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Are Libraries Locked Out of the E-book World? February 27, 2011

Posted by Bill Rosenblatt in DRM, Law, Libraries, Publishing, Uncategorized, United States.
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Publishing guru Thad McIlroy was kind enough to link to one of my stories on the e-book DRM scene in an article on his excellent Future of Publishing site.  (I have had the pleasure of working with Thad on various projects over the years.  Especially when it comes to production and output issues for publishers, he is The Man.)  So it’s incumbent on me to return the favor.

In his piece, Thad accuses book publishers and Amazon of effectively colluding to shut out libraries from access to e-books.  You can borrow e-books from many public libraries in the United States, but the process is clunky – because it entails using a system provided by a third party, Overdrive – and you can’t read them on a Kindle device or any of the Kindle apps.

On the one hand, de facto (if not necessarily explicit) collusions of this type are far from uncommon; in fact the history of copyright law is littered with such arrangements (read Jessica Litman’s Digital Copyright for a particularly jaundiced view on this).  But on the other hand, there are a couple of aspects to this story that Thad didn’t cover.  Frankly, his piece had me a bit befuddled, because for a long time I have pointed to e-book lending as one of the actual success stories of DRM, a model that increases consumer choice and convenience.

First of all, Amazon is not the only company with a popular e-book platform.  Adobe’s e-book platform works on just about every e-reader except the Kindles (including the Barnes & Noble Nooks and Sony Readers) as well as on PCs, Macs, Android, and so on.  The Adobe platform supports library lending and in fact is at the heart of Overdrive’s public library e-book lending service.  Moreover, a very recent study indicates that the Kindle’s market share among the e-book reading public has dropped below 50%, mainly thanks to the Apple iPad… and regarding iOS devices’ compatibility with the Adobe e-book platform, yes, there’s an app for that.   So, if you want to borrow e-books from your public library, just don’t use a Kindle; you have plenty of other choices.

In addition, there is a legal as well as technological or market-based angle to the problem of libraries in the era of digital content that’s worth discussing.  Section 108 of the U.S. copyright law grants libraries and archives rights to content that exceed those granted to people under normal conditions.  Among other things, it allows libraries to make copies of copyrighted works for noncommercial lending, as long as those copies are limited in number and afforded adequate protections against infringement.

There are various subtleties to Section 108 and its interplay with other areas of copyright law, not to mention moving-target implications of digital technologies.  Accordingl, the law requires a group of interested parties to revisit Section 108 every five years and recommend any changes they deem necessary.  The Section 108 Study Group is an analog to the better-known rulemaking on Section 1201, which the U.S. Copyright Office conducts every three years.  Section 1201 — enacted as part of the Digital Millennium Copyright Act — is the law against circumventing (hacking) DRM on copyrighted works.

The Section 108 Study Group (in its 2008 incarnation, at least) has 19 members, which are well balanced between copyright-owner and library/archive interests: nine  from each side and a neutral “legal advisor” from Columbia Law School.

Section 108 allows a library to make a copy of an e-book and lend it out to the library’s members.   Under this law, a library could presumably buy an e-book and lend it out.  But if the e-book is packaged with DRM, there are two problems.  First, the library is not actually buying a copyrighted work, it is licensing the work; see below.  Second, Section 108 doesn’t allow the library to hack the DRM in order to make the copy – not even if the library agrees to re-package the copy in a DRM scheme that lets a specific library patron read the e-book.  Such hacking would have to be allowed as an exception to Section 1201, which is the province of the Section 1201 rulemaking, and thus of the Copyright Office, not the Section 108 Study Group.  (See, I told you this stuff is subtle and complex.)

Because major publishers require DRM on their e-book releases, this means that libraries aren’t able to exercise rights under Section 108 just as a matter of law.  This has given rise to services like Overdrive, which facilitate the licensing of e-books from publishers for library lending purposes.

A license is a contract. The licensing of digital content exists in a legal realm that is separate from copyright law – at least for the moment.  The upshot is that publishers are free to choose whether to license their material in e-book form for library lending  and to dictate some of the terms of those uses, such as the number of devices on which a given user can read the material, period of lending, or number of times an e-book can be loaned.  For example, Simon & Schuster doesn’t license for e-book lending at all, and HarperCollins just introduced a policy to limit the number of loans per licensed e-book to 26, in an apparent move to mimic the lifespan of a physical book in library circulation.

