such as telephone directories). Joel Wolfson of Blank Rome, LLP, said, "The license is the product."

While it's not clear whether digital downloads are services or goods, so far there's been a U.S. moratorium on most online sales taxes. After Nov. 1, 2003, the long-term fate of taxation remains uncertain. At that time, the moratorium could be lifted and not extended for a third time. Compounding the problem, in July, a European Union value-added tax will be imposed on electronic products.

Steve Emmert of Reed Elsevier provided startling statistics on spam. In the past year, it has grown 400 percent, with 100 corporations accounting for more than 80 percent of it. Consequently, three anti-spam bills are before the current Congress. Information providers must be careful about the deceptive nature of spam compared to "legitimate" advertising.

NFAIS Customers Speak

A customer session is another long-standing conference tradition. Three individuals from Swarthmore College, Accenture, and GlaxoSmithKline were invited to give their corporate and academic perspectives regarding secondary services.

On the academic front, Anne Garrison explained that Swarthmore librarians teach students natural language searching, but librarians don't want all databasesto be "Google-ized." Students expect full text and will change topics if they can't get it. (Garrison referred to Steven Bell's article, "Is More Always Better?" publishedin the January 2003 issue ofAmerican Libraries.) Academic libraries also require full text, mainly in disciplines that haven't received much attention, historical materials, and primary sources like newspapers and older runs of journals.

Accenture's Janice Keeler was most direct about her company's information needs. She dared to disagree with Elsevier's Haank about a few issues, mainly in regard to pricing. Her view is that usersdo want instant gratification, and they don't want to buy the whole package. Modular and "rational" pricing models are preferred. Despite Haank's wish to eliminate document delivery, Keeler feels thereis a need for reprint/
archiving pricing rates for individual items.

In the corporate environment, database services must have an accounting mechanism to track costs, user by user.Aggregators should also keep in mind remote or mobile users and provide global support in each country's language.

45 Years and Counting

In closing sessions, Georg Friedrich Schultheiss of FIZ Karlsruhe, Karen Hunter of Elsevier Science, and Ron Dunn of Thomson Learning reflected on the past and future of NFAIS and the industry.

Schultheiss agrees with Haank that someone has to pay for the information, but urged attendees to "observe the diversity of mankind." This means the diversity of products and services and the establishment of stable processes in each of the world's regions. Schultheiss stressed that there's no one global product or user, and, therefore, it's not possible to harmonize everyone. He advised the secondary services to listen to their different types of customers and to be as flexible as possible.

Hunter reminded the audience that the rise of host services occurred between 1983 and 1988. At that time, aggregators were "seduced" by the view that electronic was going to be supplemental to print. Hunter acknowledged that electronic full text is now more important than print, but echoing Haank's sentiments, she's not clear what the value of full text is.

Another change is the emergence of the "disaggregator" model. Although secondary services are still with host sites (like Dialog), they now have their own sites.

As the last speaker, Dunn lamented how NFAIS members are referred to: as the old economy, dinosaurs, traditional, stable, and a mature business. Dunn agreed that members are operating mature business models, but claimed that successful model changes have taken place.

Dunn believes print is here to stay, since the technology base is not there to supplant it (for example, in LatinAmerica). Print is itself an excellent technology. More than 70 percent of students want books in print, so books will be around for a long time.

For the future, he recommended to NFAIS members that they read Jim Collins'book, Good to Great, which tells how to run a company and succeed.