With the ever-increasing importance of libraries as a way readers can discover new authors and books, and the growing popularity of digital access, we thought it was time to post a comprehensive update on libraries and ebook licensing.
It’s important to recognize that the large majority of libraries license, rather than buy, their ebooks. This is a critical difference, because in licensing contracts, the first sale doctrine does not apply.
For those who need reminding, the first sale doctrine is the section of copyright law that states “once a product is sold, the original creator/owner gives up all rights to preventing that copy from being resold, lent, rented, or otherwise conveyed to another person,” according to John Palfrey at The Digital Shift.
When the issue of ebook collections came up, publishers opted to license ebooks instead of selling, not only because libraries are a distinct market, but because they wanted to maintain the one patron, one book per rental paradigm with an expiration date imitating print’s inevitable wear and tear. This decision came after a fairly long period of time when publishers grappled with the best way to mimic their print deals with libraries, resulting in the initially controversial HarperCollins model.
As currently set up, the Big 5 have a few ways of going about ebook licensing contracts:
Data from The Digital Shift, 8/2014
Another licensing model that a publisher may use is charging per use, a contract that the music downloading service Freegal has in place, despite the criticism that the model is usually pricier for libraries and makes budgeting more difficult. The most popular model for smaller publishers is the one user, one ebook; perpetual use contract without markups as steep as Random House and Hachette.
To obtain a licensing contract, libraries generally contact the larger houses’ digital department. At smaller houses, which don’t separate digital into its own department, it’s more common for libraries to discuss terms with the sales department.
When a contract expires, a library’s database can auto-renew the ebook, making it easy for libraries to maintain their digital collections.
Even though 95% of U.S. public libraries have digital collections, there’s concern that they aren’t varied enough. We talked with 3M Collection Development Manager Heather McCormack who said, “We find that there’s just not probably going to be a deepening and a widening of ebook collections if price points are going to remain on the higher end of the spectrum, even if it is for perpetual ownership.”
And there does need to be a deepening and a widening. Right now, according to the 2014 Survey of Ebook Usage in the Public Libraries from Library Journal, the average library ebook collection is 71% adult titles with only 14% YA and 15% children titles. The large majority of the ebooks available are bestsellers and the price points are a high.
The Douglas County Libraries in Colorado publish a monthly price comparison report of The New York Times bestsellers between large retailers and libraries for both print and digital books. In reading the numbers, it is evident that the Random House and Hachette model for ebooks is the most prohibitive for collection expansion, because they have the highest prices for their bestsellers. For example, Mean Streak, a book published by Hachette, sells to OverDrive and 3M for $78.00 while the regular listed price on Amazon and Barnes & Noble is $12.99.
“Libraries have paid high prices for ‘library’ versions of books for ages,” said Stephanie Chase, Director of Hillsboro Public Library outside Portland, WA, of the pricing differential. “Why should this format be any different?”
According to Library Journal’s 2014 Survey of Ebook Usage in U.S. Public Libraries, libraries spent about 7% of their budgets on ebooks in 2013 and approximately 8.6% in 2014. In 5 years, it is projected that libraries will spend 14% of their budgets on ebooks.
In comparing the 2013 and 2014 ebook usage reports, it’s obvious that although ebook demand is leveling off, the trend is far from over. It’s no longer a question of whether libraries will have ebook collections, now it’s whether or not they’ll be able to beat out other ebook lending competition like Kindle Unlimited and Oyster while working within the limits of their budgets.
Chase seems prepared and determined to provide her patrons with the ebooks if the demand is there. “If my patrons would use it and want it in ebook format, and the demand warrants the format, I want to provide it.”
But perhaps, it is in publishers’ best interest to promote ebook collection variety in libraries by licensing as many of their titles and authors in the digital libraries as possible, something that can only happen if they adjust their contracts to work better with library funds.
In a recent presentation, Library Journal VP, Group Publisher Ian Singer gave the statistic that 73% of print and 78% of ebook borrowers bought books in the last six months. In what he called the Retail Connection, Singer explained, “We found they use the library to find out what to read next. They purchased titles by authors they had discovered at the library and they purchased copies of the actual titles they had previously borrowed.” The connection has been endorsed in recent years by adding a “Purchase” function on library pages.
According to Singer, the library patron numbers are increasing, because of the decrease in brick and mortar bookstore locations (there are 17,078 public library locations to the 7,300 bookstore outlets). With less bookstores and such a high retail connection percentage, libraries need to be treated as an important venue for publishers to reach new readers.
The ideal model for libraries and publishers is an expiration of some kind with a lower price point, in McCormack’s opinion. “I think if [publishers] keep the prices low and tie an expiration to it, there would be more of a diversification of ebook collections, which probably would be better in the long run for librarians, for patrons, and for publishers.”
