Well done, HarperCollins: librarians must change old thinking, by Martin Taylor

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HarperCollins’ US unit has just changed its long-standing ebook policy for library sales. Instead of selling ebooks for a one-time cost and allowing libraries to lend these ebooks in perpetuity, HarperCollins amended its terms to limit a purchase to 26 loans. For an average 2-week lending term, libraries would get a full year of lending for about US$10-20, based on typical ebook prices—that’s about 40-80 cents a loan.

This seems a very modest sum to me but it has got librarians outraged and it has started a library boycott of HarperCollins.  The response within the library world to this issue has been almost universally hostile. Here’s HarperCollins’ response to this furore.

Our prior e-book policy for libraries dates back almost 10 years to a time when the number of e-readers was too small to measure. It is projected that the installed base of e-reading devices domestically will reach nearly 40 million this year. We have serious concerns that our previous e-book policy, selling e-books to libraries in perpetuity, if left unchanged, would undermine the emerging e-book eco-system, hurt the growing e-book channel, place additional pressure on physical bookstores, and in the end lead to a decrease in book sales and royalties paid to authors. We are looking to balance the mission and needs of libraries and their patrons with those of authors and booksellers, so that the library channel can thrive alongside the growing e-book retail channel.

In spite of the heat HarperCollins can expect to receive from its library customers, I hope they stand their ground. Librarians need to shift their thinking as digitisation transforms the reading landscape. They are doing authors, publishers and ultimately themselves and their patrons no favours by this stance.

The fact is that rightsholders do have serious concerns and librarians have not managed to address them. They won’t do it with anger, or with soothing but unfounded assurances that ebooks will be no different from print in their economic impact.

In the face of rightsholders’ concerns, librarians must listen not bully, and they should be willing to experiment with new models that will ensure libraries and other channels can co-exist in the emerging, all-pervasive digital world. No-one has all the answers yet but we won’t solve this issue by denying the existence of the problem and closing off avenues for fresh thinking.

Librarians (and patrons) often make it difficult to work through issues associated with ebooks by doggedly assuming that ebooks will work the same way as printed books in terms of their economic impact, and by insisting therefore that the things they’ve done with print should carry over largely unchanged to ebooks.

But there are very important differences. Ebooks don’t wear out, they’re easy to find and hard to lose, so chances are libraries will need fewer to service the same level of borrowing. And new technology is making the effort required to borrow minimal. These facts underpin concerns about how the paid ebook market will be affected if borrowing (especially from public libraries which are open to anyone) offers few disadvantages over purchase. Borrowing ebooks can be made as easy and accessible—24/7 from anywhere—as buying them. When you combine this with the fact that “owning” a “new” file has less value for most people than owning a new physical book, you can see the potential for more, perhaps many more, people to shift from buying to borrowing especially if borrowing is free.

Librarians’ response to these concerns is typically a claim that they’ve been lending books for years and it’s probably helped rather than hurt sales. Probably true, but the potential ease with which borrowers can get a free ebook is a quantum shift, not merely an incremental change.

A recent attempt to tackle this concern was some research by library ebook supplier Overdrive. It indicated ebook lending had a positive impact on book sales. But it was printed book sales that the survey found benefited. This somewhat misses the point. It’s universally acknowledged that print will be a less  important source of income and many books will be digital-only. Publishers and authors are right to be concerned about the impact of lending on ebook sales. In addition, the past history of library ebook lending is largely irrelevant, given that it was mostly PDF files on clunky PCs—nothing like the experience of reading on a Kindle or iPad. And glib assurances that it will all be fine won’t cut it here when so much is at stake.

Librarians must open their minds to these new realities impacting the creators and important downstream services.

As well as the economic impact on the book market, the second thing to consider is the impact on libraries themselves if they saw a big increase in ebook lending. When authors and publishers look at the severe budget cuts that libraries battle with, and the limited funds they have to buy books, they rightly ask where the money will come from and what might happen as these library loans take an ever larger share of the market.

The issue that prompted this debate and boycott is a perfect example. I would have thought that 40-80 cents to give someone a $10 or $20 book was not excessive. If the book were borrowed 1000 times at the proposed “excessive” rate, it would earn its author and publisher (combined) only about $200-400, after distributor discounts (probably $50-100 for the author). If it were a popular title borrowed 100,000 times, they’d earn $20,000-40,000 between them from libraries with perhaps $5000-10,000 of that going to the author. This is not greed. In fact, I wonder how many people would see this as an acceptable return for the years of collective work that go into writing, producing and selling a book.

