Information Today
Volume 17, Issue 11 ē December 2000
ē IT Interview ē
Jay Jordan Settles In at OCLC
Company president and CEO discusses the industry and business strategies
by Tom Hogan

Jay Jordan became president and CEO of OCLC about 2 years ago, following the retirement of K. Wayne Smith, who had achieved living legend status during his 10-year tenureóa tough act to follow.

Jordan is himself a 30-year information industry veteran, however, and we wondered how he was settling into his new position and what direction he felt OCLC needed to take to remain competitive in these times filled with challenges and opportunities.

Information Today, Inc. president Tom Hogan recently had the opportunity to visit with Jordan in Dublin, Ohio, where they discussed a wide-ranging set of topics that concerns OCLC in particular and the information industry in general.

Q In 1996, K. Wayne Smith, then president of OCLC, made quite a stir when he announced at his presidentís luncheon that it was OCLCís intention to provide ďa real alternative to the DIALOG service.Ē He was referring, of course, to your FirstSearch service. Do you feel the same way, and, if so, do you think that that mission has been fulfilled?

A Iím not going to make any direct comparison to DIALOG or any other alternative service provider, but as far as whether or not we have fulfilled the mission that we have in mind for FirstSearch, the answer is ďno.Ē We have, in fact, done a lot of things right. Weíve provided value-added aggregations of databases through a common user interface, as well as intelligence linkages across databases. So in a way we have acted in a context of consortia negotiator and purchaser on behalf of libraries. We have added a good deal of content, some of which is OCLC-owned, and some of which is from content providers or other aggregators.

So, I think the notion is that thereís still value in the aggregation activity, and the market validates this notion in that FirstSearch has grown consistently in the 20-to-30-percent range compounded over the last 5 years, and there are now some 17,000 institutions subscribing to one element or another of the FirstSearch service around the globe. One would say the market has voted, and we must be doing something right.

Having said that, however, weíre certainly not satisfied with where we are today. FirstSearch needs more content, and weíre working on that. But there is often a tension with the content owners over pricing issues. So weíre looking to add additional cooperative-owned content. Our merger with Public Affairs Information Service [PAIS] in New York is an example of that; we now own that PAIS content. But I believe that the market will tell us whether we have the right amount of content and whether we have the balance correct between cooperative-owned and third-party licensed data.

Q That leads me to my next question. Itís obvious that the distribution channels for information products and services are changing. It used to be pretty simple. We had companies that created content, and we had companies that delivered that content to the user. Now, content companies are often found building their own Web-based delivery platforms on the one hand, and information-distribution companies, such as OCLC, are creating more and more content internally or through acquisitions on the other hand. Do you long for the good old days, or do you think that this change is good for our industry?

A I donít think whether or not I personally long for returning to the old model is all that relevant, nor is it for anybody else. Obviously, with the kind of change thatís going on currently, itís a market imperative that we evolve, and I donít think that anybody can afford to evolve at too slow a pace. The direct-to-user business model, which may have been manifested most radically in the recent Stephen King experiment, disintermediates all intermediaries, at least in that instance. Now, thatís an extreme example, but I definitely think that your premise is correct that many business models have changed radically. OCLC is an intermediary. OCLCís network partners in the U.S. are intermediaries. Our distribution agents and distributor networks outside the U.S are intermediaries. Libraries themselves are intermediaries. So I think all of us better pay attention to how we need to change. What is the right balance?

OCLC, in fact, will publish directly some content. I alluded to it earlieróWorldCat, ArticleFirst, NetFirst, and PAIS. In these instances, we are in the direct-publishing context that you mentioned. But, I would hasten to add, we still license a substantial amount of third-party data.

But Iíd like to add that it is my belief that there is a tremendous amount of value offered by distributors such as OCLC. Just think about the selling process and the contract negotiations with individual institutions or with consortia, the installation and training that we do, and the after-sales support. Those arenít necessarily core competencies of the intellectual property owners. You know, going back to my earlier example, Stephen King isnít going to provide customer service if there is something wrong and the text doesnít come down off his Web site properly. So, I think, there is still substantial potential for the distributors to remain viable, as long as there is sufficient value added along the way.

