The uncertain economic conditions and recent events continue to take a toll on businesses large and small. Boulder, Colorado-based netLibrary (http://www.netlibrary.com) is talking with potential buyers for the company after failing to raise additional funding. The company's 230 employees were paid through Friday, October 12 and told they could return to work on Monday but at greatly reduced pay. According to an article in the Boulder newspaper The Daily Camera, each employee would only be paid $360 a week. netLibrary has reportedly been letting employees go throughout the year.
According to a company representative, the overwhelming majority of those 230 employees returned to work on Monday, October 15. "The management team and the board remain intact, and we have no additional comment regarding the possible sale of the company at this time." When asked whether the MetaText division might be sold separately, the spokesperson said, "Please understand that any and all discussions regarding next steps for netLibrary are premature and could negatively impact important discussions underway."
netLibrary works with over 300 publishers of academic, professional, reference, and scholarly books, and currently offers over 40,000 titles in e-book format. netLibrary develops, archives, hosts, and maintains e-book collections for academic, corporate, public, and school libraries. There are currently more than 5,500 libraries and organizations in the U.S. and throughout the world that access netLibrary eBooks either through individually owned collections, shared collections via consortia, or both. The company's customers include the majority of Association of Research Libraries members, leading community colleges, virtual universities, well-known public libraries and library systems, corporations, and government information centers. In addition, netLibrary's MetaText division creates Web-based digital textbooks that offer a range of interactive learning tools.
In a letter sent on October 15 to netLibrary customers and partners, president and CEO Rob Kaufman said: "We ask for your balanced consideration, your continued support of eBooks and netLibrary, and your understanding that we will do our very best to communicate the facts to you as they become available. The employees and the management team remain highly committed to doing everything we can to bring this to successful resolution—that commitment derives in large measure from the enthusiasm and passion you have shown us these past three years."
Kaufman also elaborated on the company's recent efforts to obtain financial support. "While additional investment funding looked extremely positive a few weeks ago, those investors made the decision not to invest based on several factors, including overall economic conditions. netLibrary immediately began to pursue the possibility of being acquired by a number of possible candidates with interest in the library, publishing, and eBook marketplace. Those discussions continue today."
Timothy Schiewe, a 20-year veteran of the technology and electronic publishing industry, co-founded netLibrary in 1998. The service officially launched in March 1999. netLibrary grew quickly from eight employees in July 1998 to a high of about 400 during 1999. In 3 years, the company raised over $109 million. Most of the financing rounds were led by Kaufman, who was the company's chief financial officer. Kaufman then became president and CEO in April 2000 when the company was still in growth mode. netLibrary had announced plans for an IPO for $82.2 million, but pulled out of it in December 2000, citing unfavorable market conditions.
netLibrary has built a solid core of electronic assets and established close ties to publishers and library customers in a few short years, which, under any reasonable economic conditions would look extremely attractive to potential buyers. The company will need some luck in its search for a rescuer during these unfortunately adverse times.