Toxic for libraries? The KKR investment firm is buying none other than OverDrive—the biggest library ebook company, providing ebooks and audiobooks to 43,000+ libraries and schools in 75 countries. The seller is Rakuten, also owner of the Kobo ereader, audiobook and ebook business.
“The two sides did not provide a price tag for the Ohio-based property, which Rakuten purchased for $410 million in 2015,” MarketWatch reports, “but Rakuten said it would recognize about $365.6 million in profit from the sale in the first quarter of 2020.”
Investment firms have been poison to the newspaper business, including the shrunken newspaper in Ohio, where I once worked. The Morning Journal in Lorain must now operate out of a former McDonald’s hamburger stand. Newspapers have been in trouble for other reasons, and the buyer of my old paper was not KKR. Just the same, this illustrates the risks of expecting profit-crazed investment companies to care about the public.
Do we really want to trust digital libraries to KKR on issues ranging from access to reliable digital preservation?￼ I’m all for free enterprise and fair treatment of vendors, but with this deal, the private side will be better able￼￼ than ever to screw libraries. KKR among other things is into audiobooks by way of RBMedia, billing itself as “the largest audobook producer in the world.” That could work for or against libraries. I myself worry the former will hold true.￼ Perhaps lawyers and policymakers with the American Library Association can look over the deal from various perspectives, including the possible antitrust one.￼
Note that OverDrive’s present management has done many many good things￼ such as popularization of ebooks.￼ It’s the long-term I worry about. Founder Steve Potash will not be around forever, especially if profit goals are not met.￼ Even now, OverDrive could be more in touch with library users’ needs. When, just when, will the Libby ereading app allow export of notes and highlights from digital books – a capability that the Kindle allows?￼ Nor, last I knew, would Libby allow the volume buttons on ￼cell phones to turn pages￼, the way Amazon does. Text to speech is another area where OverDrive lags badly compared to Amazon (it isn’t even available from OverDrive and might never be due to the RBMedia audiobook connection). What happens if the Amazon-OverDrive arrangement ends and readers must rely solely on OverDrive?￼
More immediately, I’ll be curious to see what happens with the arrangements between OverDrive and Rakuten￼ in regard to library-related software integration on Kobo ereaders.￼ Maybe there will be some positives. Wouldn’t it wonderful if OverDrive’s new overlords ￼aggressively encouraged these arrangements for a number of ereader brands? So, yes, that could be some upsides from the new deal. Also, it will be great if OverDrive gets more resources to popularize ebooks and develop apps￼.
In general, however, color me skeptical. Moreover, what if KKR also buys Rakuten, for example, as has been already speculated as a possibility, and then drains away resources from it?
If nothing else, I’d like to know the situation in regard to possible debt load, which could pressure￼ KKR to squeeze more profits out of OverDrive at the expense of its products and services. Maybe somehow this won’t be a factor. But questions do need to be asked.￼ Debt load is one of the killers of the already-troubled newspaper business in an environment of acquisition mania.￼ In addition, there’s the issue of draining away newspaper profits to finance unrelated corporate activities, including buyouts. Capitalism at its most disgusting￼. I can even see KKR perhaps making a push to privatize public libraries. Whatever it takes to maximize profits!
No, we can’t reach any final conclusions here without knowing the full facts, but red flags should go up, especially if we’re thinking long-term.￼ Short term, KKR might actually pour more resources into OverDrive for cosmetic purposes. Just beware of the long term, especially in regard to possible debt load.
We truly need well-funded national digital library systems, with the private side serving as contractors rather than running the show. Time for another look at the vision that some librarians and I are advocating at LibraryEndowment.org?
Photo credit: OverDrive.
Why is Rakuten selling Overdrive?
Excellent question, Olivier. My guess — nothing else — is that Rakuten feels it could better deployed the resources elsewhere. Rakuten isn’t nearly as devoted to libraries as librarians are. As with any other corporation, the big goal is to make money. Still, it was a much more suitable owner than KKR, which is even more focused on profits.
What concerned me most was that they felt the need to put out the press release at 6.30 PM on Christmas Eve to minimise exposure.
Like Trump, KKR apparently has something to hide—beyond the purchase price.
I remember Watergate well, and it was obvious to me from the start that Nixon had something to hide, even though in the end it proved to be little. It was a rogue operation that tapped the phone of a DNC secretary whose only significance was that she arranged call girls for visiting Democrats from the hinterlands. That’s all.
