Library Report on E-Book Lending: Publishers and Libraries Don’t Understand Each Other

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I was reading through the American Library Association’s report on the state of libraries 2012 (spoiler alert: libraries are under pressure in 2012), when I came across an interesting quotation from Molly Raphael, head of the ALA:

“In our discussions, it has become clear that not everyone has a good understanding of how libraries operate, much less how libraries do (or could) operate in the ebook context. Correspondingly, it became clear that we in the library community do not have a good understanding of the ebook business—whether from the viewpoint of publishers or distributors. We all are learning, and I’m optimistic that this engagement will lead to tangible progress through our assertive efforts on behalf of our communities.”

Basically, publishers don’t understand libraries’ point of view, and libraries don’t understand publishers’ point of view. This issue is central to so much acrimony I’ve witnessed between librarians and publishers.

A corner may have been turned in March during the annual meeting of the Association of American Publishers at which Dr. Anthony Marx, president and CEO of the New York Public Library, offered to experiment with publishers on how to make e-book library lending work for both libraries and publishers. The publishers assembled in the audience seemed to feel rather positively about that. Many who I spoke with during the reception after the event said they had exchanged business cards with Marx to get things moving.

To my knowledge, publishers have not come out publicly and admitted that there is a disconnect between them and libraries. But publishers I’ve spoken with privately have agreed that this is an issue.

In case you missed it, here is the complete report by the ALA on e-books and libraries. It’s a good, quick read:

New Focus on Ebooks

Library community reacts to a price increase

The dialogue between the publishing and library communities concerning ebooks, which had been simmering for many months, moved to a front burner March 1 when Random House increased its ebook prices by 100%–200%.

Debra Oberhausen, manager of collection services at the Louisville (Ky.) Free Public Library, was among those who felt the sting.

On Feb. 29, Oberhausen had bought Eisenhower in War and Peace, by Jean Edward Smith, for $40; on March 1, the price was $120. (The print version of the book, with the library’s discount, is a little over $20; it retails at $40). For Blessings, by Anna Quindlen, the ebook price went from $15 to $45.

The publisher’s increase was to distributors, such as OverDrive, which in turn can add its own increase. OverDrive is by far the largest distributor of ebooks to public libraries.

“We’re very concerned,” Oberhausen said. “We want to provide this service, but this kind of pricing is really going to take a huge chunk of our budget. . . . This price increase is really, really hard.”

The proportion of U.S. libraries that made ebooks available almost doubled over the past five years, climbing from 38.3% in 2007 to 67.2% in 2011, according to the American Library Association’s Public Library Funding and Technology Access Study. The increase paralleled skyrocketing sales of these popular new reading devices.

Not surprisingly, the twin surges engendered an ongoing dialogue between the publishing and library communities concerning prices and the rules surrounding ebook use.

ALA asks publisher to reconsider

The American Library Association (ALA) immediately called on Random House to reconsider its decision.

“While I appreciate Random House’s engagement with libraries and its commitment to perpetual access,” ALA President Molly Raphael said in a statement, “I am deeply disappointed in the severe escalation in ebook pricing reported today [March 1, 2012]. Calling on our history together and our hope to satisfy mutual goals moving forward, the American Library Association strongly urges Random House to reconsider its decision. In a time of extreme financial constraint, a major price increase effectively curtails access for many libraries, and especially our communities that are hardest hit economically.”

Raphael acknowledged that both the library community and publishers lacked sound data concerning issues of access and profitability, and she pledged “to work quickly and collaboratively to address this concern. We must have better data to inform decisions that have such wide and deep implications.”

“Libraries belong at the center of this digital revolution, not on the periphery,” Raphael said. “We continue to seek partners to further our shared goals of connecting readers and authors well into the 21st century.”

 

Increase had been announced — but not the prices.

Random House, which had first announced the price hike (without specifying the prices) on Feb. 2 when it reaffirmed its commitment to the library ebook market, provided the following breakdown for what it is now charging library ebook distributors:

– Titles available in print as new hardcovers: $65–$85.

