Following a year-long test with its Tor imprint, Macmillan today announced a two-month embargo on sales of new ebook titles to libraries across all of its imprints. Under the new terms, libraries will be able to purchase only a single one-user/one-ebook perpetual license upon publication, and will then have to wait eight weeks to purchase additional metered licenses.

“On that single copy we will cut the price in half to $30 (currently first copies are $60 and need renewal after two years or 52 lends),” Macmillan CEO John Sargent explained in a memo to the publisher’s authors, illustrators, and agents. “This change reflects the library request for lower prices and perpetual access. Additional [ebook] copies of that title will not be available for library purchase until eight weeks after publication. All other terms remain in place.”

In the memo, Sargent said that the embargo had been tested with the Tor imprint “in response to our growing fears that library lending was cannibalizing sales” and that the company had been “reviewing all the available data, from all sources, to determine the effects of library ebook lending on digital and physical book sales…. One thing is abundantly clear. The growth in ebook lends through libraries has been remarkable. For Macmillan, 45 percent of the ebook reads in the U.S. are now being borrowed for free from libraries. And that number is still growing rapidly.”

Unfortunately, based on today’s announcement, the publisher appears to have concluded that this is a zero-sum relationship.

The Panorama Project’s Community Event Impact Report supports a different conclusion. Focusing specifically on the results of an OverDrive Big Library Read national book club promotion in 2018 featuring Jennifer McGaha’s Flat Broke with Two Goats: A Memoir of Appalachia, it found that ebook sales of the novelist’s debut title spiked significantly on Amazon immediately following the two-week event. The ebook’s Kindle rank rose from below 200,000 to a high of 7,833, according to data from OverDrive, publisher Sourcebooks, and the NPD Group’s DecisionKey. As LJ previously reported, “this strongly implies that many patrons either bought the ebook because they did not finish it during the checkout period, purchased the ebook as a gift after reading it, or learned about the title through online library marketing and opted to purchase it through Amazon.”

Similarly, in LJ’s recently published Generational Reading survey, 60 percent of millennial readers said that they had later purchased a copy of a book that they had first checked out from their library, and 77 percent said that they had later purchased other books by an author they discovered at their library. The survey was format agnostic, but the responses support the notion that libraries play a vital role in helping patrons discover books and authors.

Sargent, however, described the growth of library lending specifically in terms of lost revenue, noting that “the average revenue we get from those library reads (after the wholesaler share) is well under two dollars and dropping, a small fraction of the revenue we share with [authors] on a retail read.”

He added that Macmillan believes that the growth in library ebook reading “is driven by a number of factors: a seamless delivery of ebooks to reading devices and apps (there is no friction in e-lending, particularly compared to physical book lending), the active marketing by various parties to turn purchasers into borrowers, and apps that support lending across libraries regardless of residence (including borrowing from libraries in different states and countries), to name a few.”

While many would agree that library e-lending apps have become easier to use in recent years, many librarians would almost certainly dispute the statement that there is “no friction in e-lending.” Notably, patrons of most library systems will face a holds list when they want to check out a frontlist ebook.

Also, while OverDrive began offering libraries the option to enable remote library card signup two years ago, the service uses a third-party identity verification service that matches a new cardholder’s phone number to an address to ensure that the potential user resides within the library’s service area. It is unclear which apps Sargent is referring to that would enable users to check out ebooks from libraries in states and countries where they do not have proof of residence. The Authors Guild has argued vociferously against the concept of Controlled Digital Lending (CDL) and the practices of the Internet Archive’s Open Libraries Project, which does allow anyone with an email address to borrow ebooks from anywhere in the world, but the project maintains a strict one physical copy/one-ebook/one-user model that does not have the scale to substantially impact sales of frontlist titles. Early discussions about potential applications for CDL within the broader library field have primarily concerned out-of-print titles, orphan works, and in-copyright works that have not been digitized by publishers.

On a positive note, libraries with small ebook collections—as well as those concerned specifically with digital preservation and the maintenance of long-term backlist collections—may embrace Macmillan’s decision to offer one perpetual license per library for a lower initial price upon publication. Previously, the publisher had not offered perpetual licenses to libraries. Sargent wrote that the new terms had been decided upon following discussions with “library systems large and small and to the [American Library Association] to understand their needs.”

In a recent interview with sf author Jason Sanford, Fritz Foy, president and publisher of Macmillan’s Tom Doherty Associates, noted that these discussions had revealed to Macmillan that ebook pricing and licensing terms impact libraries differently based on the size of the library system. For example, while a large, urban system might easily loan out a new bestselling ebook 26 times during the first year of a two-year license, a small or rural library may not match that, making the smaller library’s per-circ costs much higher.

“We sort of backed into terms that were disincentive for smaller libraries carrying our books,” Foy told Sanford, later emphasizing the importance of healthy relationships with libraries.

Sargent addressed this as well, contending that “our new terms are designed to protect the value of [authors’] books during their first format publication. But they also ensure that the mission of libraries is supported. They honor the libraries’ archival mandate and they reduce the cost and administrative burden associated with ebook lending. We are trying to address the concerns of all parties.”