License to Lend

There has been a long-standing debate between publishers and libraries on how best to handle the lending of ebooks. Understanding how publishers distinguish between book sales and ebook sales is key to understanding the larger dilemma. According to the “first-sale” doctrine of copywrite law, when someone purchases the book, they are free to do what they wish with it (Vaccaro 2014). The library’s book ownership is definite. Ebooks have no such protections. When libraries – and even customers – purchase an ebook, what they are purchasing is the access to the license, and publishers have the power to dictate restrictions and parameters for these licenses (Vaccaro 2014). According to Deirdre Brennan of the Illinois Library System, “[publishers] have been trying to figure out how to price non-print content, and I think they still don’t know” (Enis 2018). Publishers justify charging exorbitant amounts of money because of the accessibility of ebooks. With the steady decline of print sales, publishers are worried that ebooks, and library ebooks in particular, may be to blame. The Canadian Public Libraries for Fair Book Pricing, a coalition of over 26 libraries, has reached out to multiple government agencies, but it is only in 2018 that publisher Penguin Random House (PRH) has led the way by implementing the first cost-effective solution. (Stevenson 2016) (fairpricingforlibraries.org). What is desperately needed is reform through a new Canadian copywrite act that addresses the changes in publishing’s new digital landscape.

The most widely used licensing models for libraries include the perpetual access model (or treat it like print model), metered model, and the limited number of loan license. The lack of uniformity has been a major cause of frustration for libraries. Major publisher HarperCollins currently uses the limited number of loans license. The company does not charge a premium for its ebooks, but rather their ebook licenses expire after 26 loans, after which libraries would have to repurchase the title. The libraries cannot remove the ebooks, they are just unavailable for checkout. HarperCollins President of Sales Josh Marwell reasons that “26 uses, if each user borrows for the typical library maximum of two weeks, puts it on par with about a year’s worth of lending. He also says less popular ebooks usually aren’t even lent 26 times” (Vaccaro 2014). The Pioneer Library System of Oklahoma refuted this explanation, explaining that wear and tear, rather than checkouts, is how librarians decide if a book needs to be repurchased (quoted in Eddy 2011). Furthermore, they point out that due to “changing tastes and technological advancement, many of their digital offerings do naturally decay and require re-purchase” but on a more realistic and manageable scale (Eddy 2011). Dianne Carty, current Massachusetts Board of Library Commissioners Director felt there was merit to Marwell’s argument but reasoned that paperbacks can typically endure 30 to 50 uses (Vaccaro 2014). HarperCollins’s licensing plan is an example of how publishers have thus far failed to address the customers’ needs and the libraries’ limitations regarding the emerging digital economy.

Like all of the Big Five publishers, the Hachette Book group utilizes the one-copy/one-user systems that limits ebooks to being lent out only by one user at a time as though it were print. Unlike HarperCollins, however, Hachette’s ebooks can be loaned out an unlimited number of times, however, libraries wishing to purchase ebook titles from Hachette’s frontlist have to pay three times the primary price for the print version (Kozlowski 2018). The extreme pricing of library ebooks is a major cause of concern for librarians. According to librarians, they pay 1.5 to 5 times what consumers pay, and often in American currency (Stevenson 2016). For example, an average reader would pay $14.99 for a James Patterson book, whereas a library pays $121 for one copy meant to be read by many patrons (Stevenson 2016). John Grisham’s Grey Mountain costs readers $15.99. Libraries have to pay $85 for the same title (Kozlowski 2015). The issue is further complicated by publishers such as Simon & Schuster and Macmillan whose licenses expire after one to two years (Kozlowski 2018). Canadian Public Libraries claim that since 2009, the public demand for ebooks has grown 1200% (Stevenson 2016). Now more than ever, major publishers and libraries need to band together to determine a flexible solution that respects the value libraries without hurting the publishing industry.

With the low overhead costs associated with producing ebooks, one might wonder whether publishers are gouging librarians for money. In an interview with Michael Kozlowski, expert on audiobooks and e-readers, Loida Garcia-Febo, president of the American Library Association (ALA), speculated that “The reason why publishers are so hostile to libraries is because the e-books are loaned out to people who might otherwise be customers, they the publishers need to compensate for those perceived losses” (2015). Major sci-fi publisher Tor Books, a division of Macmillan, confirmed the administration’s theory when the company announced in 2018 that, beginning with July 2018, it would be imposing an open-ended embargo to test the impact of library’s lending on retail sales (Albanese 2018). The ALA was disheartened to hear of Tor’s unanticipated plan to no longer allow libraries to purchase its new ebooks until four months after their original retail date (Albanese 2018). In an official statement, Macmillan claimed the publisher’s “current analysis on eLending indicates that [libraries’ ebook lending] is having a direct and adverse impact on retail eBook sales” (quoted in Albanese 2018). Beyond being disappointed about the lack of advance notice, ALA was particularly shocked that Macmillan would choose to implement the “test” while the Panorama Project is still underway. Initially funded by OverDrive, the Panorama Project is a data-driven project to determine libraries’ impact on distribution, book discovery, author brand development, and sales. It is a project that Macmillan is voluntarily participating in, and yet the company feels that having its own data from the embargo is vital to determining the true value of libraries. With how rapidly libraries have been building digital catalogues and the growing demand from patrons, it is inevitable for the Big Five to conceptualize new terms based on the changing landscape. The Tor embargo, however, suggest that that change may be for the worse.