So why do librarians think these are excessive returns and how much would they be willing to pay if their ebook lending took a much greater share of the market? While libraries do a public good by expanding readership of an author’s work, let’s not overstate their success turning readership into income for authors and publishers. The fact is that the author could lose the amount of this library income from just 4% of patrons choosing to borrow instead of buying.

So where will the money come from to pay for libraries’ increased market share, some at the expense of paid retail sales? Here are some possibilities, none of them easy.

  1. From the rightsholders—publishers and authors—who would forfeit higher value retail sales for low value library sales. This seems to be the route libraries are taking but it’s unreasonable and ultimately damaging to everyone. It seems to be based on a convenient, but false notion, that authors and publishers make excessive profits. There are rich authors and publishers, but very few. The vast majority already accept low returns.
  2. A quantum leap in funding from local and national taxes. Most people would see this as unlikely.
  3. A big reduction in buildings and staff. This is much more likely, given that politicians are already closing libraries in many parts of the world to control costs. A handful of digital libraries could service a whole country so this could be achievable without reducing access to library books. In New Zealand where I’m based, it costs about $2.50 to make each loan of a printed book, mostly due to staff and facilities costs. That’s about five times the amount that goes to buy the book so it’s certainly a fertile place to find the money. But would it be desirable? Perhaps, but we need to have this conversation.

If we want to have ebook lending while avoiding big cuts to existing library staff, services or facilities, libraries may need to consider other options, all of them with some difficult trade-offs attached.

  1. Limit patron demand. Examples would be requiring patrons to come into a physical library to borrow an ebook, such as UK publishers recently proposed to a similarly hostile reaction; having only a small number of ebooks available, or delaying library release dates to maximise paid sales.
  2. Secure a quantum leap in funding from local and/or central government. As noted above, this is unlikely given libraries’ already tight budgets.
  3. Charge a loan fee for some patron groups and/or ebook types to make the service cost-neutral. This could also bring in extra income to pay fair prices for ebooks, and reduce the impact on paid retail sales by closing the cost gap between borrowing and buying (in my opinion, the best of the available options).

However we address this, let’s start with an acknowledgement that publishers and authors (and indeed booksellers) have a genuinely-held concern and that the consequences of getting it wrong are enormous. So until, or unless they are proved wrong with hard facts, we need open-minded discussion and a willingness to try different models if we’re going to deliver the positive things that ebooks can bring.

All of the options above are uncomfortable to some degree. But this is a time when everyone needs to step outside their comfort zones if we’re not to squander the tremendous opportunity that ebooks present.

Editor’s Note:  this is reprinted, with permission, from Martin Taylor’s eReport. Martin Taylor has been involved in the publishing, technology and internet fields for more than 20 years. He is founding director of the Digital Publishing Forum, an initiative to accelerate the development of digital publishing in New Zealand, and publisher and managing director of Addenda Publishing.

83 Comments on Well done, HarperCollins: librarians must change old thinking, by Martin Taylor

  1. “Librarians need to shift their thinking as digitization transforms the reading landscape.”

    With paper books we can’t do several things, like lending them to several people at the same time. With ebooks, we can. But HarperCollins are forcing us to treat ebooks as paper books because they say it would harm their sales.
    Well, HarperCollins should shift their thinking as digitisation transforms the reading landscape.
    It is really incredible: now, technology offers us so many possibilities and at the same time people are forcing us to do things as old days just because they don’t want to adapt: yes I’m referring to HarperCollins.

    So be it: HarperCollins wants to treat ebooks as paper books? Ok. The problem is that no paper book is dead after 26 checkouts.

    This is just greedy. And I can tell you another thing: I’m 34 years old and through my life I bought more than 3000 books (which I still have – I’m not counting books that other persons gave me, but only the ones I bought). You know why? Because I love books. And you know why I love books? Because of libraries. My childhood is full of memories from libraries. Today I use libraries and still buy books. Lots of them.

    So don’t tell me that libraries hurt sales: I will not accept it.

