Association of Research Libraries (ARL®)

Jennifer Younger (Notre Dame)
Jim Neal (Columbia)

Discussion Summary

Jennifer Younger convened the discussion by noting that the idea for topic was sparked by Bill Bowen's essay (At a Slight Angle to the Universe, ARL Bimonthly Report 216, June 2001). He wrote that when the intellectual capital of the university becomes more accessible, the institution will find itself drawn increasingly into the realm of commerce. Understanding full well the controversies that will surround any thoughts of incorporating "for-profit motives" into universities, he nevertheless suggests the issue be discussed. Ms. Younger therefore opened the discussion by asking what kind of expectations research libraries now face with regard to generating new funding streams?

The University of Washington diversified their financial capacity after a drop in state aid from 25% to 16%. The library has a mandate to create new revenue, and has guidelines for generating that revenue.

Vanderbilt has established a University New Media center to transform faculty intellectual property into business opportunities.

UC - Santa Barbara has noted a shift from faculty output being viewed as outside revenue to core operating funds.

There was a question of how to capture intellectual content for profit. The speaker was skeptical about the extent of profit from faculty output. He cited the model of Chemical Abstracts taking public domain material, adding value, and receiving the rewards of that effort. Is that a model for research libraries to adopt?

Jim Neal noted that an entrepreneurial philosophy can be compatible with the mission of universities. He cited several factors:

• Cultural: tolerance of risk.
  
• Organizational: establishment of new businesses as independent from the library but linked to the library.
  
• Political: A way to show faculty that library support is not eroding.
  
• Skills: Library staff don't have business capacities.

Bernard Reilley (Center for Research Libraries) noted an interesting parallel to museum activities over the past two decades. The most successful initiatives were those that invested millions of dollars and were patient for slow growth. He cited Williamsburg's current annual net return of approximately 2 million dollars. In contrast, Winterthur receives very little return from sales of reproductions. There is a potential additional expense: a decline in reputational capital, which might threaten philanthropic monies.

It is possible that the university will not be viewed at non-profit within the next ten years. Is there a dichotomy in universities promoting copyright as fair use but then wanting strong copyright protection for the profit making activities?

CISTI's allocation was cut by 1/3 in 1995. They are wondering what kind of an organization they are: one that generates revenues or one that supports researchers. As the Canadian National Site License unfolded, some academic librarians viewed CISTI as a business and thus didn't view CISTI as a partner in the effort. Although CISTI has 50% cost recovery, their risk is high and it is increasingly hard to get public-good money. At present a significant amount of their revenue comes from document delivery, but there may be a sunset to that income.

Ms. Younger asked if anyone was digitizing and licensing the digitized content. Were libraries digitizing materials in special collections?

Rice has found that it is increasingly hard to cover salaries and fringe benefits from fee-based services. If such a service runs a deficit, would the deficit be taken from the general library budget?

Jim Neal noted that digitizing scholarly publications have been most successful and cited the ability for Project Muse at Johns Hopkins to make a nice return. He also noted that the aggregator role is another area of significant success at Johns Hopkins.

Illinois does not have the same mandate as the University of Washington. NSF's Digital Library grant activities have turned to commercial initiatives. Libraries should invest more in research and development as such R&D is useful to the organization.

Indiana is building on the Harvard storage facility model for a preservation facility. Susanne Thorin (Indiana) said she is exploring the economic model with other libraries on campus that want to use a preservation facility.

Paul Gherman (Vanderbilt) asked about e-commerce to students. He sees a decrease in coursepacks as a result of electronic reserves, but noted that the library is now paying royalties that had formerly been paid by the bookstore. He encouraged putting the library between the publisher and the student.

Richard Meyer (Georgia Tech) questioned whether digitizing journals might move libraries away from a public welfare role. Several people questioned whether libraries should be charging students. One noted that the library might become a competitor with the bookstore. Another speculated that e-commerce will grow best with new services rather than the tradition services for which libraries have not charged.

David Ferriero (Duke) asked if anyone was looking at alumni as moneymakers. Jim Neal suggested that alumni would pay for good services, such as reference, would feel good about the library, and thus become library donors. Again, someone wondered if libraries were for the public good or for-profit. Has anyone developed a business plan? Where's the profit? Where's the market?

Jennifer Younger queried whether anyone was hiring librarians from the corporate sector. She cited the hiring of a librarian from an accounting firm, someone who brings new skills to her library.

CISTI responded that after establishing a Marketing Department in 1993, they hired individuals with marketing expertise as well as hiring librarians from within and developing those marketing skills.

Bernie Reilly (CRL) cited two trends. The first is the trend toward digital in which it is increasingly becoming a barter economy. The second is closer interaction between marketing and development units.

Jeanine Schmidt, University of Queensland, noted that many Australian libraries are encouraged to make money. For some libraries 15% of current costs are covered by income from copying services, coffee shops, etc. The University of Queensland Cyber School even sells databases to schools. She had the University's Marketing Department give a series of lectures for the entire library staff. She wondered if libraries have an opportunity for e-commerce for home-use printing, etc. since if the same document is printing in the library, the library would receive the revenue.

After Ms. Younger thanked everyone for attending and contributing to a lively discussion, Jim Neal provided the last word. He asked everyone to leave a dollar when they left the room!

Overview

William G. Bowen recently suggested that when the intellectual capital of the university becomes more accessible, the institution will find itself drawn increasingly into the realm of commerce (Bowen, At a Slight Angle to the Universe, ARL 216, June 2001, p. 2). Understanding full well the controversies that will surround any thoughts of incorporating "for-profit motives" into universities, he nevertheless suggests the issue be discussed.

There are revenue-generating opportunities for research libraries in electronic publishing, technology transfer, and service programs; more than a few research libraries are already engaged in these activities. Such activities are funded in a variety of ways including by the library, the university, grants, other project funding, a vendor or some combination of sources. Recently, CLIR sponsored a meeting "to identify some models for sustainability that support the core missions and do not conflict with the internal cultures of nonprofit entities." In a report of the meeting, recommendations and next steps focus in four areas: business models, elements of sustainability, inter-institutional issues, and funding. While the report speaks to digitizing collections, the questions are not limited to electronic publishing or digitizing. (Building and Sustaining Digital Collections: Models for Libraries and Museums, August 2001, p. 2. http://www.clir.org/pubs/reports/pub100/contents.html)

Some questions that arise for discussion are:

1. How do we identify what revenue-generating activities are best done by mission-driven organizations, like libraries, and those that can or should be left to the commercial world?

2. What issues need to be addressed by the campus as it considers entering the commercial marketplace? What might the library do to initiate such discussions?

3. How do initiatives such as SPARC or Create Change fit into the picture?

4. What kinds of commercial offers might be useful? Or short-sighted?

5. How are public/private partnerships distinguishable from commercial offers to microfilm or digitize special pieces of unique library collections for inclusion in books the publisher will sell?

6. How do we deal with competition (or complementarity), like eBook, Questia?

7. For-profit service programs are not new for research libraries. Are they more important to the library now than in the past?

8. Should research libraries be expected to generate revenue?

9. What research library assets can be leveraged to produce new revenue sources?

10. Should revenue producing programs be integrated with library operations or run as auxiliary enterprises?

11. How does a library generate a pool of venture capital to launch revenue producing activities?

12. How should business plans and commercial competition be integrated into library strategic planning?