School Library Ebook Company Challenges Traditional Business Model

November 1, 2012

Brain Hive is creating buzz, and a bit of controversy, with a new business model for delivering ebooks to school libraries. The site claims that its $1-a-read rental strategy will “add thousands of titles to your collection.” Can it deliver? At first glance, I was quite skeptical: $1 a read seems rather high. After all, school libraries in New York only get $6.25 per student in materials aid. When I started doing the math, however, Brain Hive started looking like a much more interesting proposition.

Librarians build collections through art and science, but rarely through math. What if, like insurance companies, we had actuarial tables for each book we purchased? We collectively freaked out about HarperCollins and its 26-loan-per-year license, but in hindsight it is a much better deal than Random House and $84 ebooks. An $84 ebook has to get checked out over 100 times—that is, continual checkouts for four years—to be a better financial deal than HarperCollins offers. So how does the math work out on Brain Hive? Can it deliver a positive return on investment?

Let’s get the easy one out of the way. Would I rather “own” an $84 ebook that can be checked out by one person at a time, or rent a $1 ebook from Brain Hive that 84 people can borrow at once? Honestly, I like the sound of the Brain Hive model here. Buying that $84 ebook is a pretty hefty investment; you are betting that patrons will want to check out that book at least 84 times over the course of 168 weeks. So you might show a positive return on your “owning” the book as opposed to renting it from Brain Hive if a patron still wants to check out the book in February 2016. After it has been checked out continuously for the previous 39 months. Even when compared to an investment in print, Brain Hive seems to have merit. If a hardcover book is around $15 then you are still looking at 15 loans (10 months of two-week checkouts) to show a positive return versus Brain Hive’s rental model.

So, Brain Hive for everything? Absolutely not. What my simple examples above are built upon is the idea of cost per checkout. Especially for informational books, in-library use is a critical element that cannot be ignored. Brain Hive does allow limited browsing to let patrons see if they want to borrow a book; in fact a generous 25% of an ebook rented from Brain Hive is accessible before the $1 checkout kicks in. Right now, Brain Hive is a bit heavy on the nonfiction, and I see that as a weaker area of use in the long term. For me, the model shines in the realm of Big Six publisher fiction. Brain Hive already has books from Random House and Little Brown (Hachette). Not every book, of course: Brain Hive and the publishers negotiate selected-title lists. But there’s also no overhead like some other ebook aggregators charge—and no $84 ebooks.

And . . . no public libraries.

Brain Hive is a school library service only for now. It is actually a sister company to one of the larger independent publishers in the K–12 marketplace, Lerner Publishing Group, under the parent Lerner Universal Corporation. This has helped Bran Hive jump into the market, but I worry about the splintering of the K–12 ebook market as different independent publishers each work to create their own platforms. While publishers’ concern about buying into a competitor’s delivery technology is understandable, so is the undesirability of end users having to navigate through multiple platforms.

What we really desire is content. And Brain Hive is poised to deliver. Its model may not be everything librarians wanted in terms of perpetual ownership, but I would prefer the straight-up rental proposed by Brain Hive to wondering which definition of “own” is the flavor of the day. And I certainly love the chance to dabble in digital fiction from Big Six providers without having to make an $84, three-year investment in a single title. So I look forward to exploring Brain Hive more . . . as soon as it develops a consortium model.