More on "Whither Westlaw and Lexis"

I received feedback on my post, "Whither Westlaw and Lexis," all of it from law librarians who largely agreed with my assessment of the situation.

The crux of the matter in their minds is the asymmetry of the relationship between law firms and the large publishing vendors. A 2006 article by Michael Ginsborg - which draws on the wisdom of Yogi Berra ("A nickel isn't worth a dime today") to analyze soaring legal publishing costs - emphasizes the bargaining inequities that arise when three foreign publishing conglomerates (Thomson Reuters, Reid Elsevier, and Wolters Kluwer) control 84 percent of the legal publishing market (as of 2003).

In a nutshell, prices go through the roof.

Librarian response to my post mirrored this frustration. At a time when budgets are on the chopping block, the prices for publications that attorneys deem essential continue to rise steeply. From the perspective of librarians caught in the middle of this squeeze, a tragicomedy reminiscent of Groundhog Day plays itself out on a routine basis. The large publishers buy up smaller companies that are doing fine on their own. Key employees - those in possession of the most intimate knowledge of the product - often leave. Prices increase dramatically.

On a larger scale, these acquisitions occur within what sometimes seem like endless rounds of reorganizations and restructurings and bloodlettings. This flux leaves librarians and attorneys bewildered about what products belong in what product groups and makes rational pricing and budget calculations that much more difficult.

Westlaw and Lexis might argue that this is a biased and misleading perspective on both the acquisition cycle and the dynamics of product pricing. They also might argue that the market in its current state is highly competitive and that they are pricing purely in relation to what the market will bear. The fact that they negotiate confidential licensing agreements with customers would seem to support the idea that there is flex in the market and that some (presumably larger) customers possess significant bargaining power.

It is also true that the market remains open to younger, more agile companies that want to exploit the opportunities for both creating smarter, better, and less expensive research products and for building stronger, more symmetric relationships with customers. These small companies can also take advantage of the fact that Westlaw and Lexis cannot really compete with them, constrained as they are by the innovator's dilemma. The only option remaining to these large publishers is to acquire the small companies. They cannot compete on price or customer responsiveness or, in many cases, in product innovation and product quality. Speaking for myself, I respect and like our compatriots from Westlaw and Lexis, but I have never been terribly concerned that they could put my company out of business.

Are there any third parties looming on the horizon that could enter the legal publishing market and displace Westlaw and Lexis? There are two scenarios. A collection of young companies could arise in different segments of the industry (case law, corporate law, etc.) and peck away at Westlaw and Lexis until they suffered death from a thousand cuts. Alternatively, a large financial publisher might enter the fray and disturb the legal publishing universe.

Has anyone heard of Bloomberg? More to come.

Once again, anyone who would like to post their thoughts on the competitive dynamics of the legal publishing market can write me (pschwartz@knowledgemosaic.com). You also can post comments directly at my blog.