Shortly after Simon & Schuster’s June 26 announcement that it had concluded a 15-month pilot test and would make its entire ebook catalog available to all U.S. libraries, Macmillan last week announced that it will make all frontlist ebook titles available to U.S. libraries as well. These moves mark a milestone in terms of the availability of popular ebooks, as Macmillan and Simon & Schuster became the final two of the “big five” publishers to allow U.S. libraries to license and loan all titles in their ebook collections, joining the merged Penguin Random House, Hachette, and HarperCollins. Nonetheless, several industry executives promised to maintain an ongoing dialog with publishers, addressing ongoing concerns regarding issues such as ebook pricing and licensing terms.

“Today represents an important step forward in ensuring that the public has access to the full range of digital content,” American Library Association (ALA) President Courtney Young wrote in a statement on July 29. “However, we must remember that the digital content marketplace is in the midst of a revolution, and thus many more issues remain to be addressed. ALA looks forward to continuing discussions with Macmillan, and more broadly with authors, authors’ representatives, publishers, distributors, and retailers to create new opportunities to support a healthy reading ecosystem for the digital age.”

An ally in libraries

During the headiest days of ebook growth in 2010 and 2011, several major publishers expressed misgivings about library ebook lending. If library users could conveniently download their titles for free, those patrons would have no reason to buy ebooks or print books, they argued. Several studies and, later, pilot tests helped ease these concerns. Now, those publishers are once again seeing libraries as an ally in their marketing efforts, rather than a threat to sales.

“I think that publishers are, on the digital side, now looking at libraries as a necessary partner in how they market and introduce writers—especially new writers—to the world,” Michael Bills, Baker & Taylor’s director of sales, digital products, told LJ. Publishers have begun to understand that once a library facilitates the discovery of a new author or series, a patron more often than not, will become a buyer of that material, he added.

OverDrive CEO Steve Potash agreed, noting that the pilot tests conducted by these major publishers had helped prove that ebook lending can play an important role in discovery without compromising retail sales.

“Historically, I had to use anecdotal arguments about exposure,” Potash told LJ. “What’s great about how things have evolved is that the sales numbers are in. In addition to the revenue that publishers and authors are enjoying from the library market, they’re not seeing their fears materialize. People who are discovering and borrowing ebooks from the library are, in many cases, buyers. And, it’s not eroding retail sales, either for print or ebooks.”

Yet for libraries, the situation remains far from ideal. Unlike physical materials such as print books, CDs, and DVDs, ebooks are not protected by first sale doctrine. A publisher that chooses to license titles to libraries can set any terms it wants, which has resulted in a proliferation of new pricing and lending models for ebooks. Macmillan, for example, now offers its titles under a one-user, one-ebook model with licenses expiring after two years or 52 loans. Penguin and Random House have maintained separate licensing terms since their merger. Simon & Schuster, like Penguin, does not impose loan caps, but their one-user, one-ebook licenses expire after one year. HarperCollins has a 26 loan cap with no expiration date. Only Random House and Hachette offer non-expiring, uncapped licenses to libraries, and both publishers charge libraries a 300 percent markup over retail on new ebooks.

3M Cloud Library marketing manager Tom Mercer said that he does not expect publishers to settle on a single licensing model anytime soon. However, on a positive note, he said that librarians are getting better at weighing the pros and cons of these different models, and adjusting their purchases accordingly.

“All of the big five have different licensing models, and that does incent different [buying] behaviors,” Mercer said. “But I think the library buyer is getting savvy, and figuring out how to get really great circulation out of their digital investment.”

Maintaining a collection while juggling all of these terms can be difficult, said Rochelle Logan, associate director of support services for Colorado’s Douglas County Library (DCL).

“It’s really wearing on my staff to have to keep track of all of these different models,” Logan said. With large collections, there is a constant flow of unrelated titles reaching loan caps or expiration dates, she explained. “You get reports: do you want to repurchase? It’s just a real bear on the ground floor to keep it going.”

For this reason, Logan believes that the library-owned, library-managed ebook model pioneered by DCL and adopted by several other systems, including California’s Califa Library Group, will continue to grow, even as the availability of licensed ebooks improves.

“Our model is great on a number of levels,” she told LJ. “It doesn’t replace [OverDrive, 3M Cloud Library, or Axis 360], obviously, but it is still much easier to maintain, because once you have an ebook on your Adobe Content Server, you have it. It doesn’t expire.”

With all of the big five now active in the library channel, and with the Douglas County Model emerging as a viable option for many systems, library purchasing habits will, in turn, begin to shape how publishers approach the market.

“I think we’ll see more experimentation with business models,” Bills said. “Publishers will refine those models with market feedback to find what works best.”

Potash was also optimistic, predicting that competitive market forces “are going to start to create opportunities where publishers will want to consider price reductions or loosening of some of their [licensing] restrictions, because they want to enjoy broader adoption on the virtual shelves of libraries.”

“Each of these steps forward is part of an evolution where, I believe, public libraries are going to be on par—in terms of appreciation from authors and publishers—with the retail channel,” Potash added. “They’re going to realize that this is not only producing revenue and exposing their products to new buyers, but that they’re getting tremendous extra benefits in discovery.”