Warning: You Are About to Enter the Ebook Zone

Libraries and publishers are moving into a shadowy land where everything they’ve long known is up for grabs

May 22, 2012


Welcome to the world of constant change. Every week sees a new twist in the world of public libraries and ebooks, and if you are feeling bewildered, you’re not alone.

What happened to the physical-book world that we knew so well? It’s still here, but in the last two years a newcomer has started to shake things up. Hello, ebooks.

Ebooks have been running along in the background for some time now, but with the development of good-quality readers (Kindle, Nook, iPad, and many more) and the ability of consumers to acquire ebooks instantly, the game has changed. Just as libraries have always responded to the consumer market and the demands of our users, we now need to meet the demand for ebooks.

We have made ourselves experts in the world of physical books. We have review media. We have jobbers to purchase from. We have automated systems to manage our collections and our relationship with borrowers. We have systems that support interlibrary borrowing. And we can retire books and turn them into revenue through book sales. If we want to retain books for the long run, we know how to preserve them for future generations.

Nearly every aspect of this comfortable business proposition is turned on its head with ebooks. We’ve got work to do.

And to do that work we need to focus on a relationship we haven’t had to pay much attention to in a long time—our dealings with publishers. If anything, this new ebook market is even more challenging to publishers than it is to libraries, and that’s why we face such turbulence. Like libraries, publishers had it all figured out in the traditional book world. They knew how to work with authors and agents to secure the rights to publish books, and they had all the pieces in place with editors, reviewers, designers, printers, and distributors (our jobbers). They also understood how to structure the economics of book publishing to make a profit.

In the ebook world nearly all of these factors have changed and continue to change, generating an obvious and serious concern for publishers’ ability to remain financially viable. The lessons learned by the music industry regarding illegal copying play very heavily in this new equation, both for publishers and libraries, and it presents significant threats for libraries, such as maintaining reader privacy and ensuring continued access to readers with print impairments and other disabilities.

Get your ebooks here—for a price

We’ve been saying for 20 years that the internet would make everyone a publisher, and now that prediction is a reality. Not only is self-publishing providing competition for traditional publishing companies, but giant distributors such as Amazon and Apple have become ebook publishers and are looking to take big-name authors away from the traditional publishing houses. Amazon is drawing the largest crowd to the Kindle format through low ebook prices, which customers have begun to expect. Libraries are facing competition as well, as these same distributors also offer ebook lending.

So how are we to sort this out? Let’s consider the major trade publishers and how they are dealing with libraries so far. There are six major publishers that are referred to as the Big Six: Hachette, HarperCollins, Macmillan, Penguin, Random House, and Simon & Schuster. Together they publish the work of such familiar authors as Laura Lippman, Jonathan Kellerman, James Patterson, Anita Shreve, and Ruth Ozeki. As of this writing, just two of the Big Six offer their ebooks to libraries—HarperCollins and Random House. Libraries can’t buy newer ebook titles from the others, foreclosing the opportunity to lend such authors as Jonathan Franzen, Sue Grafton, Walter Mosley, Jodi Picoult, and Tina Fey. This is bread and butter for public libraries, but these publishers refuse to sell ebooks to libraries or to distributors like OverDrive, 3M, Ingram, and Baker & Taylor, our traditional sources.

In February 2011, HarperCollins changed its terms of service for library lending of ebooks, slapping a 26-loan limit on all its titles. After 26 loans, the library could rebuy the ebook at a discounted price. As librarians cried foul over any limit on the number of loans, they began to understand that libraries may not even own these books.

More recently, Random House changed its pricing policy for selling ebooks to libraries, increasing the price by factors of two to three times the list price of a hardcover copy of the same book, though libraries still retain perpetual access to their ebook purchases. Also, the ebooks will be available to libraries simultaneously with the print book release. This may be good for the publisher’s bottom line, but how are libraries to afford these ebooks? We’re caught between tight budgets and huge public demand.

Another model for your consideration: the metering model, or pay-per-use. Unlike the other models, libraries only pay for what is used. Freading, the ebook platform of the music-download service Freegal, offers this model, allowing publishers to establish a point system to vary loan fees for bestsellers vs. backlist titles. For publishers, making the most of the backlist brings in new revenue from books that were only previously available in print. The used-bookstore model of reselling books was vexing for publishers, because they were unable to monetize repeated sales of the same book. Pay-by-the-download solves that problem. For libraries, this is a risky budget arrangement, requiring them to forecast use, and the cost of that use can change at any time. Say a backlist title has a second resurgence after being adapted into a film. No problem for publishers: Just start charging more per use for that title.

For larger public libraries that typically buy numerous copies of a bestseller only to weed the majority of the copies at a later date, the simultaneous-access model may be preferred. To meet user demand, these libraries may buy access to numerous copies of an ebook, recognizing that after its popularity wanes, they can reduce the number of copies dramatically, freeing up money that can be spent on new ebooks. Smaller libraries might opt for paying a higher fee for an ebook at the front end, if they pay only once and can keep the book in perpetuity. Pure metering might be an option for a library that has some flexibility in managing the budget throughout the year.

Some lesser-known business models are also on the table. The rent-to-own model would require that libraries continue to pay for a book over a certain amount of time or number of loans. On the bright side, libraries that want to own their ebooks eventually could, but how long would the rental period last? Would the time or use limit be the same for all titles? Could publishers modify the rental terms as they wished without notice? How much money must one pay for the same book before the ownership goal kicks in?

