A changing role in a changing market

When Swets filed for bankruptcy in 2014, the 113-year old company clearly illustrated the difficulties faced by traditional intermediaries in a rapidly changing information ecosystem.

The web has revolutionised many-to-many transactions and all intermediaries – whether library, publisher or subscription agent – have needed to transform the nature of their services. Failure to transform successfully will inevitably lead to the failure of individual companies, but the failure of such a high-profile subscription agent raised fundamental questions about the future of the industry itself: How could this have happened? How can it be stopped from happening again? And, most importantly, is there a long-term future for subscription agents?

The demise of Swets was not without precedent, but the information environment has changed considerably since RoweCom filed for bankruptcy in 2003, in what many at the time dubbed ‘the Enron of the library world’.

Although there were similar comments made at the time – that it should not be allowed to happen again – since then the market has become a lot more challenging for subscription agents, rather than easier. Now, as the role of the subscription agent is challenged not only by the move from paper to digital, but also from closed to open access, questions are increasingly being asked about whether there is a need for such intermediaries at all.

Speaking to a range of industry insiders, over a year on from the demise of Swets, it is clear that there continue to be more questions about the future of subscription agents than answers. There are undoubtedly new opportunities for intermediaries, but whether they will be filled by those who have traditionally had the role of subscription agent remains to be seen.

The disruption of the market place

Subscription agents have traditionally had an important role between publishers and libraries, simplifying the subscription ordering process for journals from thousands of different publishers around the world. Ensuring access to thousands of different titles can be an onerous task, when each title must be ordered individually from different publishers, in different currencies and in different languages.

Alongside a need for a comprehensive database of journals and publishers, there is also a need for procedures for paying for the subscriptions, tracking subscriptions that are coming up for renewal, and inevitably chasing the issues that go missing to ensure unbroken runs.

This all changed, however, with the widespread adoption of the web and electronic publishing. The web has undoubtedly simplified the whole subscription process, from finding publisher and journal information to making queries and placing orders. Not only has electronic publishing reduced the problem of receiving missing issues, but it has also enabled publishers to bundle digital access to their entire list of academic titles, vastly simplifying a renewals process that is increasingly negotiated with the big publishers on a library’s behalf by consortia of libraries. Subscription agents have been left with the long tail, the smaller publishers and obscure titles from which it is inevitably harder for subscription agents to make a profit. 

As one industry insider, who preferred not to be named, put it: ‘Neither publishers nor libraries have nurtured subscription agents as a useful intermediary. The big publishers have said “Right, we’ll sell direct to the big boys and you can pick up the scraps and any good business you find we’ll take off you” and libraries have been unwilling to pay intermediaries for the service they provide. Libraries have been pushing intermediary margins down through the floor, and so you get the problem that libraries buy from the lowest bidder, protecting and preserving the weakest player in the short term, and undermining the industry as a whole in the long term.’

On the whole, when a subscription agent goes bankrupt, it is the libraries that get the sympathy, with the subscription agents portrayed as little more than parasites in the ecosystem, but not everyone sees it that way.

As the above industry insider went on to say: ‘Libraries didn’t lose too much because the publishers on the whole gave them their stuff anyway; this happened before, and libraries know they can blackmail the publishers if it all goes wrong. Libraries just didn’t pay attention to the commercial risk; librarians aren’t very commercial and aren’t very realistic. Everybody knew that Swets was in financial trouble, but libraries tend to say: ‘We can’t make those kinds of judgements; we’re not qualified to determine whether this company is viable for the long term or not. The only things we can measure are service-level agreements and price, and so we will measure that’. They’re poor at best value.’

Libraries have a responsibility to take reasonable steps to ensure the long-term viability of a subscription agent before they hand over large sums of money, a responsibility to both their users and publishers. In an age where the professional status of librarianship is increasingly challenged, it is not good enough for librarians to say they do not have those skills. Indeed, there do seem to have been some changes.

Increased scrutiny

Following the demise of Swets there has been increased scrutiny of subscription agents’ financial standing, which has been welcomed by some in the field.

According to Allen Powell, president of EBSCO Subscription Services Division: ‘The collapse of Swets has made customers more aware of the need to conduct thorough financial due diligence on the agencies with whom they work. We have noted an increase in requests for financial documentation, as well as more financial-stability related questions in the RFPs [requests for proposals]/tenders we receive. More customers are asking us to include documentation about how EBSCO handles prepayment monies. We think all of this is a good thing.