Q OCLCís stated mission is to serve the needs of libraries, but some of your products, such as FirstSearch and the new CORC [Cooperative Online Resource Catalog] service, would seem to be suitable to non-library markets as well. Do you have any plans to go beyond the library market and deliver products directly to end-users or enterprises?

A We already, in fact, deliver substantial content via FirstSearch to corporate or special libraries, but, yes, itís still done through an information center or library within those enterprises. Now, the question becomes whether or not we should deliver content directly to patrons. And this issue isnít something you or I invented. Itís a situation that libraries grapple with every day. If their patrons feel they can find everything they need on the Web, many of them arenít visiting the libraries any more. We already know that circulation is down in some categories. Therefore, we have to look carefully and, above all, at what libraries need, and we certainly are not interested in disintermediating any libraries.

So how do we reconcile the two seemingly opposite notions that a) libraries should be in the center of the information-distribution channel and b) patrons want to have direct access to that information? The meta-phor we like to employ is that of the library portal. In cooperation with libraries we try to understand first how to build effective, patron-oriented interfaces, as we have created with FirstSearch. Then, the administrative tools built into both FirstSearch and products like WebExpress allow the library to create a tailored portal that demonstrates that the information the patron is finding is in fact delivered via the library. So, to answer your question, rather than make an end run around libraries, weíd like to help them extend their services to their patrons.

And libraries understand full well that the patron doesnít always have to go physically to the library. The challenge is to createóand I donít like the word because itís overusedóďstickinessĒ for the library portal. So, weíre trying to assist the library in doing just thatódeliver authoritative, vetted, worthwhile content via the library to the patron.

Q Some of the content providers or database producers with whom you partner, including me, have been critical of OCLC for keeping the pricing of FirstSearch services so low. I believe the cost of a search on FirstSearch still averages around 50 to 60 cents. This means, in turn, that royalties to the content companies are lower than hoped for. Do you plan to gradually increase search prices over timeóat least to keep pace with inflation?

A I knew that question was coming, Tom.

Well, as you fully realize, part of our purpose as a nonprofit organization is to reduce the rate of rise of costs for libraries, and that certainly includes access to content. So itís within the public purpose of OCLC to try to keep prices as low as possible. But itís a constant struggle, as you implied, to provide sufficient royalty streams to third-party content providers on the one hand and to keep costs down for libraries on the other.

As an intermediary, we have costs of our own as you can well appreciateókeeping our infrastructure up; keeping enough communications bandwidth available; developing state-of-the-art interfaces; and moving to new platforms, functionality, and so on. So weíre trying to cover our costs in the middle, if you will, keep the user costs down, and still have a reasonable relationship with third-party providers. So itís a constant balancing act.

Weíre trying to improve our relationships with and understanding of the needs of content providers. We have very good reach. I alluded earlier to 17,000 institutions that are subscribing to FirstSearch. Obviously, some content owners or aggregators choose to go to the market on a direct basis, and thatís their choice. We have frequent discussions with the information providers, and we tell them exactly what weíre doing in the marketplace. Most of them are very familiar, as you are, with the consortia buying initiatives, which certainly translates at the end of the day into price pressure. So we have to be viable in the marketplace.

So, to answer your question, no, we donít set out every year to guarantee a royalty increase using a CPI [consumer price index] inflator or anything else, but we do have frequent discussions with the content providers to understand what their needs are and to try to get them to understand our position. Believe me, I understand the tension that exists, and I think the best way to resolve any issues is open communication on a frequent basis.

Q In a world that believes that everything you ever need to know is on the Internet for free, itís refreshing and heartening for the information industry to have libraries as customers. Information professionals understand, better than any other group perhaps, that there is great value in high-quality, indexed, and credible information. From your perspective in the library community, what do you see as the future for fee-based information services, and what is OCLC doing to influence perceptions in the marketplace?

A Well, this whole notion of ďI can get any information I want by using one of the major search enginesĒóthatís certainly a perception thatís out there. And a very sophisticated searcher can, in fact, access a great deal of data. But individual students and other end-users arenít going to have individual subscriptions to scientific journals, humanities content, or anything elseóthe kinds of things that we provide access to. So I believe the real issue here is one that I would call a marketing and communications issue. I think itís incumbent on all of us in the information communityówhether itís libraries, whether itís OCLC, whether itís one of our regional network partners, or whether itís content providers such as your companyóto get the patron to understand the value of authoritative information.