Because libraries and publishers will perpetually disagree on these terms, it helps to have a third party like Overdrive or NetLibrary to act as a buffer or intermediary.  Some publishers may also agree to license their content through these services because of the risk that their refusal to do so will cause the Section 108 Study Group to recommend changes in the copyright law that give libraries more latitude in lending digital works.  As it is now, the copyright-owner contingent in the Study Group can point to services like Overdrive and NetLibrary as evidence that the market is providing solutions so no changes in the law are necessary.

The last Section 108 Study Group Report (for which I consulted to the Study Group) came out in 2008, which means that the activity in preparation for the next one will take place next year.   The next Copyright Office 1201 rulemaking also takes place in 2013.  If the members of the 108 Study Group who are on the “library side” want greater flexibility for libraries to lend digital works, they may want to try to get exemptions to the 1201 anti-hacking law for library lending proposed and approved.

If that happens, then Amazon and book publishers definitely will no longer have the “library lock-out” that Thad McIlroy described in his article.

Comments»

1. gous - February 28, 2011

What is to prevent publishers from withdrawing their titles en masse from libraries if this happens?

Anyway Amazon has no interest in libraries, see http://ireaderreview.com/2011/01/14/will-kindle-ever-add-support-for-library-books/

The real problem here is that neither publishers nor most authors really believe the arguments put forward in support of the idea that libraries boost sales. See my comment at http://www.teleread.com/paul-biba/its-no-pocalypse-at-digital-book-world-by-eric-hellman/

Finally I’m just flabbergasted that so few have taken note of the arguments of Tim Spalding, who has consistently argued that ebooks are bad news for libraries. Just about all his writings at
http://www.librarything.com/blogs/thingology/category/ebooks/
should be read as antidote to all the eboosterism from so many others.

2. Publishing Industry Forces OverDrive and Other Library eBook Vendors to Take a Giant Step Back | Librarian by Day - February 28, 2011

[...] Are Libraries Locked Out of the E-book World? (added 2.28.2011 5:25am est) [...]

3. Thad McIlroy - March 3, 2011

Bill,

Thank you for the kind words. There is much to tackle in this entry and the next and so a comment here and a comment there.

Many important issues surround this debate. The copyright issues are very much your domain, and I always appreciate your insight. There are areas where facts can clarify and others where just to clarify the argument may add value.

Your statement: “Amazon is not the only company with a popular e-book platform…a very recent study indicates that the Kindle’s market share among the e-book reading public has dropped below 50%…”

Fact(s): There is the Kindle device and the Kindle platform. The device (in several iterations) had the standalone market mostly to itself for awhile, but since the introduction of the Nook and the iPad (and other tablets and smartphones) now faces serious competition and decreasing marketshare. However Amazon has been successful at populating the Kindle software platform in inverse proportion to its declining hardware market.

Last month Bloomberg quoted a Goldman Sachs’ report that Amazon has 58% of e-book sales, Barnes & Noble 27%, Apple 9% and Borders 7%. Whatever the real number clearly Amazon remains the leading ebook vendor and its continuing refusal to support library lending locks libraries out of the most popular format from the vendor with the best title selection and the lowest prices.

Next up: “Because libraries and publishers will perpetually disagree on these terms, it helps to have a third party like Overdrive or NetLibrary to act as a buffer or intermediary.” Help whom? Not the public. For libraries the added value from these companies is ensured compliance with copyright restrictions, thus avoiding infringement liability. Plus the vendors provide valuable cataloging services.

But these are analog publishing issues. In a digital world vendors like Overdrive become an added barrier to public ebook access. They encumber the reading experience rather than enhancing it. They aren’t licensed to offer Amazon Kindle editions. And so their selection remains limited. This, in combination with the publisher boycotts you discuss in your next blog entry will, I argue, deal a death blow to public libraries.

