For the last few months, I’ve been watching the story unfold of publisher Macmillan’s decision to start windowing new-release ebook sales to libraries. Given that it’s coming up on six months with no change, it doesn’t seem likely there’s an end in sight.
In July of last year, John Sargent of Macmillan dropped a bombshell on libraries with this memo to authors, illustrators, and agents. Concerned that library ebook lending was harming commercial ebook sales, he announced that, going forward, each library system would be able to purchase one single copy of any new-release Macmillan ebook and audiobook for the first eight weeks of its publication, to be split among users of all its branches. (On the bright side, that single book would be made available at half of the usual price for library ebooks or audiobooks, since librarians had been asking for lower prices. Gosh, that was nice of him!) Print sales would be unaffected.
It’s easy to sympathize with Sargent’s overall concerns, when he cites the statistic that 45% of Macmillan ebooks read every year are read for free in libraries. He doesn’t go into any detail on how that figure is arrived at, but whether it’s really 45% or not, I don’t doubt that the number of library ebook reads is pretty darned big—and that makes it look scary. And Macmillan has a history of reacting first to scary things—it was the first to impose agency pricing, after all.
It’s exactly the same reason publishers and writers worry about piracy: how many of those “free reads” represent lost sales? How many people decided to read for free from the library rather than buy their own copy? Of course, library ebooks don’t represent a complete loss of revenue—libraries do pay a premium price for ebooks, and those ebooks can only be borrowed a certain number of times before they must be bought again. But dividing that price into the allowed number of checkouts shows that the revenue from someone reading a library ebook is only a fraction of what the publisher would get if that person bought it instead.
I’ve seen plenty of articles over the last few months detailing how hard this is on libraries, such as these from the Wisconsin State Journal, Smithsonian, Los Angeles Times, Marketplace, and my own local Indianapolis Business Journal. But an in-depth piece that came out on WGBH the other day is particularly interesting.
Apart from summarizing the matter (including talking to Publishers Weekly contributor and Battle of $9.99 author Andrew Albanese), the article raises a couple of interesting points. First of all, is Amazon somehow secretly to blame for this move? After all, if someone gets frustrated waiting for a library copy and decides to buy the ebook, they’ll buy it from Amazon at least three times out of four. And as an epublisher, Amazon has historically not provided any of its own ebooks to libraries.
Frankly, I have my doubts. There’s no denying Amazon benefits from this, but Amazon benefits from pretty much anything involving making more ebook sales. If nothing else, given that Amazon was the whole reason the Big Six publishers and Apple came up with agency pricing to begin with, I have my doubts that any major publisher would willingly do Amazon a favor.
The other point has to do with the efforts libraries and library organizations are putting forward to request an antitrust investigation of this new Macmillan practice. An antitrust expert from Harvard Law School suggests it’s unlikely they’ll meet with much success. Unlike with agency pricing, there’s no evidence of any collusion between multiple publishers; indeed, so far Macmillan is the only publisher to impose these restrictions. At the moment, none of the other Big Five publishers has indicated any interest in following suit. And since libraries are paying less per read than a book sale would net the publisher, they’re not being overcharged. The Harvard expert suggests that getting Congress to pass a law in support of library ebooks might be a better move.
It’s not exactly surprising that the rest of the Big Five publishers haven’t been so quick to follow Macmillan this time. Perhaps they remember how they all rushed into agency pricing, only to end up needing to make expensive antitrust settlements afterward. Perhaps this time they want to be sure there’s no possibility they could be accused of collusion before they move. But I don’t doubt that they’re watching how the whole thing shakes out for Macmillan very closely, and I would not be at all surprised if they started imposing similar restrictions themselves within a few months to a year.
As disheartening as it is to see these restrictions on new-release library ebooks, I can’t help thinking that they might be at least a little justified. Even leaving aside whether someone checking the book out will buy it later, library ebooks can also represent a worry-free method of ebook piracy. The library lending programs use the same DRM as ebooks that you buy from stores—so the DRM-cracking software intended to allow people to “own” the books they paid for will also allow them to “own” ebooks they just check out from a library. Also, regardless of whether every person who checks an ebook out would have bought it instead, at least some of them would have. And as nice as it is to read a new-release ebook for free, nobody’s entitled to it.
But perhaps publishers would do well to consider the alternatives. Someone who can no longer check out a new library ebook, from which the publisher would at least have gotten something, might just go ahead and pirate it instead rather than buying it. They might even feel perfectly justified in doing so, it being a way to poke a thumb in the eye of the publisher who made it harder to get legitimately. Those DRM-cracking tools also make it trivial to post an ebook to Bittorrent—and the more popular the book, the more people will be posting it. It’s not exactly a surprise that video piracy has been making a comeback in light of the proliferation and balkanization of video streaming services; the same might very well be said for ebook piracy if other publishers follow Macmillan in restricting their new ebook and audiobook offerings to libraries.
When it comes to libraries and ebooks, publishers really are between a rock and a hard place. With paper books, there are enough tradeoffs that they don’t necessarily cannibalize paper sales so much. Libraries don’t have enough shelf room to keep all the copies their patrons could possibly want, and patrons have to go down to the library (or at least bookmobile) in person to get it. There are definitely incentives (availability, at-home delivery) to buy the paper book instead of waiting for a copy to return to the library shelf.
But ebooks remove a lot of that friction. Library systems consolidate all their ebooks for checkout, which means a popular title could have up to a few dozen copies available to all patrons at any given time. And someone who wants a library ebook doesn’t even have to leave their own easy chair, just as if they bought the ebook to own. With that in mind, I could believe that at least some ebook sales are being cannibalized. It’s kind of funny the publishers care so much about that, given how happy they’ve said they are that ebooks only make up 20% of their total book sales, but nobody ever said people had to be consistent.
And Albanese suggests another possible reason for Sargent’s concern: he might be afraid that library ebook lending is training readers to think ebooks should be free. It seems plausible, given that a big reason behind agency pricing was the concern that Amazon was training readers to think ebooks should only cost $9.99. Of course, if that is the publishers’ concern, they’re a little late; public libraries have been “training” readers that they can read for free since at least the days of Andrew Carnegie.
Libraries have long helped to expose new authors and readers to each other, driving sales when people find they love a book enough that they want to own it and others by the same author. The inability to do that for new ebooks right at the peak of the new-title marketing push will hurt, for certain—including hurting new authors who would otherwise have seen that added exposure. But after eight weeks, the libraries will still be able to get those ebooks on exactly the same terms as any other ebooks. Can that be enough?
We already have windowing for other forms of media, after all. New-release movies play in theaters for months before you can ever buy them on home or streaming video. Most paper books come out in hardcover well before they come out in paperback. As good and useful as it is to library patrons to be able to read new-release books for free soon after they come out, it may not be what’s best for publishers. And publishers have to keep making money to be able to make their books available at all.
It remains to be seen whether other publishers start library ebook windowing, or Macmillan gets enough pushback that it stops. I’ll definitely be watching to see how it all turns out.
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