Threats to Digital Lending

Posted Thursday, January 12, 2012 - 12:19
Does the durability of ebooks pose a digital danger to libraries?
Graphic of books flying out of the stacks

When the Kansas Digital Library Consortium’s contract with digital-content distributor OverDrive was up for renewal last year, two issues made Kansas State Librarian Joanne Budler decide it was time to move on and transfer the ebook titles to another vendor who could offer a better deal. First, OverDrive planned to raise license fees by almost 700% by 2014. But even more disturbing was a change to the contract that would have changed the consortium’s ownership of the ebooks to a subscription.

OverDrive said that the libraries had only leased access; they did not own the books, and therefore could not retain access when they changed providers. The Kansas attorney general’s office argued otherwise, saying that the wording of the license agreement indicated that the library did own the ebooks. Kansas decided to hold firm on the state attorney general’s assertion, and Budler began her quest to negotiate ownership of the ebooks with each individual rights holder, in most cases the publisher. (Budler will tell her story at the 2012 ALA Midwinter Meeting in Dallas on Saturday, January 21.)

Taking issue with licensing

The situation in Kansas highlights the uncertainty about ownership of ebook content. What is ownership, after all? Perpetual access under certain conditions defined in the contract? True ownership, where the library can sell or discard its digital copy?

Check out your ebook licenses; if you think you own the ebooks that you paid for, think again. A thorough examination of the contract language may indicate that you are only renting the content, which would mean you have to pay the rent every year or risk losing all of your ebooks. State and local government officials might question what you have been doing with the money appropriated to fund your public library: “You say you bought the books, but now you don’t have them anymore? Sounds like tax dollars down the drain.”

In fact, libraries have been renting their digital content for more than 30 years. However, with other license agreements, libraries get additional content each year they subscribe. In some cases, they get enhanced services, such as keyword searching capability, by choosing to rent the digital version of a journal instead of buying the print edition. But imagine paying every year for the same content without bells and whistles. It really is like renting an apartment: Your landlord is the intermediary vendor who negotiates rights with publishers, literary agents, and authors—not an easy job—and hosts the ebooks you have selected for purchase.

Contracts for digital content can also legally circumvent user rights that we value in the print world. Here, the right of first sale under the copyright law is of greatest concern. First sale allows the owner of a lawfully acquired copy of a work the right to lend that copy or rent or dispose of it. Libraries can purchase resources and lend them at no cost to the user because of first sale, which is an exception to an exclusive right of copyright—in this case the distribution right. But there is no digital first sale right per se, unless a license agreement expressly says so.

Some troubling scenarios already exist: limiting the number of loans unless an additional payment is made, as in the HarperCollins 26-loan business model, Penguin delaying access to such high-demand e-content as new releases, and Hachette refusing to sell any new ebook releases to libraries. The worst-case scenario is already practiced by two publishers: Neither Macmillan nor Simon & Schuster sell ebooks to libraries at all. And Brilliance Solutions has decided to suspend the availability of its audiobooks for library download as of January 31.

The very real possibility that libraries may find themselves unable to lend escalates as more content is made available only in digital formats under stricter contract terms. In addition, other library functions—preservation, interlibrary loan, and fair use, to name a few—may also be forbidden when dealing with digital materials.

Rights holders have valid concerns as well. They say they are going out on a limb by providing digital files, which are prey to pirates who make unauthorized copies, readily available to all. Rights holders assert that pirated copies replace sales. If rights holders are going to provide digital content, they need license agreements enforced by digital rights management (DRM) technologies that will limit the risk.

Whether this is a sensible strategy can be debated. More chilling is the realization that many rights holders never particularly liked library lending in the first place. Some rights holders feel they should be paid each time a patron borrows an ebook; today’s digital technologies make this a viable business model.

Remember how the library community feared a pay-per-use model? Is it becoming a reality?

Creating new lending models

Can we do anything to preserve first sale when such federal copyright exceptions are effectively nonexistent in the digital context?