    I am boycotting HarperCollins (and my husband too). I found out that two collections that I was trying to complete are from HarperCollins and I can tell you, if they don’t change this 26 thing, I will not buy anything from them again.

    I am not a librarian. I am a reader.

  2. I could de-construct your article and argue against it point by point, but it’s simply not worth it. Your article is all based in the wrong premise that libraries are meant to serve publishers and authors, and that is not true. Libraries buy books, just like readers do, and they do with it what are their purpose to do, and do it abiding with the laws created to accommodate the libraries functions. What HarperCollins is doing is basically refusing to sell ebooks to libraries, selling them instead licenses to use ebooks for a limited number of times. That is not acceptable, libraries shouldn’t accept it, and neither readers or anyone else. I will keep boycotting HarperCollins, and I hope many other will do the same.

  3. Libraries are a public service, not a bookseller, and they shouldn’t be treated as adversaries or competitors by publishers. They are in the business of growing readers; they should be seen as partners.

    I have two books on loan from the library right now that are over 50 years old, one almost 80. How many times have they been read? If publishers want to impose a limit, simply say that a purchased e-book can only lend them to one person at a time, making it an entirely equivalent situation. If they want to lend to multiple people at the same time, they can buy multiple copies, as they do now.

    It is funny (but not ha-ha funny) that publishers are telling libraries it’s ridiculous for them to “own” e-books forever for one price at the same time they are telling authors that they will keep their e-rights while the book is in print .. which is forever.

    Rights should revert to the authors after a reasonable amount of time, and perhaps libraries should have to purchase new copies after a reasonable amount of time. One year is not a reasonable amount of time.

  4. The “new model” presented by HC is a joke, that for every paper book that the libraries have to replace before 26 loans, there are probably two dozen books they loan 50 or even 100 times before it needs replacement. What this would really do to libraries is cause the extremely popular books to be available for a couple of years while the library is forced to renew their ebook license, and anything that is marginally popular will just become unavailable once the initial 26 loans is up.

    Even though I love the convenience of the ebook, I’m tired of publishers “protecting” their revenues with this scheme and the agency pricing when they are totally neglecting things like the fact that by adding another tier to the pricing ranges, equivalent to the used paper book’s market price, they would be monetizing the long tail much further out than they are today, especially with today’s short print cycle. The publishers want ebooks to be treated like paper books, except for when they can make more money by not doing so.

  5. If they don’t want us to “assume” that we can do the things we have done with print, than they should not be charging us print prices. THAT is where the hostility, from both libraries and from book-buying customers, is coming from. They are charging the same or more, for less. If they want this to change the rights people have, they need to lower prices to compensate for this loss of privilege. If they want to keep prices at print levels for digital books, then they need to accept that this will drive people to anger and lead them to explore other options.

  6. I totally disagree with Martin Taylor, and totally agree with the previous commenters. Libraries create readers. If Harper Collins want to rent their ebooks, their terms must be better. I’ve sent a letter to HarperCollins and I have joined the boycott.

    Actions like these just make me hostile to publishers. When we’re all mostly digital, authors won’t need them to make money. Amanda Hocking and J. A. Konrath, to name a few already show that authors can make a decent living selling at reasonable prices.

  7. With traditional publishing rapidly heading for oblivion it not surprising that the big 6 will try anything to augment their diminishing income stream. HarperCollins execs must have sat up all night dreaming up a doozy like this.

  8. Is HC next going to put this kind of a limit on their ebooks for those of us who do purchase the book? a “three-read” license, then the book expires? That’s where this kind of thinking is leading. It’s almost like they want people to stop buying their ebooks.

  9. 40 cents a book would be great, that’s actually about what print books shake out at. The problem is that libraries pay about 30 dollars for each ebook, not the same price a retail customer pays, and certainly not the same as the bulk discounts we currently get for print books.

    Additionally, Overdrive is so complicated that many patrons can’t figure it out, there are about 20 steps to downloading your first “free” ebook. (patrons pay for them with taxes) It’s a serious investment in time and education.

    If they want us to get out of the same as print model, then they do too. Charge us per circ, grant us licenses for collections instead of individual books. LIbraries encourage literacy and create readers, this should be a conversation not a declaration from above.

  10. Jonathan Kuyper // March 6, 2011 at 10:19 pm //

    Just another corporate gasbag defending price gouging by publishers who want to protect an obsolete business model, and who are engaged in what is, essentially, a conspiracy in restraint of trade. Keep on gouging the public, fella, and we’ll keep right on pirating.

