Not-for-Profit Service Organizations and Economic Viability on the Internet

Joseph Janes
Internet Public Library, USA


There are many kinds of not-for-profit service organizations: schools, colleges and universities, libraries, museums, charities, organizations specific to religious, cultural, or social groups, and so on. These are typically funded and supported by taxes, gifts, donations and other philanthropy, membership fees, foundation or corporate grants, and, in some cases, sales of products or services. They serve groups at many levels: local, regional, national, and even international.

The Internet is a rapidly growing, highly dynamic environment, with a global population of several million. Although the majority of these people are highly educated and financially well-off, located mainly in North America, the diversity of its users grows with its overall population. Many of the kinds of entities described above exist in the networked environment, but these are usually sites maintained by organizations that originated elsewhere and have developed presences on the Internet as analogues to their other services. This raises an intriguing question: can a not-for-profit institution developed within the Internet and whose sole base of interest is on the Internet become economically self-sustaining?

This paper will explore, as a case study, the plans and discussions of the Internet Public Library (IPL) ( regarding its continuing economic viability and self-sustainability. The IPL was founded in 1995 to be a public library of and for the Internet community and to explore and promote the roles of librarians and librarianship on the Internet. It provides reference services and exhibits as well as services for children, teenagers, and practicing librarians via its Web site and MOO. Recently, it has been planning strategies by which the Library can become self-sustaining over the next few years, with some initial support from foundations and other sources.


There are two types of organizations that provide services to their members: governmental and private. Governments often operate in areas such as education, culture, crime and punishment, communication, health, environment, recreation, defense, and immigration, and these services are typically available only to those people who are citizens or residents within a particular government's territory. Private organizations include charities and groups whose members share some concern or affinity. There are many types of these: athletic, business, community, labor, political, religious, social, age-based, and clubs of all kinds based on mutual interest. These groups offer opportunities to congregate with others of similar interest and often provide services within their scope to their members, and in many cases, others as well. Some private organizations operate in areas that are also associated with governments: private schools and museums, for example. Further, there are for-profit corporations that operate hospitals, telecommunications networks, postal services and other functions often associated with governments.

In many parts of the world, these organizations are all familiar and often expected parts of the life of their communities. With the increasing characterization of the Internet as a "community," which kinds of services will be most needed there, what kinds of organizations will arise to provide them, and to what extent will the Internet community be able to support these types of organizations?

There are several potential impediments to the formation and successful implementation of service organizations in the networked environment. First of all, although there is in many people's eyes a growing sense of community on the Internet, it is not yet entirely clear that there is sufficient coherence between people and groups to merit designation as a "community" and to support such cooperative efforts. This is accentuated by the fact that there is limited (and often no) personal, face-to-face contact between people on the Internet. Interaction of this sort is often critical to a sense of shared values, orientation, and interest, and it also allows for more complete communication, incorporating nonverbal as well as verbal aspects. There is also no government to levy taxes, make decisions on behalf of its citizens, and allocate resources to undertake activities for them. Furthermore, there is as yet no mutually agreed-upon way of exchanging money or other items of value; initiatives such as digital cash have begun, but the perceived or real lack of security of transmission of cash or credit card numbers has impeded the flow of money to date. Finally, surveys of Internet users to date have consistently shown that the people who "live" there are not fully representative of the global population; at the very least, this means that the sort of services that are being developed or contemplated may not necessarily be responsive to the needs of people not yet part of the Internet and may in fact serve as barriers or disincentives to their connection.

By the same token, there are some distinct advantages to the Internet environment. Although communication is still limited in scope, it can be instantaneous and possible at low or almost no cost. Using networks, it is possible to communicate and share with people across and regardless of barriers of geography, ethnicity, gender, or age, for example, at the same time it permits people easily to find and affiliate with groups that share interests or characteristics. It also provides freedom, flexibility, creativity of expression, and exploration often unknown elsewhere.

To further explore the questions around maintaining organizations that provide service to networked communities, it is useful to examine a particular entity as a case study. The balance of this paper will discuss the Internet Public Library project and its attempts to furnish economically viable public library services to the Internet population.

