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The Coming Two-Tiered World of Libary E-book Lending June 4, 2013

Posted by Bill Rosenblatt in Libraries, Publishing, Services, United States.
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A group of public libraries in California recently launched a beta version of EnkiLibrary, an e-book lending system that the libraries run themselves.  EnkiLibrary is modeled on the Douglas County Libraries system in Colorado.  It enables libraries to acquire e-book titles for lending in a model that approximates print book acquisition more closely than the existing model.

Small independent publishers are making their catalogs available to these library-owned systems on liberal terms, including low prices and a package of rights that emulates ownership.  In contrast, major trade publishers license content to white-label service providers such as OverDrive under a varied, changing, and often confusing array of conditions — including limited catalog, higher prices than those charged to consumers, and limitations on the number of loans.  The vast majority of public libraries in the United States use these systems: they choose which titles to license and offer those to their patrons.

Welcome to the coming two-tiered world of library e-book lending.  E-lending systems like EnkiLibrary may well proliferate, but they are unlikely to take over; instead they will coexist with — or, in EnkiLibrary’s own words, “complement” — those used by the major publishers.

The reason for this is simple: indie publishers — and authors, working through publisher/aggregators like Smashwords — prioritize exposure over revenue, while for major publishers it’s the other way around.  If more liberal rights granted to libraries means that borrowers “overshare” e-books, then so be it: some of that oversharing has promotional value that could translate into incremental, cost-free sales.

In some ways, the emerging dichotomy in library e-lending is like the dichotomy between major and indie labels regarding Internet music sales.  Before 2009, the world of (legal) music downloads was divided into two camps: iTunes sold both major and indie music and used DRM that tied files to the Apple ecosystem; smaller services like eMusic sold only indie music, but the files were DRM-free MP3s that could be played on any device and copied freely.  That year, iTunes dropped DRM, Amazon expanded its DRM-free MP3 download service to major-label music, and eventually eMusic tapered off into irrelevance.

Yet it would be a mistake to stretch the analogy too far.  Major publishers are unlikely to license e-books for library lending on the liberal terms of a system like EnkiLibrary or Douglas County’s in the foreseeable future; the market dynamics are just not the same.

In 2008, iTunes had an inordinately large share of the music download market; the major labels had no leverage to negotiate more favorable licensing terms, such as the ability to charge variable prices for music.  The majors had tried and failed to nurture viable competitors to iTunes.  Amazon was their last and best hope.  iTunes already had an easy-to-use system that was tightly integrated with Apple’s own highly popular devices.  It became clear that the only meaningful advantage that another retailer could have over iTunes was lack of DRM.  So the major labels were compelled to give up DRM in order to get Amazon on board.  By 2009, DRM-free music from all labels became available through all major retailers.

No such competitive pressures exist in the library market.  On the contrary, libraries themselves are under competition from the private sector, including Amazon.  Furthermore, arguments that e-book lending under liberal terms leads to increased sales for small publishers won’t apply very much to major publishers, for reasons given above.

Therefore, unless libraries get e-lending rights under copyright law instead of relying on “publishers’ good graces” (as I put it at the recent IDPF Digital Book 2013 conference) for e-lending permission, it’s likely that libraries will have to labor under a two-tiered system for the foreseeable future.  Douglas County Libraries director Jamie LaRue — increasingly seen as a revolutionary force in the library community — captured the attitude of many when he said, “It isn’t the job of libraries to keep publishers in business.”  He’s right.  Ergo the stalemate should continue for some time to come.

Comments»

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