New Focus on Ebooks

2012 State of America's Libraries Report

Libraries deepen ebook engagement

Teen girl at library with e-readerTeen using e-reader at Myrtle Grove Middle School in Wilmington, North Carolina.

The proportion of U.S. libraries that made ebooks available almost doubled over the past five years, climbing from 38.3% in 2007 to 67.2% in 2011, according to the American Library Association's Public Library Funding and Technology Access Study. The increase paralleled skyrocketing sales of popular new reading devices and tablet computers.

Not surprisingly, the twin surges provided additional impetus for a dialogue between the publishing and library communities concerning the availability and pricing of ebooks to libraries. ALA officials met with representatives of Penguin, Macmillan, Random House, Simon & Schuster, and Perseus in New York in January 2012. (Macmillan, Hachette Book Group, and Simon & Schuster have refused to sell ebooks to libraries, and Penguin had eliminated library access to its new ebook titles in November 2011.)

“We explored possibilities for collaboration to conceptualize and develop business models and improve everyone’s understanding of how library ebook lending advances the marketability and availability of titles for all,” said ALA President Molly Raphael. “Indeed, some distributors have library ebook lending pilots planned in the near future toward that end.

“Though ebook demand is growing rapidly, print books still comprise a significant portion of acquisitions in public libraries. Several of the distributors discussed how print books, ebooks with perpetual licenses, and ebooks with limited licenses each provide different functionality and should be viewed as a portfolio of varied resources, rather than mutually exclusive.”

Libraries would see more setbacks in their ability to provide no-fee access to ebooks before improvements in the market, however.

Publisher raises prices for ebooks to libraries

After signaling in February that price adjustments were in the works, Random House increased its ebook prices by 100-200% in March 2012.

Debra Oberhausen, manager of collection services at the Louisville (Ky.) Free Public Library, was among those who felt the sting.

On Feb. 29, Oberhausen had bought Eisenhower in War and Peace, by Jean Edward Smith, for $40; on March 1, the price was $120. (The print version of the book, with the library’s discount, is a little over $20; it retails at $40). For Blessings, by Anna Quindlen, the ebook price went from $15 to $45.

Random House increased prices to distributors, such as OverDrive, which in turn can add its own increase. OverDrive is by far the largest distributor of ebooks to public libraries.

“We’re very concerned,” Oberhausen said. “We want to provide this service, but this kind of pricing is really going to take a huge chunk of our budget. . . . This price increase is really, really hard.”

The ALA immediately called on Random House to reconsider its decision.

“While I appreciate Random House’s engagement with libraries and its commitment to perpetual access,” Raphael said in a statement, “I am deeply disappointed in the severe escalation in ebook pricing. Calling on our history together and our hope to satisfy mutual goals moving forward, ALA strongly urges Random House to reconsider its decision. In a time of extreme financial constraint, a major price increase effectively curtails access for many libraries, and especially our communities that are hardest hit economically.

Random House, which had first announced the price hike (without specifying the prices) on Feb. 2, provided the following breakdown for what it is now charging library ebook distributors:

  • Titles available in print as new hard covers: $65–$85.
  • Titles available for several months, or generally timed to paperback release: $25–$50.
  • New children’s titles available in print as hardcovers: $35–$85.
  • Older children’s titles and children’s paperbacks: $25–$45.

 

“We believe our new library e-pricing reflects the high value placed on perpetuity of lending and simultaneity of availability for our titles,” said Stuart Applebaum, a Random House spokesperson. “Understandably, every library will have its own perspective on this topic, and we are prepared to listen, learn, and adapt as appropriate,” he said.

Applebaum said Random House welcomed “continuing discussions on the value we place on the unrestricted perpetuity, as well as the simultaneous release of our titles to retail booksellers and public libraries, the key differentiating factors determining our new pricing to library wholesalers.”

“We are requesting data that libraries can share about their patrons’ borrowing patterns that over time will better enable us to establish mutually workable pricing levels that will best serve the overall ebook ecosystem,” Applebaum said. He also noted that the new pricing does not affect Random House titles already in a library’s collection.

 

Other things you should know about ebooks and libraries:

  • Ebook sales are expected to generate $9.7 billion worldwide in 2016, according to one forecaster.

  • While library ebook circulation is still very low compared to print book collections, many libraries have experienced significant increases in ebook circulation.

  • Mobile devices, including ebook readers and netbooks, are available at 27.8% of libraries.

  • In many cases ebook circulation is hindered by e-reader compatibility issues and the complexity of ebook downloads, digital rights management issues, and availability of popular titles.