The Internet Public Library

The Internet Public Library ( was founded in 1995 to explore the roles of libraries and librarianship in the distributed networked environment of the Internet. The IPL is a teaching and research library.

First, it is a library--the only public library on, of and for the community of people who live on the Internet. As such, it provides services for that community: maintaining a collection of network-based ready reference works; answering reference questions; creating stories and contests for children; evaluating and helping people to use popular search engines and catalogs.

In addition, the Library has also been a place for people to learn about librarianship, the Internet, and the relationship between the two. It began in a graduate seminar and continues to provide learning opportunities for professionals-in-training as well as for those working in the field. At the end of 1995, over 100 people had been involved in the work of the Library as seminar members, workshop participants, or volunteers in the Reference Division, and 20 more joined in January 1996.

Further, the Library serves as a venue for research into issues raised by its work. Some recent examples of research projects include a historical review of technological innovation in reference work, development of software to manage distributed collaborative work and create transaction logs for Web servers, development of an archive for the Library's own materials, investigation of the status of languages other than English on the Internet, and development of a real-time interactive reference service in the Library's MOO.

A survey conducted in February and March of 1996 provided some further information about users of the Library. About 2,200 people responded; 60 percent of them were male, and about two-thirds were between the ages of 28 and 50. About half of them had had access to the Internet for less than six months, roughly half use the Web less than five hours per week, and roughly half were first-time users of the IPL (although about 10 percent reported using the IPL at least four times in the previous month).

In thinking about the development and provision of services to people in a networked community, a library makes an interesting case study. What we now know as "public libraries" arose in the United States in the mid-19th century out of "circulating" or "subscription" libraries supported by corporations or membership dues. Their development was significantly advanced in the early 20th century due to the philanthropy of Andrew Carnegie who by 1920 had given over US$41 million toward the construction of 1,700 public library buildings.

In thinking about ways to continue, improve, and add to the current work of the IPL, there have been a series of discussions and plans aimed at developing ways to provide stable, consistent and self-sustaining methods of funding. Unlike other libraries, there is no government or larger institutional entity (such as a corporation, school, or university) to provide operating support to the IPL in return for library service for its members. Therefore, the Library must generate its own operating revenue.

Toward that aim, plans have been developed for three enterprises that are intended to supply net revenue to the IPL. That revenue will go toward the core function of the project, which is the operation of a free public library for the Internet community. At present, this includes:

This library service may well be able to generate some revenue on its own. It is common for public and academic libraries in North America to have organizations known as Friends of the Library that act as volunteers or community liaisons and who pay membership dues. In addition, many libraries receive corporate support for general operations or special projects, as well as philanthropic and other funding. The IPL will pursue these avenues, but it is unlikely at present that these alone would generate sufficient revenue to support all the current and planned aspects of the free IPL.

This core set of operations will feed into and benefit from the three auxiliary revenue-generating enterprises. These are:

A federated network of libraries and librarians, which will allow the IPL to work with librarians and library collections all over the Internet. This federation will be intimately incorporated with the operations of the free library--it will enable the IPL to draw on the resources of a wide variety of collections, experience and skills distributed among the members of the federation. In return, the IPL can share its expertise on the use of networks for librarianship, provide training to members, give access to databases of answered reference questions and to software used to handle and manage networked-based communication and collaboration. Members of the federation, in addition to devoting time and permitting access to local resources, will also make modest financial contributions.

The IPL will benefit not only from this revenue, but also from assistance in some of its core operations, freeing IPL staff to work on other aspects of the Library. Participants will gain valuable experience in the use of the Internet for library service for their local communities as well as other professional development opportunities at relatively low cost. Furthermore, this network will allow referral of patrons between institutions: a reference question that comes to the IPL can be handled there initially, but the patron could also be referred to a librarian at a member institution nearby. Similarly, librarians could refer to the IPL patrons who have questions that might best be answered using networked-based resources. Collection development, services for special populations, and other aspects of library work could similarly be enhanced through broad participation of librarians around the world.