In 2018, the publishing industry had what many librarians consider the first victory in ebook licensing. Starting October 1st, PRH is shifting from the perpetual access model to a metered model (Albanese 2018). The metered model is when publishers offer lower prices on their ebooks, but the books expire after two years. In an official letter, PRH vice president Skip Dye assured the press that the decision was made based on librarians’ feedback (Albanese 2018). Only new titles would be affected, whereas libraries would permanently retain the license to ebooks they purchased under the perpetual access model. In explaining the change, Dye emphasized that PRH is prioritizing library patrons’ access to frontlist titles, allowing the titles to be lent out on the same day they are available in retail (Albanese 2018). In contrast to Tor’s outlook on the adversarial impact of libraries, PHR stated that they “believe strongly that libraries help build relationships for our authors and having [their] books available promptly to [libraries] at the one-sale date is an important way to support the valuable work that public libraries do” (quoted in Albanese 2018). There are benefits and downsides to this new model. As Kozlowski points out, trendy books often have a short expiration date (2018). Larger libraries benefit from not having to pay exorbitant amounts of money for the ebook of the latest Giller prize winner or bestseller. There are libraries that do not have the budget for paying five times over the retail price, and by prioritizing the frontlist, these libraries can save money. Unfortunately, the perpetual access model for librariesis central to building a strong backlist. Michael Blackwell, director of St. Mary’s County Library described the model as “A mixed bag for libraries” because although the shortlist would be cost-effective, the perpetual license enabled them “to keep important, high-circ titles…in [their] collections over time, rather than having to constantly repurchase them” (quoted in Enis 2018). PRH’s new licensing model is a positive step in the right direction, but it may not be the ideal solution to satisfying the needs of librarians and their patrons.

Based on librarians’ feedback, one might suggest that the best model would involve allowing librarians to choose between perpetual access and metered licensing based on the nature of the title. This would ensure that librarians would not have to repurchase titles with enduring popularity nor pay a surplus for frontlist ebooks with short shelf lives. However, even if publishers implemented these changes, two issues would remain. The first is the lack of uniformity between publishers. Unity between major publishers would simplify the licensing system for librarians who have the difficult task of determining which books to buy, from whom, and how much to budget for their ebook catalogue. Key to this resolution is establishing libraries’ impact on sales. With publishing profits plunging, most experts have pointed to Amazon sales as the culprit, but publishers are waiting eagerly for the Panorama Project to determine libraries’ true value. The crucial data behind the project will inevitably shape the new licensing policies the Big Five will release in the upcoming years. Until then, the future of ebook licensing remains uncertain.

Albanese, Andrew. (2018, September 4th). “Penguin Random House Changes its Library E-book Terms.” https://www.publishersweekly.com/pw/by-topic/industry-news/libraries/article/77904-penguin-random-house-changes-its-library-e-book-terms.html

Albanese, Andrew. (2018, July 18th). “Tor Scales Back Library E-Book Lending as Part of Test.” Publishers Weekly. https://www.publishersweekly.com/pw/by-topic/industry-news/libraries/article/77532-tor-scales-back-library-e-book-lending-as-part-of-test.html

Blackwell, Michael. (2018, September the 4th). “Penguin Random changes e-book models mostly for the better.” Readers First. http://www.readersfirst.org/news/2018/9/4/penguin-random-changes-e-book-models-mostly-for-the-better

Eddy, Max. (2011, March the 3rd). “HarperCollins Builds Auto Destruct into Library eBooks.” The Mary Sue. https://www.themarysue.com/harpercollins-builds-auto-destruct-into-library-ebooks/

Enis, Matt. (2018, October 12th). “Librarians React to New Random House Ebook Terms.” Library Journal. https://www.libraryjournal.com/?detailStory=181012PRHebookterms

Fair Pricing for Libraries.org. http://www.fairpricingforlibraries.org/

Kozlowski, Michael. (2018, August 23rd). “Here is a breakdown of how much libraries pay for ebooks from publishers.” Good e-Reader. https://goodereader.com/blog/e-book-news/here-is-a-breakdown-of-how-much-libraries-pay-for-ebooks-from-publishers

Kozlowski, Michael. (2018, September 5th). “Penguin Random House is changing their terms for library ebooks.” Good e-Reader. https://goodereader.com/blog/digital-library-news/penguin-random-house-is-changing-their-terms-for-library-ebooks

Panorama Project.org. https://www.panoramaproject.org/

Stevenson, Verity (2016, May 24th). “Libraries feel the ebook pinch.” The Star. https://www.thestar.com/business/2016/05/24/libraries-feel-the-ebook-pinch.html

Vaccaro, Adam. (2014, June the 27th). “Why It’s Difficult for Your Libraries to Lend Ebooks.” Boston.com. https://www.boston.com/news/technology/2014/06/27/why-its-difficult-for-your-library-to-lend-ebooks

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