Penguin discontinues library ebook sales

Penguin joined three of the other “Big Six” publishers in disallowing the acquisition of ebook and audiobook titles by libraries when it severed its relationship with library vendor OverDrive in February 2012, immediately eliminating new purchases. This followed a November 2011 decision to stop offering its frontlist ebooks to OverDrive.

“Looking ahead, we are continuing to talk about our future plans for eBook and digital audiobook availability for library lending with a number of partners providing these services. Because of these discussions, as of February 10, 2012, Penguin will no longer offer additional copies of ebooks and audiobooks for purchase via OverDrive. Physical editions of Penguin's new and backlist titles will continue to be available in libraries everywhere,” the publisher announced.

At the same time, Penguin expressed interest in continuing the dialogue with libraries and ALA: “In these ever changing times, it is vital that we forge relationships with libraries and build a future together.  We care about preserving the value of our authors’ work as well as helping libraries continue to serve their communities, Our ongoing partnership with the ALA is more important than ever, and our recent talks with ALA leadership helped bring everything into focus.”

ALA President Raphael affirmed ALA would continue the conversation. “This is a radically dynamic time of change, and we look forward to crafting stable and sustainable business models that enable libraries and publishers to connect readers and authors in the digital age as successfully as we have done since Gutenberg. We all need to work together—and quickly—to bring about full access to ebooks in libraries for everyone, and especially for those readers who depend on libraries as their only source of reading material.”

HarperCollins policy: 26 loans per ebook

HarperCollins had adopted something of a compromise position about a year ago, when it became the only major publisher to change the traditional ebook arrangements with libraries. Starting in March 2011, HarperCollins stopped selling ebooks to libraries for unlimited use, which it had been doing since 2001, and began licensing use of each ebook copy for a maximum of 26 loans. The move affects only the most popular titles and has no practical effect on others. After the limit is reached, the library can repurchase access rights at a lower cost than the original price.

The policy came under fire from the ALA, authors, libraries, and librarians, among others. A petition against the change garnered more than 70,000 online “signatures,” though the 26-loan policy started looking much better on March 1 of this year. HarperCollins said the policy stemmed from concerns that continuing to sell ebooks on the old, unlimited terms would “in the end lead to a decrease in book sales and royalties paid to authors.”

Before the Random House move, publishers had been holding back, watching for an industrywide approach to gel. Any agreement still seems elusive, in part because, as David Young, chief executive of Hachette Book Group, says, “Publishers can’t meet to discuss standards because of antitrust concerns. This has had a chilling effect on reaching consensus.”

Discussion in the blogosphere

The questions swirling around ebooks—and the lack of data available to answer those questions—have fueled widespread commentary in the blogosphere.

“The reluctance of most big publishers to make ebooks available through library lending is a topic of widespread attention and concern,” wrote Mike Shatzkin, a blogger at The Idea Logical Company (www.idealog.com/blog), on March 27.

“What really rang true [after the Random House decision] was the fear that the consumers in an emerging ebook ecosystem would ‘learn’ that getting ‘free’ ebooks from libraries was just as easy as getting ebooks from retailers and paying for them,” Shatzkin said. “Given that all this requires is pointing your web browser in a different direction, it looked to many of the publishers like a really poor bet to enable ebook lending by libraries. Sales of ebooks to libraries isn’t a huge market, so the upside is limited. And with many ebook retailers struggling to gain traction in an Amazon-dominated marketplace, the consequences of even a small loss in sales could knock players out of the game.”

Amazon’s Kindle is in competition with other makers of ebooks, including Apple with its iPad, Barnes & Noble (the Nook), Kobo, and Sony (the Sony Reader). And there’s a lot at stake: Sales of adult ebook titles rose 49.4% between January 2011 and January 2012 ($66.6 million versus $99.5 million), while ebook sales in the children and young adult segment shot up 475% ($3.9 million versus $22.6 million).

Again, the lack of data in a field that is developing at warp speed means that “publishers are implementing policies that they know will result in their revenue being reduced immediately in order to develop what they believe will be a stronger and more diversified distribution network for ebooks in the long run,” Shatzkin said.

One possibility: Make ebooks available through libraries after the titles have started on a downward sales trajectory at retail. “Yes, this is windowing,” Shatzkin said. “If publishers did it on their big ebook titles, they’d be doing exactly what Hollywood is doing with DVDs of major movies, which are also withheld from library distribution until the theatrical and early DVD revenues have been harvested.”

In sum, no one is quite sure where the ebook–library relationship is going. Is this a marriage that’s breaking up or an engagement that’s just going through a rough period? Time will tell, and more data will certainly help.

Meanwhile, it’s worth recalling that in 1992—ancient times, in this context—Sony launched the Data Discman, an electronic book reader that could read ebooks stored on CD-ROM. One of those ebooks was a collection of titles called The Library of the Future.