The Surprisingly Massive Enterprise of Library E-books

Steve Potash, the bearded and bespectacled president and C.E.O. of OverDrive, spent the second week of March, 2020, on a enterprise journey to New York Metropolis. OverDrive distributes e-books and audiobooks—i.e., “digital content material.” In New York, Potash met with two purchasers: the New York Public Library and Houghton Mifflin Harcourt. By then, Potash had already heard what he described to me not too long ago as “heart-wrenching tales” from colleagues in China, about neighborhoods that had been shut down owing to the coronavirus. He had an inkling that his enterprise is perhaps in for giant modifications when, towards the tip of the week, on March thirteenth, the N.Y.P.L. closed down and issued an announcement: “The accountable factor to do—and one of the best ways to serve our patrons proper now—is to assist reduce the unfold of COVID-19.” The library added, “We’ll proceed to supply entry to e-books.”

The sudden shift to e-books had huge sensible and monetary implications, not just for OverDrive however for public libraries throughout the nation. Libraries can purchase print books in bulk from any vendor that they select, and, because of a authorized precept known as the first-sale doctrine, they’ve the correct to lend these books to any variety of readers freed from cost. However the first-sale doctrine doesn’t apply to digital content material. For probably the most half, publishers don’t promote their e-books or audiobooks to libraries—they promote digital distribution rights to third-party venders, reminiscent of OverDrive, and other people like Steve Potash promote lending rights to libraries. These rights typically have an expiration date, and so they make library e-books “much more costly, on the whole, than print books,” Michelle Jeske, who oversees Denver’s public-library system, advised me. Digital content material offers publishers extra energy over costs, as a result of it permits them to deal with libraries in a different way than they deal with other forms of patrons. Final yr, the Denver Public Library elevated its digital checkouts by greater than sixty per cent, to 2.3 million, and spent a couple of third of its collections finances on digital content material, up from twenty per cent the yr earlier than.

There are a handful of widespread e-book venders, together with Bibliotheca, Hoopla, Axis 360, and the nonprofit Digital Public Library of America. However OverDrive is the biggest. It’s the firm behind the favored app Libby, which, because the Apple App Retailer places it, “enables you to log in to your native library to entry ebooks, audiobooks, and magazines, all for the cheap worth of free.” The overwhelming majority of OverDrive’s earnings come from markups on the digital content material that it licenses to libraries and faculties, which is to say that these earnings come largely from American taxes. As libraries and faculties have transitioned to e-books, the corporate has skyrocketed in worth. Rakuten, the maker of the Kobo e-reader, purchased OverDrive for greater than 4 hundred million {dollars}, in 2015. Final yr, it offered the corporate to Ok.Ok.R., the private-equity agency made well-known by the 1989 guide “Barbarians on the Gate.” The small print of the sale weren’t made public, however Rakuten reported a revenue of “about $365.6 million.”

Within the first days of the lockdown, the N.Y.P.L. skilled a spike in downloads, which lengthened the wait instances for widespread books. In response, it restricted readers to 3 checkouts and three waitlist requests at a time, and it shifted nearly all of its multimillion-dollar acquisitions finances to digital content material. By the tip of March, seventy-four per cent of U.S. libraries had been reporting that they’d expanded their digital choices in response to coronavirus-related library closures. Throughout a current interview over Zoom (one other digital service that proliferated through the pandemic), Potash recalled that OverDrive rapidly redirected a couple of hundred workers, who would usually have been at commerce reveals, “to assist help and fortify the rise in demand in digital.” He recalled a fellow-executive telling him, “E-books aren’t simply ‘a factor’ now—they’re our solely factor.”

Earlier than the pandemic, I had by no means learn an e-book, and didn’t notably wish to. However, through the lockdown, I spent almost every single day wandering my neighborhood in a masks and headphones, listening to audiobooks. I needed to listen to a human voice and really feel the passing of time; Libby turned a lifeline. As a twin citizen of the Brooklyn Public Library and the N.Y.P.L., I toggled between library playing cards, in the hunt for the shortest ready checklist. I did what beforehand had been unthinkable and spent 100 and eighty {dollars} on a Kobo. I learn extra books in 2020 than I had in years. I used to be not the one one; final yr, greater than 100 library programs checked out one million or extra books every from OverDrive’s catalogue, and the corporate reported a staggering 4 hundred and thirty million checkouts, up a 3rd from the yr earlier than. (Barnes & Noble, which has extra retail places than every other bookseller within the U.S., has stated that it sells a couple of hundred and fifty-five million print books a yr.) The burst in digital borrowing has helped many readers, but it surely has additionally accelerated an unsettling development. Books, like music and flicks and TV reveals, are more and more one thing that libraries and readers don’t personal however, fairly, entry briefly, from firms that do.