We certainly have spent a good deal of time trying to develop communications programs, not just for OCLCís products but also communications programs that help libraries to maintain their vital position in the value chain. And itís interesting. We think that WebExpress, which is a product we just launched on July 1, is a good example of that. Itís a Web-portal-creation tool that doesnít require a library to have a staff of programmers on board. The administrative module is quite simple, and they can set it up and it becomes ďmy library.Ē Weíve got the authentication tools in place today that can route the patron to the library and give the library a chance to display how much content or knowledge is available through that library portal.

Q Let me ask you about your new CORC service. CORC, as I understand it, is a cooperative effort among your member libraries to catalog and index Web sites that contain useful information. There is something of a paradox here, it seems to me, in that you are a purveyor of fee-based information services, yet you are in essence helping people find information that is free.

A Well, thatís a good point, but if we look at it from the standpoint of how CORC evolved, you might get a different perspective. CORC started out as a tool set for cataloging Web resources, and there are a number of good efforts going on around the globe, in fact, in that same context. We felt that we had a tool set that was ready to go, that used, initially, MARC format but also allowed Dublin Core cataloging. It also had some automation to it so that it could reasonably efficiently assign Dewey headings on an automated basis. So we felt that there was value in it that libraries could use to their benefit.

From there it evolved into a cooperative project in which authoritative catalogers would select and catalog specific Web resources for WorldCat, our bibliographic database. So, the non-paradoxical aspect to CORC is that it fits the model of the cooperative, which is OCLCís traditional model.

What we are doing with CORC is involving libraries in a selection process and producing, on behalf of library patrons, a mechanism to screen out some of the garbage that we all know is out there on the Web. This is just simply an additional category of information objects from our standpoint. But weíve done this on a global scale, and we have 489 libraries from 24 countries from around the world participating with us in a) developing the tool set on the fly and b) building the catalog of Web resources.

Q But to the extent that you are successful in cataloging all the worthwhile content on the Web, arenít you giving users even more reason to believe that everything is available and free on the Internet?

A Letís go back to one of the points we discussed earlier, and thatís the value-added proposition. The fee-based content has arguably greater value if people are still paying for it. Therefore, it must be better than whatís out there for free. And as long as thatís the case, I donít think having easy access to good Web content will eliminate the use of the fee-based content. In fact, one of our campaigns is weaving the library into the Web and weaving the Web into the library. It almost sounds arrogant, but itís an interesting notion.

The point is that if a patron is out on the Web using a search engine and gets a bibliographic record, and if the system says that the original document is available at your local library or available online through the libraryís network, then weíve succeeded in weaving the Web into the library and the library into the Web. The other thing that we are trying to do is provide links back to the content owner. In other words, your library doesnít have access to that material, but you may order that book or that article or whatever directly from them. So weíre trying to create a richer, fuller experience for the researcher.

Q So youíre saying that all this use that CORC and other OCLC services will generate will lead to additional business for your fee-based services?

A Most OCLC services, including CORC, are fee-based, and the fees are there to cover our costs, invest in R&D, new technology, and so forth. Weíve found that increased availability of cataloging data leads to more interlibrary loan requests. Increased usage of bibliographic and abstracting information on FirstSearch leads to more requests for full text, and on it goes. Our partners, the content providers, typically see increased demand for their information as a result of all this synergy generated by OCLC services.

Q A lot of the emphasis at OCLC lately seems to be on adding full-text sources to FirstSearch rather than bibliographic or abstracting-and-indexing (A&I) databases. What do you see as the future of A&I services?

A Iíve had a substantial amount of experience in my former life and my current life with A&I. Again, I think that as long as thereís unique value offered, I think A&I services are certainly viable. And, yes, theyíre going to be threatened by better and better search engines and better and better linking tools and better and better spiders and Web agents. But the imperative again here is how does the A&I producer create additional value. And thatís what we talked about in the last question.

Part of the additional value that OCLC can offer is creating more intelligent links so that rather than having to click 50 times to research a topic or order an article, maybe we can get it down to four clicks. In fact, the option may be to go directly to the content owner. But again we are going to try to route that back through the library so that the patrons understand there is a huge amount of value offered by that library portal.

