Monday, 24 February 2014

The Evolution of Subscription Industry 1970-2014: Subscription Agents and Consortia-New Roles and Opportunities

Dan Tonkery: a short history of subscription agents
Dan Tonkery, President and CEO of Content Strategies, an international information services consulting company working with STM publishers, kicked off the afternoon session at the ASA conference. In a previous life he has been a subscription agent and librarian and has an encyclopaedic memory of the history of subscription agents.

The agent years of milk and honey 1970-1985
The market was filled with multiple agents (such as Faxon, ESBSCO, Readmore, Blackwell, Majors, Swets, Harassowitz, Turner, Boley, McGregor, SMS and others). There was a low average selling price. Main frame computers were introduced to support processing. Agents dominated in the sense that you couldn't find a library around the world that wasn't using an agent.

Agents were essential to both libraries and publishers with 99% of libraries using agents. They become experts at processing individual orders and supporting each other. They built comprehensive title databases (c. 400k titles) and developed new reporting and analysis tools for librarians. They also developed interfaces with ILS vendors (so you could automatically load invoices and reports).

Years of mergers and rapid growth 1986-1996
This was the era when many of the smaller agents were acquired by larger agents. Faxon and EBSCO dominated the US market and Swets in Europe. Agents were building related services such as SC-10, ROSS, Microlinx, REMO, EBSCOnet. Gross margins continued to drop from 12.4% to 8.1% in 1999. Agents attempted to build new business systems, but Faxon collapsed on business system failure in 1994 and Dawson Plc bought Faxon in October of that year. In summary, subscription agents were growing and they were important to libraries and publishers. Bear in mind that hardly any of the publishers had a sales team at this time.

The golden age of library consortia 1996-2006
There were over 200 active consortia that were usually regionally (sometimes nationally) based. Publishers moved from print to electronic formats. A number of major consortia formed as resource-sharing agents serving their member libraries. Publishers turned to consortia as a new sales channel and direct deals were negotiated. Publishers began selling Big Deals or Custom Deals and began thinking of database deals instead of individual titles. You could argue that agents were caught flatfooted. Consortia examples from the US include:

  • NERL: 1996 28 core members and 80 affiliates. Bought $102 million in 2013, most of it handled direct.
  • GWLA: 1996 33 research libraries in Central and Westtern US, bought $37 million in 2012.
  • SCELC: 111 members and 120 affiliates. Bought $38 million in 2013.

This is close to $500 million business of subscription agents that now goes direct: a major problem for many companies.

Agents respond with new tools and services
In response, agents developed tools to help libraries manage publisher packages, expanded services and built knowledge and license databases to support A to Z services. However, consortia managed to capture market share from subscription agents: the market shrank from 98% in 1996 to less than 60% now.

Subscription Agent rebirth
Agents continue to evolve into new or expanded products and services. There is an opportunity for rebirth and growth through databases and distribution services amongst other areas. The most important factor to look for is having someone come from outside our industry and invent a new product service. Tonkery closed with a call to constantly look outside the box.

1 comment:

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