  11. The part that he seems to be totally clueless about is that a hardcover book will last for many many more lendings than 26.

    And HarperCollins is not selling ebooks for $10 which totally blows his comparison out of the water.

    With this in place, libraries will be expected to pay close to hardcover price and instead of getting a book that lasts for years, they “buy” short term rental of an ebook.

    Piffle.

  12. I would be fine if we recognize that ebooks are different then paper books and the libraries stop buying them. Instead they can compensate the authors directly the $0.40 to $0.80 per loan and leave the publishers out of it. If the libraries don’t have to pay for books that are rarely loaned they could have much better selection and the total cost would probably balance out.

  13. Humus B. Chittenbee // March 7, 2011 at 1:04 am //

    I find you present the monetary side of the authors with understanding. You do not, however, give the same attention to the libraries.

    Using your numbers, I took $15 as the median for a library to purchase an ebook. Their cost spread over the 26 ‘lendings’ would be $.58. So far, so good.

    You then refer to a lending number of 1,000 (using your first number.) For a library to procure enough ebook iterations to provide for that would cost them $577 [1000/26 X $15.] When faced [as you do mention] with funding issues in these times, are you at all surprised they balk at buying a book for $25 that they can loan indefinitely and paying 23 times that cost for being allowed to lend it only 1,000 times? Perhaps a much lower cost to libraries would ameliorate the issue.

  14. Could someone please explain why on earth a library should have to purchase a fixed number of copies of an e-book in the first place? These are digital files not physical objects. The whole mechanism of lending e-books through libraries has already been completely screwed up by publishers trying to make e-books work like physical books rather than adapting the business model to work. Why aren’t libraries allowed unlimited copies to lend, but paying a fixed royalty for each time an e-book is borrowed? It’s pretty clear who really isn’t adapting to digital technology.

    The crazy thing is that publishers are supposedly concerned about Amazon dominating the e-book market, but library lending uses the EPUB format which isn’t supported on the Kindle. If publishers are serious about limiting Amazon’s dominance, you would think that they would be doing whatever they could to make EPUB ending as easy as possible so that Amazon will be faced with the prospect of either supporting EPUB formats or losing market share.

  15. I think the general tone of these comments confirms the point I’ve made that this issue generates too much heat and not enough light. The concerns únderlying HarperCollins move won’t go away and they won’t get the serious thinking and debate they need until all the participants can talk about them freely. Libraries are part of a wider ecosystem, and the debate needs to go beyond inward-looking concerns of whether, and how, much libraries should pay for ebooks.

  16. Andy Jenkinson // March 7, 2011 at 5:36 am //

    So you write an inflamatory, inaccurate and biased article and then use the comments to try to justify your prejudice. Very clever.

  17. It’s very sad to see publishers and libraries fall prey to the same exact backwards thinking that has delivered such a blow to music sales in recent years. Publishers have an opportunity to establish a legal digital reading habit in consumers. Ask the major record labels what happens when you start to treat your customers like enemies, out of a fear of change.

    It took more than ten years for everyone to settle on a model for iTunes that shuns overly restrictive DRM, and a lot of music fans soured forever on the concept of paying for music at all. I think HarperCollins is delusional, at this point. And, unfortunately, the users, (your customers remember?), will suffer the most, followed by their sales. It’s not rocket science, unless you’re over the age of fifty, apparently…

  18. But Martin, you are assuming there has to BE a debate. I don’t think their does. To me (and to most customers) this is a very simple issue. Either we keep paying print prices, and therefore we expect to have the same rights we did with print books, or we have fewer rights, and we therefore pay fewer dollars. Until publishers grasp this essential belief that drives the marketplace, they won’t succeed in it. Ultimately, it matters less what Harper Collins ‘wants’ if they can’t get people to willingly pay them for it. And if they do drive people to other avenues, how do they know that people won’t STAY on those other avenues once the dust settles? I don’t think they understand the risk they are taking.