Q Some people have gone so far as to say that if A&I services didnít exist, the Internet would cause their invention. Of course, I hear this mostly from people in the A&I business, but would you agree with this notion?

A I would. The greater the proliferation of information, the greater the need is for tools to find the right information. I think, increasingly, A&I will play a critical role in looking across a very broad range of information and selecting intelligently a vertical set which is really your field of study or your field of interest. So I think good A&I isnít going away.

Q Iíve been hearing rumblings about a new initiative at OCLC that involves extending WorldCat. Can you tell me a little bit about it?

A Itís a very interesting concept. Itís not fully developed, but Iíll explore the notion with you briefly. WorldCat is the largest and most searched database in libraries today. We didnít build it. Weíre the vessel and the steward. Our member libraries built it, and itís a huge asset. But, weíre saying, ďWait a second.Ē OCLC today serves 36,000 libraries in 76 countries, and, yes, you can say thatís a very impressive number, and I quite agree. But, I am trying to look forward and ask why isnít that a 136,000, why not 1,036,000? And I donít want to limit our vision to just libraries. We should be looking at linking to every knowledge object that resides in every knowledge repository. How about museums, archives, historical societies, and local and private collections? So the notion of extending WorldCat is to link to more knowledge objects around the globe.

The other notionógoing back to my theme of weaving libraries into the Web and weaving the Web into librariesóweíre looking very seriously at [is] the idea of taking portions of WorldCat, part of that bibliographic record, and putting it out on the Web so that a user using one of the major commercial search engines could, in fact, discover at least a portion of the bibliographic record we and our member libraries have created. Then that would route them back to their local library for the actual documentóto borrow the book, to request it on interlibrary loan, or to go into the library and sit down and read the article. So the notion is to proliferate that incredibly valuable bibliographic resource toward the mission of providing greater discovery capability for researchers.

Q Some people have said that this would enable you to go into partnership with Amazon.com and provide their customers with access to all the books on the shelves of your member libraries. But Iíd have to ask the question ďWhy would Amazon.com be interested in doing anything that would encourage people to borrow books rather than buy them?Ē

A Maybe they wouldnít be. But somebody else might beómaybe a provider of out-of-print books, maybe a provider of current literature. Let me go back to the notion that what we should be about is providing choice to the knowledge seeker. Weíd love to have an intelligent conversation with Amazon, or Barnes & Noble, or Borders about this concept. But are they interested in cooperating? I donít know. Why would they be? How about access to 36,000 institutions around the world? And thatís just the institution count. Do you want to tell me how many patrons are actually using those institutions to do research? So the point is there is tremendous reach right there. So again itís about intelligent partnering by OCLC and about providing greater choice or a richer experience ultimately to the patron.

Q From a strategic point of view, what do you see as your major challenge at OCLC?

A Since Iíve arrived on the scene, itís become obvious to me that a lot of what we do here grew up as separate initiatives, which was the historical imperative at the time. Obviously, the central cataloging utility was first, then came interlibrary loan services, and then reference services were born. But, it hasnít been an integrated offering.

Q Itís been kind of a silo situation.

A Exactly. So the point is that the obvious integrator, the common denominator, if you will, is WorldCat. You can call it the metadata or the indexóI donít care what you call it. But itís the information that sits on top of the knowledge object and makes it discoverable by anyone, anywhere. So I am saying we need to provide an intelligently integrated set of services as well as more options and choices both for the libraries and, ultimately, for their patrons. I can promise you that you are going to see many more choices from OCLC in the future. OCLC is still a very small organization in comparison to the potential library community out there. As I said before, 36,000 libraries is an impressive number, but the potential to serve hundreds of thousands of libraries is real.

So what are we going to do about it? Why havenít more than 36,000 libraries signed up? Itís because they havenít seen the value equation so far. So the challenge, and itís a big one, is to integrate our own offerings more effectively than we have in the past. Once weíve done that weíll have an even more compelling service to offer those libraries and other institutions that we donít serve today. In a nutshell, thatís our vision and our strategy.

[Editorís Note: For more information about OCLCís WorldCat, see the NewsBreak on page 1.]
 

Tom Hogan is president of Information Today, Inc. and publisher of Information Today. His e-mail address is hoganiti@aol.com.


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