Publishers Shift Strategy to Deal with Greater Online Lending

Publishers Shift Strategy to Deal with Greater Online Lending

In the debate surrounding controlled digital lending (CDL), where libraries can scan physical copies of books to be lent out on a one-to-one own-to-loan basis, one common refrain is that these libraries have special e-book licenses they can purchase.

This is true, though the costs charged to libraries are exorbitant, as librarian Jennie Rothschild found while doing her own research. Many publishers limit what titles are available, charge well above the cost of a physical copy, and sometimes charge on a per-check-out basis (called a “metered license”).

But the shutdowns and economic downturn caused by the COVID-19 outbreak have led to a shift in the book market from physical books to e-books, with libraries footing the bill for more expensive licenses. As Aarian Marshall writes in Wired:

Borrowers…are driving publishers crazy. After the pandemic closed many libraries’ physical branches this spring, checkouts of ebooks are up 52 percent from the same period last year, according to OverDrive, which partners with 50,000 libraries worldwide. Hoopla, another service that connects libraries to publishers, says 439 library systems in the US and Canada have joined since March, boosting its membership by 20 percent…

But the surging popularity of library ebooks also has heightened longstanding tensions between publishers, who fear that digital borrowing eats into their sales, and public librarians, who are trying to serve their communities during a once-in-a-generation crisis. Since 2011, the industry’s big-five publishers—Penguin Random House, Hachette Book Group, HarperCollins, Simon and Schuster, and Macmillan—have limited library lending of ebooks, either by time—two years, for example—or number of checkouts—most often, 26 or 52 times. Readers can browse, download, join waiting lists for, and return digital library books from the comfort of their home, and the books are automatically removed from their devices at the end of the lending period.

Publishers are responding to this shift in the market by increasing their prices but, more importantly, by imposing more stringent terms on libraries purchasing e-book licenses:

[P]ublishers’ licensing terms make it “very difficult for libraries to be able to afford ebooks,” says Michelle Jeske, director of the Denver Public Library and president of the Public Library Association. “The pricing models don’t work well for libraries.” Between January and July, the Denver system saw 212,000 more books downloaded than the same period last year, a 17 percent increase.

Last year, Macmillan took an additional step, limiting each library system to only a single digital copy of a new title—at half its usual price—until it had been on the market for two months. Macmillan CEO John Sargent said he worried there was too little friction in library ebook lending. “To borrow a book in [the pre-digital days] days required transportation, returning the book, and paying those pesky fines when you forgot to get them back on time,” he wrote in a letter announcing the policy. “In today’s digital world there is no such friction in the market.” Many librarians, arguing the Macmillan policy hurt large urban systems that already struggle to keep up with demand for new and noteworthy books, organized to boycott the publisher. [Emphasis added]

This bolded quotation in particular is troubling. It’s one thing for publishers to be worried about piracy–the illicit copying and distribution of protected works. But it’s another thing entirely for them to complain about a market getting more efficient, with technological changes making access to works cheaper for readers. This becomes even more concerning when there’s no evidence that easy access is reducing publishers’ ability to do anything other than collect rents above the reasonable profit necessary for the publishing industry to function.

The ability to gouge libraries (read: taxpayers) has even raised antitrust concerns, as the article highlights, “The debate has attracted attention in Washington. The House Antitrust Subcommittee last year launched an investigation of competition in the digital marketplace, and subcommittee chair Representative David Cicilline (D–Rhode Island) has met with library advocates.”

Whether legislation to address the practices of publishers is necessary is a separate question, but it’s worth keeping in mind that the reason such legislation may be necessary in the first place is because of the monopoly power granted by exclusive rights in books which are licensed.

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By |2020-10-07T09:27:17-07:00October 7th, 2020|Blog, Intellectual Property|