April 27, 2010
Open Access in a Closed Universe: Thomson Reuter, Reed Elsevier, Wolters Kluwer and the Monetization Opportunities of Distribution Channels in the Legal Information Marketplace
While a bit dated in the reported financial data for legal publishers, Olufunmilayo Arewa's Open Access in a Closed Universe: Lexis, Westlaw, Law Schools, and the Legal Information Market, 10 Lewis & Clark Law Review 797 (2006) [SSRN] presents a still timely analysis of open access issues in the context of the structure of legal publishing industry as a whole, particularly, with respect to the increased pricing of commercial products since the consolidation in the legal information industry. Arewa writes:
[T]he online legal information industry can be characterized as a duopoly in which Lexis and Westlaw are the most important players. The organization of the legal information industry more generally has certain oligopolistic characteristics, including industry concentration and interdependence among several firms in which members have at times adopted intensely competitive behavior. Consideration of the print market does not alter the significant concentration that exists among legal publishers. The legal publishing industry is characterized by three major players: the Thomson Corporation, which owns Westlaw, Reed Elsevier, which owns Lexis, and Wolters Kluwer.
Industry concentration poses significant questions, according to Arewa, particularly in the current (that is to say mid-2000's) environment of increasing electronic dissemination of legal information. Consumers of legal information, including commercial users, law school users, and the general public are considered in this article. This commercially-based digital era can be characterized as a "closed universe" when compared to the once open universe of print-based law library collections where anyone who wanted to access legal information could pull needed primary and secondary sources off the shelves after using readily accessible print-based research tools.
The dominance of commercial publishers in the legal information industry has significant implications for questions of access. This is particularly true with respect to consumers who are not able to pay the prices charged by commercial publishers for their services. Concerns about pricing and access have become heightened in the digital era, at least in part as a result of the lack of an effective library through which information in digital databases might be accessed by the public in the manner of the public library during the print era. Consequently, access to legal information is a critical question in the current era in which digital information is becoming increasingly prevalent.
At the time Arewa was researching and writing her highly recommended article, the digital-only trend was clearly seen. The current economic climate has escalated its advance in this Shed West Era, perhaps more rapidly than some anticipated even five years ago. Today's hybrid era of print and digital legal materials in law libraries, outlined by Harvard's John Palfrey in Cornerstones of Law Libraries for an Era of Digital-Plus (LLJ, forthcoming) [SSRN] can be viewed in significant respects as a digital-closed - print-open universe today.
"Our information environment, now and in the foreseeable future, is best described as a world of 'digital-plus,'" writes Palfrey. The emphasis on acquiring monographic works in print remains but the foreseeable future also includes the distinct possibility of moving to an eBook licensing model driven by library economics and the need to serve a law library's primary, that is to say, institutional users first. Arewa's article was written before the marketing of DRM-eBooks had advanced to the stage it is now, so we might add that this latest development could substantially close the once widely open universe even more.
Expanding the Closed Universe by eBook Distribution Channels. Given the dominance of commercial legal publishers and the transition from the ownership to licensing model with its restrictive access requirements by law libraries, open access advocacy must also tackle the DRM-eBook issue because many users simply may not be able to afford to buy eReaders and pay the prices charged by commercial publishers for legal eBooks. As revenue for print sales declines and law students and legal practitioners start asking why they cannot read more law titles on their Kindles, iPads, etc., no doubt TR Legal, LexisNexis and Wolters Kluwer will maximize the monetization opportunities these device-based distribution channels offer.
In The iPad isn't a computer, it's a distribution channel, O'Reilly Radar's Jim Stogdill writes
the "content creating" laptop may go the way of the desktop PC, reduced to serving niche developers and content creators, while mobile and task-specific devices (with all of their constraints and beholden to a few large companies with contingent power over anything deployed to them) become the primary way people interact online.
"Anything deployed" includes eBooks and applies equally to ones sold by either Apple or Amazon. Essentially the eBook is on the web but without a URL. It is an app coming from a locked source like an online database that requires a login account.
Apple can use the device as the point of sale for content worth more than the device itself. The leverage is linked - the first leads to market presence, and then the market presence makes for stronger monetization opportunities in the device-hosted channel ... one that is intentionally constrained to be a delivery channel for content and applications from or via one company, Apple.
Again, Stogdill comments also apply to Amazon's Kindled editions. No doubt TR Legal, LexisNexis and Wolters Kluwer will find these locked down eBook distribution channels attractive once the negotiated pay walls have reach sufficient height. Casebooks, hornbooks, supplemented treatises, updated practitioner guides, topical codes, court rules, and even repackaged sections of multi-volume print continuations can be ported into the eBook distribution channel once publisher, not eBook distributor, controls pricing, something the major textbook publishers won in their battle with Amazon recently. In the context of law eBooks, this may likely include regular updating along the lines of the standing order or subscription model where licensed texts includes regularly billed updates to license holders.
eBook Access in the Law Library. At the moment, DRM is the single most important factor hindering eBook use for library patrons according to the 2009 Librarian eBook Survey conducted by Highwire Press. They prefer eBooks in PDF format and librarians prefer purchase with perpetual access as the most acceptable business model of eBooks. Law librarians have forsaken perpetual access to other legal materials in favor of licensed access. There is no reason to assume that this trend will stop simply because eBooks cannot be checked out at the Circulation Desk right now.
In reality, Kindled and iPad editions are not completely device dependent. They are software based. For example, you can download an app to read a licensed Kindled text on a laptop or desktop.. Some day this may open the door for law libraries to acquire licenses for eBooks without the need to acquire eReaders but, if the past is prologue, one can expect restrictive access requirements to these distribution channels similar to current licensing practices for online legal databases.
Eventually, law libraries will be acquiring licensed access to eBooks made accessible in their computer labs, should they continue to exist, or on patron's laptops or eReaders for specified durations. Instead of sending overdue notices, either the law library, publisher or the distributor will pull the access plug at the conclusion of the lending period. While we might hope for the day when .txt is the new .mpg, when eText is DRM-free, it's more realistic to consider as something viable in the future semi-open access under a licensing model that allows law libraries to provide some form of limited duration eBook access to their user population. [JH]
-- OY! I do that all the time. Thanks. Joe
Posted by: pcharles | Apr 27, 2010 1:26:13 PM