Academic libraries have had some success negotiating perpetual access terms in licensing agreements. The idea is that the license should expressly state that libraries have this right. For academic libraries, perpetual access is essential for the preservation of the cultural heritage. School librarians, who also tend to deal directly with publishers (without vendor intermediaries), have also negotiated agreeable contract terms. For schools, retaining content is not always necessary and lending may not be as important; but concerns about ease of use, simultaneous access, and interoperability are paramount.

In both cases, however, academic and school libraries primarily acquire content for the purposes of learning and research. Publishers that provide this type of content rely almost exclusively on sales to these educational institutions and their libraries. With trade publications, public libraries are not the sole customer for content; in fact, they are a relatively small percentage of the market. The public buys trade books from brick-and-mortar bookstores—now dwindling in number—or from online retailers like Amazon. People buy their e-content at an online retail store because it is so easy—downloading content is a breeze. In fact, Amazon seeks to provide readers with a “seamless shopping and reading experience.” People might as well buy a lawn mower while they are downloading the latest Scott Turow thriller.

We know that public libraries enhance the sale of books; but does this benefit outweigh publisher concerns about piracy and the business opportunity to sell the same content over and over again, monetizing library lending? One often-heard suggestion is to change the copyright law to include a digital first-sale provision. Experts agree that this is a pipe dream for several reasons. First, it is highly unlikely that Congress will act, especially given the current political environment. If legislators did take up the issue, it is unlikely that the stakeholders would come to a consensus that everyone could live with. Moreover, there is the real possibility that the resulting legislation would end up being worse for libraries rather than better.

Second, the request for a digital first-sale right has already been considered by Congress, and subsequently studied by the US Copyright Office. While negotiating the Digital Millennium Copyright Act (DMCA) of 1998, libraries supported legislation that would create a digital first-sale right within the copyright law. Congress postponed consideration pending a report from the Copyright Office, which concluded that the library associations were worried about a future that was unlikely to occur and that business models would provide viable options. (See DMCA Section 104 Report, PDF file).

We can’t remain passive and wait around for Congress to act. We need to think more creatively—and aggressively. Perhaps we can even put the print model aside and develop good digital models for sharing library ebooks.

In the meantime, I hope the library community can accomplish a few things:

  • Negotiate better contracts. As the rules shift and change, librarians must be critical consumers. More than ever, we must ask questions, seek clarity on vague language, challenge contract terms, and bargain for the best terms for our libraries and our users.
  • Learn from each other. What can public librarians learn from school and academic librarians—and vice versa?
  • Gather and demand better data. Is it true that lending undermines sales? We have valid data indicating the opposite: A 2007 Harris poll of library patrons (PDF file) indicates that borrowing books inspires people to buy their own copy. A 2010 white paper from OverDrive (PDF file) draws similar conclusions about ebook lending. Still, rights holders are not convinced, and we need even more proof about libraries’ quite-positive effect on publishers’ sales to counter the misguided theory that lending replaces sales.

Searching for solutions

Finally, we need to be clever and action-oriented, and stop sitting around hoping that the situation is going to change.

We need to walk a mile or two in the publishers’ shoes to appreciate rights holders’ concerns. The ebook phenomenon endangers the way publishers do business. Gone are the big sales realized in the known business cycle, where publishers could depend on the success of hardcover bestsellers and later make the same titles available in paperback, bringing in another chunk of change. Gone are the bookstores that promoted sales, encouraged browsing, and provided sidewalk marketing appeal. Gone is the ability to have greater control over pricing, as online sellers undercut prices to gain market share. If we work with publishers, could we find common ground leading to workable solutions?

We should try out new business models in our dealings with rights holders: Buy directly from rights holders, including authors; host your own ebook content; or offer library users the choice of purchasing ebooks through the library catalog when the waitlist is too long. All of these have been fruitful experiments for libraries and rights holders.

Libraries can do a better job at negotiating contracts with ebook vendors: Challenge contract terms; ask questions; provide clarity to vague, incomprehensible language; and bargain.

Most importantly: Envision, plan, and develop the public library of the future. If public libraries are to survive and remain essential to their communities, they cannot be the libraries we know today. Their time has come—and is nearly gone.

CARRIE RUSSELL is the director of the Program on Public Access to Information of the Office for Information Policy at ALA’s Washington Office.