‘For years, EBSCO has been encouraging customers to conduct this sort of due diligence on their vendors. We believe customers need to know the financial standing of their serials vendor and they must know how that vendor conducts business. This includes EBSCO. We are proud of the fiscal procedures EBSCO has instituted in order to protect our customers. We believe customers feel a sense of security once they understand the disciplined approach we have taken on their behalf.’

Powell continued: ‘As for the impact of the Swets dissolution, we believe that both customers and publishers are reassessing their relationships with vendors, and appear to be moving to consolidate with those who, after appropriate due diligence, provide minimal risk and highest value.’

Inevitably more scrutiny of financial records will favour the larger, more established companies with efficiencies of size, and EBSCO undoubtedly now dominates the field of subscription agents. But increased scrutiny doesn’t address the underlying challenges facing subscription agents; it doesn’t address the problem of publishers bypassing subscription agents, and it seems as though the challenge from new publishing models will continue unabated. With these challenges, however, potentially come new opportunities for new intermediaries.

Changing opportunities

One of the biggest potential future challenges for subscription agents is that of open access; when everything is free, there is no need for people to handle subscriptions. Although such a utopia (or dystopia depending on your perspective) is still a long way off in many fields, as research funders are increasingly insisting on open access publication, the movement has undoubtedly gathered pace and cannot be ignored. A lack of subscription agents, however, should not be mistaken for a lack of intermediaries.

Mark Carden, organiser of the Researcher to Reader Conference said: ‘There is a notion that if you make scholarly communication free it all just happens by magic, but it doesn’t; it needs people to build systems and standards and have processes that glue it all together, because if you don’t have discovery and reputation and brand going on, then you don’t know what to read and what to trust. There’s a long future for that intermediation, and there’s room for subscription agents. There are plenty of these in niches where they are doing the business with obscure titles – or they are doing work in particular geographic regions and that sort of thing – who will continue to survive.’

This changing nature of intermediation services is reflected in the emergence of the Researcher to Reader conference as a successor to the Association of Subscription Agents annual conference, following the dissolution of the Association of Subscription Agents as one of the knock-on effects from Swets’ bankruptcy.

Carden continued: ‘We need to look at all forms of intermediation between the author of the paper and the reader of the paper, and that is what the conference ought to be about. There’s still a problem to be solved; there’s still the issue that there are many many publishers and there are many many libraries, and there is still that bow-tie of order management and claiming that is best handled by an intermediary with good systems. With open access again there are many publishers and many institutions, and someone should act as an intermediary to do that, but I’m not sure subscription agents are well placed to be the ones doing it.’

The difficulties in building a sustainable business model, where the underlying economics of the system as a whole are in a state of flux, are obvious. Open access comes in many varieties, publishers are developing a wide range of new products, and research funders are increasingly adding new stipulations. Whether general services are suitable in such a heterogeneous environment, and whether big subscription agents will continue to have a significant role in the long term, is less clear.

Powell, however, is undisputedly positive: ‘In the natural order of things, a service only goes away when there is no longer a need. We believe the need for intermediation, while changed from years past, is still very strong. A system without subscription agents would dramatically impact the library workflow. Now, libraries can take advantage of a streamlined acquisition and management process, which we believe increases efficiency and decreases their overall costs.’

A bright future?

If subscription agents, including the big ones, are to have a positive future then they need not only to add value, but be recognised for the value that they add to the information system as a whole.

The value for an individual library from a well run subscription agent is often less apparent than the cost, and like any good part of an organisation’s infrastructure, it only becomes apparent when things go wrong. My own experience of working at a poorly run subscription agent over a decade ago, leaves me under no illusions about how wrong it is possible for a subscription agent to get it – but also the huge potential from a well-run service. 

Good subscription agents need to demonstrate the value they are adding, and libraries need to be more willing to pay for the best value and not just the cheapest. It is also important to remember, however, that subscription agents add value to the system as a whole, rather than just to individual organisations. They have a role in rebalancing the journal market away from the dominance of the big publishers, potentially making it as easy to subscribe to a journal from an obscure publishing house as a publishing conglomerate. 

If we take a step back from subscription agents, and look at the role of intermediation more generally, then the picture is far more positive. The potential for intermediation is undoubtedly expanding, as there is a need for a far greater variety of tools and services to ease the transfer of traditional forms of publication, especially as new forms of open access are joined by open data, open code, and new forms of enhanced publication. The exact details of this intermediation are still being worked out in the creative-destruction of the marketplace.

One thing is clear however: the information ecosystem is much more complex than it ever used to be, and with it comes a need for more intermediaries – not less.

_{The Research to Reader conference will be held in London on 15 and 16 February. Visit http://r2rconf.com/registration/ for more information.}