Martin taylor 2 1

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.