4. Bill Rosenblatt - March 3, 2011

Thad,

Thanks for weighing in here. Your insights are always valued. However, I have to take issue with two of your points:

1. The dominance of the Kindle platform. It’s irrelevant in this case. The salient fact is that you can borrow a library e-book on any popular device except a Kindle. The fact that Amazon accounts for 58% of e-book sales is equally irrelevant. You don’t go to Amazon to borrow e-books, so I don’t see the point. The barrier to entry for a user who wants to borrow an e-book and has, say, a PC, Mac, iPhone, or (in my case) an Android phone, is quite low: just install an app. Of course Amazon won’t participate in the library market because it fears lost e-book sales. Who blames them? Adobe doesn’t operate an e-book store, so its motivations are the opposite.

2. The point about how the Overdrives and NetLibraries help by acting as intermediaries. I guess I failed to explain myself clearly enough. As Eric Hellman points out, these companies deserve a lot of credit for having creating the library e-book lending market from scratch. They built scalable systems that libraries can use without infrastructure costs or IT expertise, neither of which libraries (let’s face it) have in abundance. And they ran around aggregating content from hundreds of publishers and got them all to agree to more or less the same licensing terms, resulting in a relatively smooth (compared to many alternatives) experience for library patrons. Libraries would not have been able to achieve this on their own. I know that Steve Potash slogged it out for many years before his company gained the trust of publishers, in part by running their own e-book stores for them. We should tip our hats to people like him, especially because — as you and I seem to agree — their era may be coming to a painful end if things go the way they seem to be going now.

5. Brian Bordenkircher - May 15, 2011

I think it will be very interesting to see what changes will come about with the way digital book reading will change the market. Yes, I do believe that this could potentially bring down the traditional view of libraries just as it will close down many of the traditional sources of books and publications. Mom and pop book stores have mostly already closed down and going forward many book stores with store fronts may continue to get business taken away and need to close. Same will apply for news organizations and publications that may strictly provide writting and news in paper form and may not make the leap to the digital media soon enough.

Libraries will likely change focusing more on historical and digital media and internet access.

Authors may be able to self publish easier and yet the competition and advertising costs may increase per book.

The price of paper books will increase to possibly 3 to 4 times the price of e-books in the next 20 years as the paper book becomes more of a collectible form of publishing. The future of this industry and how it will change our day to day lifes is quite interesting!

6. Lis Carey - July 24, 2011

I know this is months old, but I followed a link, and followed a link, and here I am.

Interesting to note that Amazon announced in April that they’re interested in the library ebook market after all http://phx.corporate-ir.net/phoenix.zhtml?ID=1552678&c=176060&p=irol-newsArticle and Overdrive is making changes to boost the Amazon program and also simplify ebook lending for libraries http://www.techflash.com/seattle/2011/06/overdrive-update-helps-amazon-program.html

It’s quite true that, at least many authors don’t believe that libraries boost sales. Publishers, being smarter about marketing (that’s part of their job and justification for existing, after all), do believe it–for print books. For print books, they understand exactly how and why being well-represented in libraries boosts the sales of books.

Where they don’t believe it, most of them, is with ebooks. Most publishers are terrified of electronic formats. That’s why we have sometimes extreme and unworkable DRM.

But there are exceptions. It’s been over a decade now since the National Academy Press decided they were more interested in the books being read than in making money, and made most of them available for free in pdf–and discovered that their print sales went up, not down.

A very different kind of publisher, Baen Books, also decided years ago to experiment with making some titles available free in electronic format. It’s been enormously successful. They encourage their authors to agree to making some of their books available free in their online library (ideally the first books of series; Jim Baen was never crazy), first chapters for the month’s titles are free, there’s a monthly free short story, you can buy individual books as ebooks, and you can subscribe–quite cheaply, especially compared to buying them all in print–to receive each month’s entire list in ebook format.

Again, it has boosted their sales and been a very effective form of advertising for them.

There are also some individual authors, such as Cory Doctorow and Charles Stross, who strongly believe they boost their sales by making some of their books available as free ebooks–and who also understand what libraries do for building their audience and attracting new buyers.

And at the other extreme you have authors who think libraries are The Enemy, and that every loan from a library is a lost sale. But they are fools, and I won’t either shame or advertise them by naming them here.

How libraries navigate the digital world is certainly a question fraught with many challenges, but what we offer is not just the ability to borrow books, and the transition to digital is more a challenge than a threat.

Bill Rosenblatt - July 24, 2011

Lis,

Thanks for your thoughtful comments. I have a few things to reply about.