The corporate that turned OverDrive started, within the mid-eighties, as a document-digitizing agency, in a suburb of Cleveland. Potash and his spouse, Loree, a tutorial librarian, had each gone to regulation faculty at evening, and their early purchasers had been regulation corporations that wanted assist digitizing giant volumes of paperwork. Finally, Harcourt Brace Jovanovich (a precursor to Houghton Mifflin Harcourt) employed the younger firm to digitize reference books, and different publishers adopted. “It was in all probability a couple of ten-year battle to get the e-book idea to seize maintain,” Jon Nigbor, an early colleague and investor who left OverDrive round 1990 and offered his stake in 2010, advised me. “It was the twenty-five-year overnight-success story.” (Nigbor describes himself as a co-founder of the corporate; Potash denies this.)

Within the two-thousands, OverDrive helped publishers arrange on-line shops and offered e-books on to customers by its personal market. The corporate additionally persuaded a couple of presses to license their e-books to libraries. On the time, the six largest publishers tended to promote their items by on-line retailers, reminiscent of Amazon, which launched its e-reader, the Kindle, in 2007. However, progressively, the Massive Six started to promote digital rights to libraries beneath a “one copy, one person” mannequin. As quickly as one reader returned an e-book, a second reader might test it out, and so forth, with no expiration date. “At first, we had been actually making an attempt to copy what occurs on the print-book facet,” a publishing govt advised me. Digital books, which might in idea be duplicated without cost by any librarian with a pc, would nonetheless have ready lists.

“We then noticed the primary wrinkle in a single copy, one person,” Potash stated. In 2011, HarperCollins launched a brand new lending mannequin that was capped at twenty-six checkouts, after which a library would wish to buy the guide once more. Publishers quickly launched different variations, from two-year licenses to copies that a number of readers might use at one time, which boosted their income and allowed libraries to purchase completely different sorts of books in numerous methods. For a traditional work, which readers had been possible to take a look at steadily for years to come back, a library would possibly buy a handful of high-priced perpetual licenses. With a flashy best-seller, which could possibly be anticipated to lose steam over time, the library would possibly purchase numerous cheaper licenses that will expire comparatively rapidly. Throughout nationwide racial-justice protests in the summertime of 2020, the N.Y.P.L. licensed books about Black liberation beneath a pay-per-use mannequin, which gave all library customers entry to the books with none ready checklist; such licenses are too costly for use for a complete assortment, however they will accommodate surges in demand. “On the time of its launch, the twenty-six-circulation mannequin was a lightning rod,” Josh Marwell, the president of gross sales at HarperCollins, advised me. “However, over time, the suggestions we now have gotten from librarians is that our mannequin is truthful and works effectively with their mission to offer library patrons with the books they wish to learn.”

Through the previous decade, publishers and booksellers have consolidated at a speedy tempo, leaving a smaller variety of corporations with a larger diploma of affect over what and the way we learn. Within the early days of the Kindle, Amazon undercut a lot of its rivals, together with brick-and-mortar bookstores, by promoting shopper e-books for simply $9.99. In 2012, the U.S. Division of Justice accused Apple of conspiring with publishers to extend the costs of shopper e-books, and Apple later agreed to pay 4 hundred and fifty million {dollars} in settlement. In 2013, the six largest publishers turned 5 when Penguin merged with Random Home. (Now, the Massive 5 is poised to turn into the Massive 4, if Penguin Random Home’s buy of Simon & Schuster is authorised.) Earlier this yr, a shopper class-action lawsuit accused Amazon of signing anti-competitive contracts with the 5 largest publishers in a “conspiracy to repair the retail worth of commerce eBooks.” (An Amazon spokesperson declined to remark for this story.)

