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Raw Deal in Ebook Pricing
By
Volume 43, Number 5 - September/October 2019

When Macmillan’s CEO John Sargent told authors that Macmillan was changing the way it sold ebooks to libraries, claiming it was sup porting the “mission of libraries” (infodocket.com/wp-content/uploads/2019/07/John-Sargent-Letter-Changes-to-Library-Lending-Terms.pdf), librarians everywhere rolled their eyes. The new terms include a single, non-expiring discounted ebook for each library system and then a 2-month embargo—called “windowing”—before libraries could buy additional, full-price copies. These copies would need to be renewed (as is currently the case) every 2 years or 52 lends. This is a raw deal, based on a faulty premise.

Macmillan sees this move as a way to increase the value it gets from “library reads.” It claims this meets a library’s need for lower prices and also claims that it arrived at this scheme after conversations with all kinds of libraries as well as ALA. However, ALA and PLA past president Sari Feldman, one of the people Macmillan met with, stat ed bluntly in her Publishers Weekly column, “it does not appear that Macmillan has listened to our concerns” (publishersweekly.com/pw/by-top ic/industry-news/libraries/article/80689-libraries-must-draw-the-line-on-e-books.html).

Let’s talk about the concept of “library reads.” It’s unclear if Sargent even understands how library ebook lending works in the first place. He seems to think that most patrons can borrow ebooks from multiple libraries in a “frictionless” experience. He doesn’t appear to understand hold queues, digital rights management (DRM), or the regional nature of libraries, something that Eric Hellman reported as far back as March 2010 (go-to-hellman.blogspot.com/2010/03/ebooks-in-libraries-thorny-problem-says.html). The statistics Sargent uses in his letter to authors, which state that “45% of ebook reads in the US are now being borrowed for free from libraries,” are unsupported and, according to Steve Potash from OverDrive, “pure fallacy” (overdrivesteve.com/ macmillan-publishes-a-work-of-fiction). Macmillan has been unwilling to share the data it used to arrive at these numbers, if it even exists.

The one available dataset, uncovered by Jason Sanford, is from the trial embargo that Macmillan enforced through its Tor Books imprint, using its Minotaur imprint as a control group (patreon.com/posts/28075188). In this case, all Tor ebooks were subject to a 4-month embargo. These embargoed books showed a gain in non-library sales compared to the un-embargoed books— although Tor’s ebook sales to libraries after the embargo period ended were lower. However, Tor Books is one of the more recognizable genre imprints of Macmillan and has a rabid fanbase (in part, ironically because of its acknowledgment that removing DRM from ebooks didn’t negatively impact sales, according to Ars Technica) and may not be indicative of Macmillan’s larger readership (arstechnica.com/information-technology/2013/05/tor-books-says-cutting-drm-out-of-its-e-books-hasnt-hurt-business).

Keep in mind that ebooks, technically, are licensed and not sold. It’s very unclear how authors are remunerated for library ebook purchases, a point explained by Porter Anderson and Jane Friedman in The Hot Sheet (mailchi.mp/2782ee381ce9/macmillan-embargo#mctoc2). It is true that in the U.S., unlike Canada and the U.K., authors do not receive additional income from ebook library lends. However, Sargent’s math, claiming that Macmillan’s share of ebook revenue is “well under two dollars” per ebook, is based on some calculations of ebook readership that don’t jibe with the numbers that OverDrive has.

This is not just a sign of gloom and doom in publishing generally. Other publishers, such as Penguin Random House, have been using actual library ebook sales data to come up with more equitable terms for digital lending, stating, “libraries help build readership for our authors. …” (publishersweekly.com/pw/by-topic/industry-news/libraries/article/77904-penguin-random-house-changes-its-library-e-book-terms.html). This claim is backed up by actual 2014 data from Pew Research, and others (libraryjournal.com/?detailStory=Social-Readers). One number that is not disputed is that Macmillan’s library ebook revenue has increased 800% during the last 5 years. This is nice for Macmillan, considering ebook sales overall appear to have plateaued, as even younger readers are returning to print, according to The Guardian, in quoting 2016 numbers (theguardian.com/books/2017/mar/14/ebook-sales-continue-to-fall-nielsen-survey-uk-book-sales).

But print books, with some of their fixed materials costs, aren’t quite the same “license to print money” as ebooks are. It’s mystifying why Macmillan would want to alienate one of its bigger growth markets with convoluted purchasing schemes and, quite frankly, insulting implications that libraries—which offer free shelf space, programming, and advertising for all kinds of books—are somehow inhibiting its growth and keeping it from paying its authors well.

Let’s talk about what’s going to happen in the library. Large systems with a single copy of a popular new release are going to have some explaining to do as their holds queues, which many libraries try to keep to single digits per item, stretch into years before they’re allowed to purchase additional copies of the title (thestar.com/entertainment/books/2018/07/06/why-the-toronto-public-library-cant-buy-some-of-canadas-top-audiobooks.html). Libraries will have to choose, as the Upper Arlington Public Library has tried to do, between explaining the arcane system of per-publisher ebook purchasing to their patrons, or just quietly accepting that they can’t serve their users’ needs (web.archive.org/web/20180825075453/https:/www.ualibrary.org/mediasrvc/blog/statement-release-regarding-tor-digital-books). Some users may purchase a new release out of frustration with hold queues, but many, especially those without the means to buy their own books, will go without. Will patrons connect this inconvenience with the publisher, the author, or the library?

ALA has come out strongly against Macmillan’s decision (ala.org/advocacy/e-books). However, even though libraries in the aggregate make up a large (and growing) percentage of Macmillan’s ebook sales, this does not translate into enough group purchasing power to effectively enact a retaliatory boycott. Probably.

It remains unclear if Macmillan is actually going to go through with this proposed scheme, one based on misunderstandings of how libraries operate and questionable conclusions drawn from unavailable data. Macmillan’s statement accusing libraries of cannibalizing its sales is like McDonald’s complaining about a school lunch program cutting into its french fry profits. It’s a craven grab for more private wealth at the expense of the public good. As public institutions, libraries owe our patrons, staff, and funders more transparency and, quite frankly, a better deal than this.


Jessamyn West is a librarian and technologist living in rural Vermont, a frequent speaker on library topics, and a regular columnist for Computers in Libraries magazine.

 

Comments? Email the editor-in-chief: marydee@xmission.com

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