First of all, I did write a follow-up article about Amazon and Overdrive: http://copyrightandtechnology.com/2011/04/20/amazon-to-enter-library-lending-market/.

Secondly, I have to say that I disagree with several of your points.

I don’t know where you get your assertion that publishers believe that “being well-represented in libraries boosts the sales of books.” This is, at best, an overstatement. Most of the publishers I talk to (and I talk to a lot of publishers) don’t like libraries, except the academic publishers whose only customers are institutional libraries. And the latter are on the lookout for other types of customers because, among other reasons, such libraries’ budgets keep shrinking.

Lending libraries are made possible by section 109 of the US copyright law, which forbids publishers from preventing libraries from buying books and lending them. Over time, publishers have made peace with this law and have learned how to live with it; that’s the most positive thing I can say about their relationships with libraries. They view e-books as a chance to start fresh and limit what libraries can do with them, as I have explained in my articles. The legal context and the fact that publishers don’t pay for the DRM go a long way toward explaining how e-book DRM is the way it is today. If publishers are “terrified” of e-books it’s mainly because a) they don’t understand the technology, b) they don’t believe that people actually want to read books on electronic devices, and c) the high-level manager in charge of print sales wants to protect his turf. Concerns about piracy are further down the list, as I have found from talking to people who try to sell publishers DRM.

Regarding free first chapters and free PDFs: both of these examples “don’t count.” They are both promotional devices that do not substitute for the real thing. Digital first chapters have been available going back to the late 1990s through a company called Dial-a-Book, which was a “behind the scenes” aggregator of first-chapter digital rights. PDF is far from an ideal format for reading. As Laura Fillmore from OBS (Online Book Store, later OpenBook Systems) will tell you, no one wanted to pay for plain-ASCII-text digital books back in the mid-90s. It’s the same thing. I myself publish a table of content protection technologies on the market; I make a copy available for free in PDF, which is an even less convenient way to read large tables of data, and I sell an (unprotected) Excel spreadsheet for money.

National Academies Press is a government-funded nonprofit. They don’t need to make a profit. They “decided they were more interested in the books being read than in making money” from Day One.

As for Cory Doctorow, he is a well-known extremist on this subject whose opinions are suspect because they are primarily intended to attract attention to himself. Some of what he writes and talks about is valuable, such as his advice to publishers of how companies like Amazon can affect the economics of the digital supply chain. But doesn’t really understand the DRM market, and he gets a free pass with many techies because he is a talented SF author. I respect Cory but take his output with more than a grain of salt.

7. Lis Carey - July 24, 2011

Maybe I wasn’t clear enough: Baen Books makes whole books available free in all standard ebook formats. Not all their books all the time, but a wide selection of what they publish. Cory Doctorow is a bit of an extremist, yes, but Jim Baen was a businessman, interested in making a profit, as are the people running the company since his death.

Charles Stross isn’t an extremist, either, and is very interested in supporting himself as much as possible via his writing.

Yes, NAP is a government-funded non-profit, and getting the books read has been the main goal from the beginning. But the costs have to be covered; that’s why they don’t give the print books away for free to anyone who asks. And e-publishing only eliminates the physical production costs; all the other costs of publishing remain.

So, yes, indeed, NAP was taking a risk when they began making books available free as pdfs. They thought they would have a drop in sales, but thought it would be a small enough drop that they could afford it. They did not anticipate an increase in sales.

Jim Baen, being better acquainted with his market, did anticipate the increase in sales.

I’ve been negotiating contracts for electronic materials since the early 90s, and the restrictions and pricing have generally been nutty from any perspective other than a terror of losing control o their materials if it’s in electronic format. The publishers’ behavior certainly hasn’t reflected a fear that no one would want their materials in electronic format; quite the contrary. It has reflected a belief that no one would buy the cow if they could get the milk for free.

I do think, though, that once they had the vision of a pay-per-view world electronically, at least some of them started daydreaming about it in the print world.

I don’t care what the publishers say; I care how they act. And how they act is that they’re only gradually coming to terms with the necessity of publishing electronically, deeply regret the failure of the music industry’s efforts to force us to pay separately for each device we want to use their intellectual property on, and have not yet let go of their fears regarding copying and sharing.


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