  19. Felix Torres // March 7, 2011 at 8:05 am //

    Joanna: Actually, the BPHs are in fact driving people to “other avenues”.
    Dark avenues full of massive collections. All for free in one honking big T-o-r-r-e-n-t.
    Just ask David Carnoy at CNET.
    I for one am not boycotting HC over their ridiculous library policy; I was already boycotting them over the Price-Fixing scam.
    One year, BPH-free, and not sweating it.
    And I still haven’t dipped into the Darknet. But I know how to do it.
    I am hardly alone.
    Music Napsterization occurred because the Studios were too late to recognize the market deman for reasonably priced and accessible digital music.
    eBook Napsterization now looms as a reality because the six BPHs are so mortally afraid of the ongoing commoditization of books that they are doing everything conceivable to make “piracy” attractive and giving mainstream readers all the excuses they could possibly need to rationalize away any ethical or moral concerns over availing themselves of the Darknet.
    Instead of adjusting to the new reality, they are trying to stem the tide of change.
    Yeah, right.
    Good luck with that!

  20. Perhaps a third model would be useful. A journal model could be based on a time to 100 circulations subscription.

    Certainly the journal subscription model requires an extreme need to read. Such a need is only partly generated by even wildly popular fiction. But there is a gradient. A popularity gradient can be established by the number of circulations per a timed circulation, say time to 100.

    Publishers will receive compensation based on popularity established by a reliable market measure. (it will even gauge the size of print runs) Libraries can meet the readership market without the need to build collections. In essence libraries continue to cultivate readership.

  21. I understand Harper Collins position, but they also need to move into the reality of ebooks. They seem to forget the cost savings they see from this distribution model and that is not factored into any of these arguments. You can argue what the actual percentage is, but nobody outside of the publishers actually knows for sure and I’m sure it varies from across books and genres. We tend to see big numbers associated with major releases, but what percentage of new releases actually get that level of marketing behind them? I would wager very few.

    I’m not opposed to limiting the number of times an ebook can be lent, but let’s ensure it’s a rationale number. As many librarians have already commented, 26 is very low for a physical book before it needs to be replaced. The other approach could be a license type of model similar to the Software industry. Pay a yearly fee and have no lending limits.

  22. Mr. Taylor is from New Zealand, and is therefore most likely unaware of the U.S. laws that have governed the publishing business and libraries for decades.

    The First Sale Doctrine says that once a publisher, movie studio or record company sells a book, home video or CD, the buyer can resell, loan or otherwise use the purchased copy as they like. Duplication for the purpose of piracy is illegal, however. Now that the distribution of media is shifting to bits over a network, publishers, etc. are using that as an argument to get out from under First Sale. They’re changing the terms from “sale” to “licensing”, which allows them to sidestep First Sale. At the same time, as other commenters have said, publishers are not offering any of the advantages of electronic distribution, such as multiple simultaneous usage.

    Publishers want eBooks to work just like print, but in HarperCollins’ case, they’re unwilling to admit that print books, even paperbacks, are usable for far more than 26 checkouts. In short, they’re taking advantage of licensing terms to take away a basic right that libraries have had for many decades.

    In addition, copious market research in the U.S. points out that libraries are one of the most important points of discovery for consumers to learn about new titles. Readers read books from libraries and tell their friends, who purchase the titles for themselves.

    HarperCollins’ move will ultimately backfire on it and any other publisher that tries to impose similar terms.

  23. Either we keep paying print prices, and therefore we expect to have the same rights we did with print books, or we have fewer rights, and we therefore pay fewer dollars.

    The problem with this logic is: Ebooks actually give you more usability options than printed books, which by your logic would suggest publishers should start charging more for ebooks. So I’d suggest, if you want to improve the likelihood that ebook prices will come down, you’d stop using that particular argument.

  24. They don’t give you more at all though, Steven. They give you less. You can’t re-sell them, can’t loan them out except in limited circumstances, and they can be removed from your digital bookshelf at the publisher’s whim. Also, if you change devices, your former purchases may not be compatible and you’ll have to buy your books again. How is that MORE?

  25. The problem with this logic is: Ebooks actually give you more usability options than printed books, which by your logic would suggest publishers should start charging more for ebooks.

    how so? An ebook only gives me more options when it is DRM-free. Until then, I’m being sold a crippled file that I can only read on a limited set of devices, with no assurance of being able to still access the book when technology changes (note B&N’s abandonment of the pdb file format with the Nook Color), I can’t loan it, give it, sell it. like I can a physical book. How is this *more* value?

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