– Titles available for several months, or generally timed to paperback release: $25–$50.

– New children’s titles available in print as hardcovers: $35–$85.

– Older children’s titles and children’s paperbacks: $25–$45.

“We believe our new library e-pricing reflects the high value placed on perpetuity of lending and simultaneity of availability for our titles,” said Stuart Applebaum, a Random House spokesperson. “Understandably, every library will have its own perspective on this topic, and we are prepared to listen, learn, and adapt as appropriate,” he said.

Applebaum said Random House welcomed “continuing discussions on the value we place on the unrestricted perpetuity, as well as the simultaneous release of our titles to retail booksellers and public libraries, the key differentiating factors determining our new pricing to library wholesalers.”

“We are requesting data that libraries can share about their patrons’ borrowing patterns that over time will better enable us to establish mutually workable pricing levels that will best serve the overall ebook ecosystem,” Applebaum said. He also noted that the new pricing does not affect Random House titles already in a library’s collection.

Other things you should know about ebooks and libraries:

– Ebook sales are expected to generate $9.7 billion worldwide in 2016, according to one forecaster.

– While library ebook circulation is still very low compared to print book collections, many libraries have experienced significant increases in ebook circulation.

– Mobile devices, including ebook readers and netbooks, are available at 27.8% of libraries.

– In many cases ebook circulation is hindered by e-reader compatibility issues and the complexity of ebook downloads, digital rights management issues, and availability of popular titles.

Price hike followed talks with publishers, distributors

The discussions concerning ebook pricing and availability had assumed new urgency in January, when ALA officials met with representatives of Penguin, Macmillan, Random House, Simon & Schuster, and Perseus in New York. (Macmillan, Hachette Book Group, and Simon & Schuster have refused to sell ebooks to libraries, and Penguin refused to let libraries lend its new titles.) The officials then met with ebook distributors, including OverDrive, Baker & Taylor, Ingram, and 3M, during a Public Library Association conference in mid-March.

“We explored possibilities for collaboration to conceptualize and develop business models and improve everyone’s understanding of how library ebook lending advances the marketability and availability of titles for all,” Raphael said. “Indeed, some distributors have library ebook lending pilots planned in the near future toward that end.

“Though ebook demand is growing rapidly, print books still comprise a significant portion of acquisitions in public libraries. Several of the distributors discussed how print books, ebooks with perpetual licenses, and ebooks with limited licenses each provide different functionality and should be viewed as a portfolio of varied resources, rather than mutually exclusive.”

“Talk does not equal the action that ALA members urgently need, but it is a necessary prerequisite to action,” Raphael said. “In our discussions, it has become clear that not everyone has a good understanding of how libraries operate, much less how libraries do (or could) operate in the ebook context. Correspondingly, it became clear that we in the library community do not have a good understanding of the ebook business—whether from the viewpoint of publishers or distributors. We all are learning, and I’m optimistic that this engagement will lead to tangible progress through our assertive efforts on behalf of our communities.”

 

HarperCollins policy: 26 loans per ebook

HarperCollins had adopted something of a compromise position about a year ago, when it became the only major publisher to change the traditional ebook arrangements with libraries. Starting in March 2011, HarperCollins stopped selling ebooks to libraries for unlimited use, which it had been doing since 2001, and began licensing use of each ebook copy for a maximum of 26 loans. The move affects only the most popular titles and has no practical effect on others. After the limit is reached, the library can repurchase access rights at a lower cost than the original price.

The policy came under fire from the ALA, authors, libraries, and librarians, among others. A petition against the change garnered more than 70,000 online “signatures,” though the 26-loan policy started looking much better on March 1 of this year. HarperCollins said the policy stemmed from concerns that continuing to sell ebooks on the old, unlimited terms would “in the end lead to a decrease in book sales and royalties paid to authors.”

