The Enron of Library Leasing

This sounds really nasty. A few months ago my wife and I noticed that some of the books at our local library were marked as leased property, not property of the library. It turns out that some libraries do indeed lease their material — including books and periodicals — from suppliers, rather than buy material outright. There are various companies that do this; in 1998 one of them, Faxon, with over a hundred years in the business, was in financial trouble and was acquired by RoweCom in 1999, which was in turn absorbed by devine Information Services about a year ago.

In December, RoweCom/devine decided to spend its money on reducing its debt, rather than on material for its subscribers, and now they’re looking to sell the serial-leasing business. As a result, many subscribing libraries are out of hundreds of thousands of dollars, for a total of 80 million or more. Huh, I had wondered how that whole leasing thing worked in practice.

Here’s an article in the Library Journal on it, and another with links to more information. It sounds desperate and really sucky. The official press announcement contains echos of press announcements by other dotdom flameouts (“Trust us, the Management Committee is working on it,” yeesh).

“Limited Operations” = “We’ve got your money and we’re working out how to spend it without giving you much of anything.”

The Chicago public library system was about to send devine/RoweCom/Faxon a check for $1.6M when this happened. Fortunately, in this case a slow bureaucracy saved them a bundle of cash. Other libraries weren’t as lucky. As usual, guess who’s paying the bills on this?

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