Fee-for-service research, offered by many public libraries in North America as well as by private information brokerage corporations, which will permit IPL staff to work on questions beyond the scope of brief, factual, ready-reference type questions. A substantial proportion of the questions received by the IPL's reference question answering service is of this type, asking for searching of literature databases, detailed original research, or other in-depth work. IPL staff's experience and expertise with using networked-based resources can add an extra dimension to this work, and indeed it might be most effective to partner this service with an already operating project that has yet to branch into the networked world. IPL could take questions via its Internet presence, and the two organizations could take on projects or aspects of projects that best match their skills and resources.

An Internet newsletter for children, parents, and teachers, which would focus on Internet resources aimed at children, and which would complement the IPL's Youth Division. The increasing presence of the Internet in schools, along with growing concern about resources inappropriate for young children, make this a timely and valuable possibility. Its origin, as the product of an organization dedicated to providing library service, could make an IPL publication desirable and popular.

A final enterprise, albeit one that may not produce significant revenue for the Library, is cooperative work with schools of information and library studies. Students taking courses on reference work, organization of information resources, library services for children or young adults, use of networks, management of libraries, and so on could find the IPL an ideal venue for projects or other exploration. Other possibilities include independent volunteering for participation in the IPL, group or individual independent study or field experience projects, or indeed entire seminars that focus on the IPL, akin to the seminars at Michigan which gave it life and continue to develop it.

These five enterprises--the free library, the federated network, the fee-for-service research, the newsletter, and the cooperation with library education--are designed to work together to make the IPL self-sustaining but also to provide the highest quality service possible, to further its mission as a teaching and research library, to provide an incentive for people to connect to the Internet, and to make the Library more like the networked environment that it serves by distributing work and knowledge.


The attempt to develop, maintain, and run such an entity raises several interesting questions beyond the scope of the work of the Library per se:

Are we a community? Do those of us who spend a substantial amount of time connected to the Internet constitute a community? Will people identify with this group as they do with their geographic, ethnic, and religious communities? Is there enough communication, enough sharing, enough sense of mutual purpose to bring this group together, or are we simply a few million people all of whom use the same computer network?

How do we move the money around? The development of secure Internet-based methods to transfer money is critical not only to the future of service organizations like the IPL but also (and arguably more importantly) to commercial enterprises. The potential markets are so large and lucrative that it seems unlikely that such techniques will not arise, but the challenge is not only to provide methods that are technically secure but also to make people feel secure about transmitting money this way, the probably more difficult aspect.

How good does it have to be? Schools, libraries, museums, and other similar organizations get support from a variety of sources but they are so well ingrained in the popular and political consciousness that it is hard to imagine them no longer being funded. To be sure, a few do fail, especially in difficult economic times, but they have to be pretty bad to overcome the sense that they are institutions that are expected to be parts of communities. Network-based service organizations face the opposite situation: they must prove themselves to be worthy of support beyond the normal expectation since there is virtually no precedent for them and no ready mechanism to finance them.

Will people care? In its first year of operation, the Internet Public Library has been visited approximately 1,000,000 times from over 90 countries, and has answered over 2,000 reference questions. This would seem to indicate that there is a need on the Internet for the kinds of services libraries and librarians typically offer. But so far, that has all been free. Is there a market for an impartial organization that evaluates, organizes, collects and provides access to high-quality information resources under the rubric of a "library"? Or will commercial, advertising-funded services such as Yahoo prevail? Yahoo provides very little annotation or description of resources it points to and makes no claim of evaluation, balance or quality. Yet it receives millions of hits per week. All of this raises a significant question: What good are libraries, anyway, and are they worth paying for? These are the sorts of questions the Internet Public Library was designed to explore. The answers should be fascinating.


The author wishes to acknowledge with gratitude the hard work, dedication, and creativity of all of those of who have participated in the Internet Public Library project. Particular thanks go to Michael McClennen and Steven Toub, who contributed significantly to the development of most of the above ideas, with the assistance of Louise Alcorn, David Carter, Nigel Kerr, Nettie Lagace, Martha Pinto, Sara Ryan, and Schelle Simcox.

The Internet Public Library project receives support from The Andrew W. Mellon Foundation as well as the W.K. Kellogg Foundation through its grant to the School of Information at the University of Michigan.