Before the Random House move, publishers had been holding back, watching for an industrywide approach to gel. Any agreement still seems elusive, in part because, as David Young, chief executive of Hachette Book Group, says, “Publishers can’t meet to discuss standards because of antitrust concerns. This has had a chilling effect on reaching consensus.”

 

Discussion in the blogosphere

The questions swirling around ebooks—and the lack of data available to answer those questions—have fueled widespread commentary in the blogosphere.

“The reluctance of most big publishers to make ebooks available through library lending is a topic of widespread attention and concern,” wrote Mike Shatzkin, a blogger at The Idea Logical Company (www.idealog.com/blog), on March 27.

“What really rang true [after the Random House decision] was the fear that the consumers in an emerging ebook ecosystem would ‘learn’ that getting ‘free’ ebooks from libraries was just as easy as getting ebooks from retailers and paying for them,” Shatzkin said. “Given that all this requires is pointing your web browser in a different direction, it looked to many of the publishers like a really poor bet to enable ebook lending by libraries. Sales of ebooks to libraries isn’t a huge market, so the upside is limited. And with many ebook retailers struggling to gain traction in an Amazon-dominated marketplace, the consequences of even a small loss in sales could knock players out of the game.”

Amazon’s Kindle is in competition with other makers of ebooks, including Apple with its iPad, Barnes & Noble (the Nook), Kobo, and Sony (the Sony Reader). And there’s a lot at stake: Sales of adult ebook titles rose 49.4% between January 2011 and January 2012 ($66.6 million versus $99.5 million), while ebook sales in the children and young adult segment shot up 475% ($3.9 million versus $22.6 million).

Again, the lack of data in a field that is developing at warp speed means that “publishers are implementing policies that they know will result in their revenue being reduced immediately in order to develop what they believe will be a stronger and more diversified distribution network for ebooks in the long run,” Shatzkin said. “As most people know who are following the tribulations of libraries trying to stock ebooks, four of the Big Six publishers [Hachette Book Group, HarperCollins, Macmillan, Penguin Group, Random House, and Simon & Schuster] are not making any ebooks available to libraries at all (except titles already sold in the past.)”

One possibility: Make ebooks available through libraries after the titles have started on a downward sales trajectory at retail. “Yes, this is windowing,” Shatzkin said. “If publishers did it on their big ebook titles, they’d be doing exactly what Hollywood is doing with DVDs of major movies, which are also withheld from library distribution until the theatrical and early DVD revenues have been harvested.”

In sum, no one is quite sure where the ebook–library relationship is going. Is this a marriage that’s breaking up or an engagement that’s just going through a rough period? Time will tell, and more data will certainly help.

Meanwhile, it’s worth recalling that in 1992—ancient times, in this context—Sony launched the Data Discman, an electronic book reader that could read ebooks stored on CD-ROM. One of those ebooks was a collection of titles called The Library of the Future.

Jeremy Greenfield

About Jeremy Greenfield

Jeremy Greenfield is the editorial director of Digital Book World. Opinions presented here are his own. Read more of his work here.

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One thought on “Library Report on E-Book Lending: Publishers and Libraries Don’t Understand Each Other

  1. Given that only one person can read an ebook at any given time, I fail to see how lending an ebook is any different from lending a print book. I can only check out an ebook if it’s available for checkout, the same as a print book. If I’m in a hurry, I can buy either form.

    Growing numbers of authors are discovering that allowing FREE downloads on Kindle for a couple of days massively increases paid sales. Perhaps publishers should take note and GIVE books to libraries!

    Another point to consider is that most of us who check out books in any form are unlikely to purchase any specific book if it were not available in the library. We augment our reading, and read far more than we could afford to if we had to pay retail prices for each copy. Nobody is losing any sales by making books available in the library, and in many cases, authors are getting exposure and buzz that would not happen with fewer readers.

    Finally, quite sadly, ebooks cannot be resold or gifted the way print ones can. This alone is bound to inflate sales of any given title above the corresponding print version.

    In summary, if you don’t sell your title to the library, you are almost never going to sell it directly to me, or most other patrons, so you might as well sell at least one!

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