Read Deep State Target if you want to worry. Various federal agencies, particularly the FBI, conspired with foreign spy agencies to create ‘events’ that would create the illusion that there was a Trump/Putin conspiracy. That’s why an investigation costing millions turned up nothing. There was nothing. Take Watergate and multiply it by a million and you have what happened during Election 2016. People deep within our government conspired to fix an election.
Trump has displayed no evidence of hiding anything and it’s not hard to see why. It’s totally absurd that a billionaire would need to make a deal with Putin to get about $200,000 in campaign funding. It was Obama whose anemic foreign policies were great for Russia and Trump’s that have been a disaster for Russian expansionism. Russia is heavily dependent on oil exports for money. By encouraging fracking and pipelines, Trump hurt Putin in the worst possible way. If Putin had blackmail on Trump, it’d be out by now.
It is also absurd anyone with a scrap of sense would hire Russian hackers to shape U.S. politics. Both being Russian and being hackers means they know nothing about us. Besides, Hillary spent about $2 billion and had the best campaign advisers that money could buy. It did her no good. Given the Russia probably has copies of all her private server State Department emails, she is the one at risk of blackmail.
And does anyone with a scrape of sense think that Trump’s tax records have anything to hide? He can afford the best tax advisors on the planet and those returns were filed in heavily Democratic NYC and NY state. If he’d done anything illegal, the records would have leaked and he’d have been prosecuted.
As for this buyout, I’m hardly surprised. The entire ebook process has been a disaster from the start. The ePub standard is grossly inadequate. The major publishers haven’t been given a reason to sign on. The press never covered the fact that Amazon was backrolling the feds in their attack on Apple and the major publishers. Amazon dominates the ebook market. Librarians signed up with a business that could be sold out rather than forming their own non-profit. The list goes on.
When it comes to ebooks, almost everything that could go wrong has gone wrong. That is everything except the marvelous volunteer organizations giving us public domain ebooks and audiobooks. That delights me.
Happy New Year, Michael.
As for Trump not hiding anything, that’s great to know. I assume that he and Mitch McConnell will now go for a Senate hearing with unlimited access to witnesses and documents. More seriously, we’ll agree to disagree on that one.
In regard to OverDrive, it’ll be interesting to see if it survives long-term in its present form. There are some really nice, dedicated people there (even if I don’t agree with everything the company does). I’m just hoping that scads of OverDrive staffers don’t lose their jobs.
I agree with you on the valuable service that groups like Project Gutenberg have provided. I myself donated The Silicon Jungle and NetWorld—-both originally published commercially—to PG. But volunteer groups are no replacements for full-strength national digital library systems or, for that matter, brick-and-mortar libraries.
You can export notes and highlights from Sora, which is the school version of Overdrive. So they have the technology to do that already.
Exactly, Jen. We’re talking about marketer-created limitations, not tech ones. Shame on OverDrive for not serving public library patrons better in this respect with Libby (in general a good app).
What I worry about is that an investment company (who by definition is profit driven) will go beyond taking profit and into the realm of under-reporting book reads that correlate to author royalties in order to increase their profits. A certain company that dominates the ebook market is currently being accused of this. Authors are tired of being stolen from. With Overdrive they were treated fairly in the past.
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That too, among the other obvious things.
Oh this is NOT GOOD. I know all about KKR – strip the company it acquired of all assets deemed unprofitable, fire 20-50% of the workforce – make what’s left look good on the books – then sell it.
We just bought a Kobo Clara in Canada and have been unable to make the connection to Overdrive. Will spare you the details Kobo’s online help instructions and our library haven’t fixed it and Kobo’s toll free support line is currently suspended. Do you think this is a temporary Kobo/Overdrive problem or KKR is already reducing the value of Overdrive by making very difficult or impossible to use for Kobo owners?
Sorry about your problems, Barbara. I’m going to see if Kobo will offer an explanation. Very possibly, this has nothing to do with KKR, but one would think that support activities could be carried on by employees working at home to stay safe during the virus. In fairness to KKR, wouldn’t it make sense for its OverDrive service to work with as many machines as possible? And isn’t the Kobo support number intended for activities beyond those related to OverDrive? Still, I have no idea what might be going on behind the scenes. Ideally, Kobo can enlighten us.
Barbara Grinfield: Also try help.kobo.com and look for a chat icon. Kobo may be using chat rather than the toll-free number for support now. Let me know what happens. Most likely, this is not related to KKR.
Hi, Barbara. As I thought, the support issue did not have anything to do with the KKR news. My email got lost at Kobo, but I now have a reply. Use this chat page to request a call back:
The above arrangement is in effect because of the virus.