Libraries now pay OverDrive and its friends for a variety of digital providers, from negotiating costs with publishers to managing an more and more advanced system of digital rights. Throughout our video name, Potash confirmed me OverDrive’s e-book market for librarians, which might kind titles by worth, recognition, launch date, language, subject, license kind, and extra. About fifty librarians work for OverDrive, Potash stated, and “every week they curate the very best methods every neighborhood can maximize their taxpayers’ greenback.” The corporate affords rotating reductions and generates statistics that public libraries can use to mission their future budgets. After I famous that OverDrive’s portal seemed a bit like Amazon.com, Potash didn’t reply. Later, he stated, with a contact of satisfaction, “That is like coming into the entrance door of Costco.”

Alan Inouye, the senior public-policy director on the American Library Affiliation, advised me that consolidation might cut back competitors and doubtlessly drive the price of library e-books even increased. “OverDrive is already a really giant presence available in the market,” he stated. The corporate’s private-equity proprietor, Ok.Ok.R., additionally owns a significant audiobook producer, RBMedia, which offered its digital library property to OverDrive final yr. However, Inouye added, OverDrive’s affect is a vital counterweight to the biggest publishers and to Amazon, which dominates the patron e-book market and operates as a writer in its personal proper. (Amazon didn’t make its personal e-books accessible to libraries till Could, when it introduced a cope with the Digital Public Library of America.) After I requested Potash in regards to the concern that consolidation might additionally give OverDrive an excessive amount of affect over the market, he known as that “a far-fetched conspiracy idea.” He cited the corporate’s observe document of advocating for libraries, including, “I’m a giant fan of free-market capitalism.”

As an instance the economics of e-book lending, the N.Y.P.L. despatched me its January, 2021, figures for “A Promised Land,” the memoir by Barack Obama that had been printed a couple of months earlier by Penguin Random Home. At that time, the library system had bought 300 and ten perpetual audiobook licenses at ninety-five {dollars} every, for a complete of $29,450, and had purchased 600 and thirty-nine one- and two-year licenses for the e-book, for a complete of $22,512. Taken collectively, these digital rights value about as a lot as three thousand copies of the patron e-book, which sells for about eighteen {dollars} per copy. As of August, 2021, the library has spent lower than ten thousand {dollars} on 2 hundred and twenty-six copies of the hardcover version, which has a listing worth of forty-five {dollars} however sells for $23.23 on Amazon. A number of thousand individuals had checked out digital copies within the guide’s first three months, and hundreds extra had been on the ready checklist. (A number of librarians advised me that they monitor maintain requests, together with for books that haven’t but been launched, to resolve what number of licenses to amass.)

The excessive costs of e-book rights might turn into untenable for libraries in the long term, in response to a number of librarians and advocates I spoke to—libraries, venders, and publishers will in all probability want to barter a brand new means ahead. “It’s not an excellent system,” Inouye stated. “There must be some type of change within the regulation, to reinstate public rights that we now have for analog supplies.” Maria Bustillos, a founding editor of the publishing coöperative Brick Home, argued not too long ago in The Nation that libraries ought to pay simply as soon as for every copy of an e-book. “The purpose of a library is to protect, and as a way to protect, a library should personal,” Bustillos wrote. After I requested Potash about libraries and their rising digital budgets, he argued that “digital will at all times be higher worth,” however he acknowledged that, if present tendencies proceed, “Sure, there’s a problem.”

Readers of the long run are prone to need much more digital content material, however it could not look the identical because it does now. Audible, which is owned by Amazon, has already made listening to books extra like streaming, with subscribers getting access to a shifting catalogue of audiobooks that they don’t want to purchase individually. “We’ve got moved away from proudly owning, to accessing,” Mirela Roncevic, a longtime publishing and library advisor, advised me. Possibly readers will anticipate books to really feel extra like Internet sites, and an infinite scroll will substitute the flip of the web page, because it has within the digital journal you’re studying now. Maybe readers will need photos and movies to be woven seamlessly into the textual content, requiring a brand new format. The e-book as we all know it “is not going to final,” Roncevic insisted. Lending libraries had been as soon as an innovation that helped unfold literacy and popularize books. Roncevic needs libraries to proceed innovating—for instance, by experimenting with new codecs and license fashions in partnership with impartial or worldwide publishers. “Libraries have extra energy than they often understand,” she advised me.