Kansas State Librarian Goes Eyeball to Eyeball with OverDrive in Contract Talks
By Michael Kelley Apr 6, 2011The state librarian of Kansas is playing country hardball with ebook vendor OverDrive, rejecting contract renewal proposals that, in one case, would have increased administrative fees nearly 700 percent by 2014.
The stalled negotiations have also raised concerns among Kansas librarians because they have spent hundreds of thousands of dollars licensing content from OverDrive since the contract went into effect in 2006, and they fear they will lose access to all that content if an agreement is not reached. The current contract (though not the newer proposals) appears to oblige OverDrive to transfer content to another service provider if the contract is terminated, but it is unclear what that would entail.
OverDrive spokesperson Dan Stasiewski told LJ that the increase in fees under the first proposal was necessitated by the ten-fold increase in circulation that Kansas's digital collection has had since 2006, even as fees have remained flat.
"This utilizes additional hosting, bandwidth, network and support services," he said, which OverDrive has been absorbing the cost of. "In the end that seven times increase [detailed below] is coming down to around $200 a library in 2014," he said.
"Unsustainable pricing"
The Kansas State Library's contract with OverDrive expires this December. In September 2010, the library's director, Jo Budler, received an initial renewal proposal from OverDrive that would have raised the annual administrative fee from its current $10,800 to $25,000 in 2012, $50,000 in 2013, and $75,000 in 2014 and 2015, a 694 percent increase in just three years.
"My own budget has been cut 26 percent and to expect that kind of increase is unreasonable. This is unsustainable pricing," Budler told LJ, saying she refused to accept the proposal, which she called "astronomical."
"This is just for the platform, no content. It means we won't have any content money," she said. The state paid $75,911 in 2010 for content.
"When Steve Potash [the company's CEO] and I talked he mentioned that the increases were for things that I consider the cost of doing business, for example, offering apps for mobile devices," Budler said. "I don't think this warrants 100 percent increases each year over a four-year period."
A subsequent proposal would have reduced the state library's administrative fee and, instead, levied (through the state library) fees on member libraries based on the population served. The fees would have ranged from $600 for the smallest libraries (service area up to 1000) to $12,000 for the largest (service area over 100,000).
However, Budler and her staff extrapolated the potential total cost for the state's 330 public libraries, and they found the projected $408,000 sum equally unacceptable. One-third of that money would have gone to OverDrive for administrative fees, or, in other words, even more than the $75,000 of the initial proposal. The balance would have been for content.
"My question to Steve was, for what? Suddenly you need $135,000? He said not all libraries would participate, and, for me, that's part of the problem," Budler said. She rejected this proposal as well.
Last week, OverDrive resubmitted the initial proposal, Budler said.
"When we saw that we said that's just ridiculous.... You send me the same unreasonable and unsustainable model.... [I]f this is what we are going to talk about there's no point. It's unacceptable."
Budler said she is preparing a counteroffer for OverDrive.
A ten-fold increase in usage with no fee increase
Beyond the ten-fold increase in usage and flat pricing that OverDrive's Stasiewski pointed out, he also said the centralized nature of Kansas's operation presented challenges, such as the need to integrate with 25 different ILS systems. The company put the second, decentralized offer, which has been successful elsewhere, on the table as a way to empower local libraries, he said.
"Even the smallest library could actively participate. This would have also provided every Kansas library with continued access to the collection, as well as direct reporting, training, outreach assistance, and support services," he said. "When [the individual libraries] are involved we see increases in circulation."
(Stasiewski noted that the company's overall national checkout number for 2011 was rapidly approaching the total checkouts for 2010. "We are at one checkout per second, which is something we haven't seen before.")
The state library's contract with OverDrive allows the 330 public libraries in the state to gain access to the state-run consortial platform (academic and school libraries can also participate). From 2006 through June 2010 (end of the fiscal year), the consortium's members paid OverDrive $568,000 in content licensing fees, with $182,000 coming from the state and the balance from the consortium members. If a member licenses access to a title it becomes available to all members.
Concern about future access
If the state cannot negotiate a new contract with OverDrive, however, the platform and its accumulated content may disappear.
"The librarians in Kansas are very concerned that all our content will be gone if we do not negotiate a sustainable contract with OverDrive," Budler said.
Budler said the state is definitely going to look at other vendors, but, in the meantime, some public libraries are not sure whether they should proceed with licensing more content since the possibility exists that it would no longer be accessible at year's end.
"Our organization advised libraries not to pay for any additional content until this issue is resolved," Jim Minges, executive director of the Northeast Kansas Library System (NKLS), told LJ; NKLS has about 120 member libraries (48 public).
"I don't think their original position was reasonable or sustainable, and it wasn't just the cost but initially their position was that each library would have to pay a separate fee rather than have the state library pay a single administrative fee," he said (referring actually to the second proposal). "At one time they had talked about a $1000 minimum fee for every library, but it was going to be pretty impossible from an administrative view. And some libraries have very limited budgets and wouldn't have been able to pay, so we would have been moving to a consortium with an uneven picture of access...."
OverDrive said the higher fee for the larger libraries in the state would help defray the costs of "product development," according to Donna Lauffer, the county librarian for the 13-branch Johnson County Library in Overland Park.
"The OverDrive product is difficult to use and so we spend a lot of time explaining how to use it," she told LJ. "And there isn't really a competitor to OverDrive.... So, now we're being asked by OverDrive to contribute money to help develop their products as well as to buy the content. We expect them to develop their product. They should have been developing their product all along," she said.
Lauffer also said her library was "in limbo" and "in a precarious position" until the contract situation is resolved, but the possibility that the collection could disappear has raised questions of access that trouble her.
"We can't guarantee that we will always deliver, and that's not a comfortable position to be put into," she said. "It doesn't feel like we're at the table out here in Kansas. We don't feel like we are a partner."
The question of access may pivot around clause 11.4 of the current contract (see full contract below), which has been excised from the renewal proposals, Budler said. The clause, Budler believes, obliges OverDrive to cooperate in the transfer of content to another service provider in the event the contract is terminated.
"We noted that they have tried to pull this clause, and we will be looking more deeply into that," she said.
Stasiewski said a contract of some sort is necessary to continue access, but that OverDrive would do whatever it could to ensure continued access, even if it meant striking a separate deal with every library in the state.
"We welcome the chance to provide every Kansas library access to their existing shared collection and services to meet their community's needs. We are open to discussing this with every library in Kansas. However this is structured, Kansas libraries will be able to benefit from their content investments and all of the significant new services and tech upgrades we provide our library partners."
