June 21, 2019
Ebook readership has exploded in recent years, with publishers rushing to release hot titles in digital form in order to reach readers who would prefer to consume books electronically rather than physically. Libraries have adapted to this development as well, purchasing ebooks from publishers to lend along with paper editions. However, this would-be symbiotic relationship between ebook publishers and libraries has been unsettled in recent months by publishers seeking to renegotiate the terms.
Most recently, Hachette announced in June 2019 that it would begin licensing its ebooks to libraries for two-year terms instead of in perpetuity. The first-time licensing fee would be lower than what libraries had been paying for perpetual licenses, with libraries having the option to renew once the two years are up.
Different publishers have used different licensing models for library ebook licensing, including the “perpetual ownership” model. A library pays a flat, one-time fee to the publisher for access to an ebook, which the library can then lend out for as long as it wishes. Other publishers have instead licensed ebooks to libraries for a limited period of time or a limited number of loans. The fees for the perpetual licenses are of course much higher, which libraries have criticized over the years. For example, one Hachette ebook retails for $14.99 for a single consumer, while the library price is $84. The reason for the higher prices is that the revenue per reader for the publisher (and hence the book’s author) drops dramatically when one considers that a single library ebook could be lent out hundreds of times and generally is read by far more people than the physical library edition. Publishers and the library associations have been in discussions about how to best accommodate the loss of sales due to library ebooks and also many libraries’ inability to pay high prices for as many ebooks as they would like to acquire.
Hachette is not the first publisher to reconsider its
licensing model for library ebooks. In October 2018, Penguin
Random House launched a two-year “metered” system (meaning that the
licenses last for only two years at a time). When announcing this decision, PRH
suggested that a cheaper, temporary license is actually preferable for
libraries because demand for new books is typically highest in the first couple
of years after publication, claiming, “Most librarians are telling us they
would rather pay lower prices across our frontlists and backlists, in exchange
for a copy that expires after a given time period.”
Simon & Schuster also
offers a one-year lending term for all ebooks and a two-year lending term for
some ebooks (mostly backlist), where the second year is half off.
HarperCollins’ model is slightly different. Since 2011, it has offered a
26-loan limit on ebooks, and in 2018, added a new ebook “cost per circulation”
option (where the library pays the publisher a small amount each time an ebook
is checked out) for some backlist titles.
A new twist in library licensing recently has been introduced into the conversation—windowing—that is, waiting a period of months after the book’s publication before ebook licenses are provided to libraries (in the manner that movies are often not made available for television viewing until they have been in theaters for a period of some months). In July 2018, Macmillan announced it was testing a four-month delay window before making ebooks from its Tor imprint available to libraries. With this window, it is testing the hypothesis that immediate ebook lending availability cuts into ebook sales and author revenue, stating, “We have been seeing an adverse impact on our ebook sales over a period of time.”
In response to Hachette’s announcement, the American Library Association released a statement expressing concern that libraries seeking to renew their ebook licenses would actually pay more under the new metered system. The ALA reacted even more strongly against Tor’s proposed window, or “embargo,” dismissing as “tired and unproven” the belief that ebook lending cuts into sales.
The modifications to ebook lending taken by three of the Big Five publishers over the past year suggest that there will be no returning to perpetual ownership anytime soon. Between Hachette-style metering and Tor-style windows, libraries may come to accept a metered license model as the more acceptable option.
Given that these changes to ebook lending are fairly recent, it is difficult to gauge their impact on authors. Certainly, publishers’ intent is to drive up ebook sales, whether to libraries renewing a metered license or to readers who will choose to a buy an ebook that they cannot find at their library. Libraries warn that these changes will actually harm authors by reducing their exposure to new readers, who may be more willing to check out an ebook from the library than take a chance on a purchase—although given the very low cost of books compared to other forms of entertainment or indulgences, that should not be the case.
What is clear is that ebook library lending is undergoing
close review and adjustment. The Authors Guild strongly supports public
libraries and the essential role they play in our communities, including
introducing readers to new books and writers. But there needs to be balance
between unlimited ebook lending and protecting working authors’ and publishers’
financial interests. Publishers’ differing approaches to ebook licensing should
be welcomed as ways to draw closer to an optimal library licensing model that
supports readers, authors, and libraries alike.