Consider subscription plans. One already in use by some publishers and vendors is the bookshelf model. The library would subscribe and pay an annual fee for a set of ebooks, their selection likely in the hands of publishers or distributors. The following year, the bookshelf disappears. Libraries that continue to pay their annual fee receive another, different set of ebooks. In this model, ownership of the content is off the table. The library can’t build a collection but would pay for access to a temporary collection of ebooks that might include some that they do not want. Moreover, publishers could use this system to hold back the bestsellers until sales for these books begin to wane.

Media librarians may be familiar with the embargo model, in which DVDs cannot be purchased for the collection until after a particular period of time following general consumer release. In this model, rights holders believe the loan and rental markets cut into retail sales of DVDs of first-run films. A positive aspect of this approach is that libraries, if they are patient, can build collections. A negative aspect is that library users will be unhappy and the library is relegated to lending yesterday’s goods and becoming holder of the hand-me-downs.

How bad can it get?

Worse scenarios have been proposed. Examples include library users paying for access to ebooks; users having to come to the library to download; and users paying an annual fee for their library cards. For publishers, making no-fee lending less desirable to potential ebook buyers is often articulated as a priority. This line of thinking is that “friction”—for example, either making it next to impossible to successfully download a book, or imposing difficulty by requiring a user to physically go to the library, stand in line to check out books, place a hold on a book that is checked out, and return a book to the library—will turn book borrowers into book buyers. People would eventually get fed up and buy the book online.

While there is no evidence that library lending negatively affects sales, we do know that book borrowers are also book buyers. An April study by the Pew Research Center’s Internet and American Society Project (“The Rise of E-Reading”), ebook enthusiasts read more books than the average print-book reader and prefer to purchase what they want to read, although some start their search for reading material at their library. People discover books at the library. With the demise of the local bookstore, the library becomes a welcome spot where book borrowers and buyers can browse. They can also be a point of sale for borrowers who are also buyers. Libraries are starting to offer a purchase option right in their catalogs in return for a share of the revenue. And why not? It’s time for libraries to claim more credit for the work we do promoting books and authors.

Douglas County (Colo.) Libraries did just that, by establishing a do-it-yourself ebook lending service through the purchase of its own Adobe Content Server software to self-host some of its copy-protected ebook content, bypassing the vendor intermediary (and the costs involved). One of DCL’s innovations is an agreement with the Colorado Independent Publishers Association to both loan its ebooks and offer them for sale. Most recently, the Califa Library Group, which brokers services for 220 California libraries jumped on board, buying its own server to house ebooks that it buys outright and contacting Los Angeles authors associations to join.

Problem solved? It’s a beginning. The reality is that most libraries are accustomed to working through a distributor to obtain ebooks. OverDrive, one of the first distributors to offer ebooks and content services to libraries, is the big player on the block, with more than 1,500 library customers. Since 2002, OverDrive has been negotiating with publishers to obtain the rights to sell ebooks to libraries. New entrants in the field include 3M, Baker & Taylor, and Follett. Each offers multiple kinds of service features for libraries, such as one ebook file/one loan, library-catalog links that direct users to stores where ebooks can be purchased (such as OverDrive’s “buy it now” option), patron-driven acquisitions where an additional copy of an ebook is automatically acquired by the library once a certain number of patron holds are placed on the title, and so on. Especially for public libraries just dipping their toes in the ebook water rapids, it is difficult to know what distributor to choose, what business models to select, and what percentage of your meager collections budget to devote to ebooks.

One thing is sure: Library ownership of content is completely different than licensing access to it. Some argue that it is possible to own ebooks, but the legal language confuses us. Libraries can obtain a license for perpetual access to the ebook content purchased, allowing them to retain or move content to another provider or server continuously—that is, if the license agreement says so. Some business models are clearly rentals, such as the bookshelf model in which the library acquires a new but different set of ebook titles on an annual subscription basis. Rental or pay-per-use models may be preferable to some; but bear in mind that even with perpetual access you still have to negotiate for other rights, such as lending and preservation.

Why can’t we work it out?

One might assume that by bringing all of the publishers together to share our concerns and work out an agreement, we could develop a mutually acceptable business model; but because of antitrust laws, publishers will not meet as an industry for fear of even the appearance of collusion and price fixing. For now, librarians can bounce business model ideas to individual publishers. Indeed, ALA leaders have met with senior executives from the Big Six, who indicated that they are receptive to Association proposals. Of course, while the willingness to communicate is an essential first step, it is only just that.

Public (and other) libraries, publishers, distributors, authors, agents, and other stakeholders have common goals, but we also have obvious points of conflict. If libraries want to continue ebook lending, something’s got to give; all stakeholders need to be willing to make a deal and then act accordingly. Publishers, distributors, and libraries must accept that new models of lending will not look like the old print model. We may well be in for at least another year or two of turmoil in this industry, and it doesn’t help that technological change, innovation, and the entrance of new players keep us bound to this roller-coaster ride. There will be missteps. There will be controversy. Librarians will have to hang in there.

We are not just trying to solve a library lending problem, although that is the current emergency. What we do today may very well shape the future of public libraries. Where do libraries want to be in the coming decades? As Twilight Zone narrator Rod Serling said, “You’re moving into a land of both shadow and substance, of things and ideas.” That’s the signpost up ahead: Your next stop—the Ebook Zone.

ROBERT C. MAIER is director of the Massachusetts Board of Library Commissioners. CARRIE RUSSELL is director of the Program on Public Access to Information in ALA’s Office for Information Technology Policy.



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