From Copyright and Technology:
An announcement this week by hoopla digital and HarperCollins augurs big changes in the ways that public libraries make e-books available. It sets the stage for realignment of the relationships between publishers and libraries, and it could have longer-term ripple effects on the entire e-book market.
For more than a decade, public libraries have been able to “lend” e-books using a certain model: the library “acquires” a title through an e-lending platform such as OverDrive; the library then has one “copy” that it can make available to patrons at a time. The platform sends each patron a DRM-protected file that allows reading for up to the library’s lending period. If one patron has the e-book “checked out” then another patron can’t read it until the period expires or the first patron “returns” it.
The library technologist Eric Hellman calls this model “Pretend It’s Print (PIP),” while the industry term is “one copy, one user.” PIP is an apt term because the library pays a fixed price for the title, just as it would do if it were acquiring a print book, and the publisher can account for it much as if it were a sale. If a library wants to enable more than one patron to read the title at a time, it has to “acquire” multiple “copies.”
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Hoopla digital, an OverDrive competitor, is a digital “lending” platform for libraries run by Midwest Tape, a leading supplier of library-ready physical media products (such as CDs, DVDs, and Blu-ray discs). It had been licensing digital audiobooks from HarperCollins since last year (as well as from many indie publishers). The new deal expands the relationship into e-books. HarperCollins will make over 15,000 titles available, though apparently not including frontlist titles.
What’s new here? Instead of libraries paying a fixed upfront price, as in the PIP model, they pay per “loan,” and there are no longer any limits on how many people can read an e-book at the same time. This is a boon to library patrons: it means that all titles can be available at any time, with no waiting lists. Otherwise the reader experience is much the same as with PIP, as is the technology used to deliver and display e-books.
The innovation is really on the financial and licensing side. At a basic level, this arrangement is risky for libraries. With the hoopla digital model, Libraries can’t budget for “acquisitions” as they have done with print books for centuries; instead they have to bear less predictable costs that rise and fall with demand for titles. At the same time, it enables libraries to license long-tail titles that they wouldn’t normally “acquire” because they don’t expect sufficient demand to make the one-time price worthwhile. That’s another benefit to users.
Publishers, meanwhile, get paid based on actual readership, not on a per-title basis. That’s good for them conceptually, because it makes libraries more like channel partners. So why are publishers slow to embrace this model — which hoopla digital has offered for e-books since 2014?
One reason is author contracts. Many author contracts don’t provide for handling royalties on much other than simple book purchases. From the perspectives of rights management and royalty processing, both e-book retail and PIP library e-book revenues can be treated similarly to print book sales. Things get difficult for publishers when they license into access models that fall short of purchases: sometimes they have to pay authors for each access as if it were a purchase, even if a user only reads a few pages, because the author contracts won’t allow otherwise.
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Trade book authors typically own copyrights in their works and only license publishers for specific purposes, such as print book sales; so publishers have little flexibility to enter into innovative license agreements without having to renegotiate author contracts. And renegotiating author contracts is, to put it mildly, not scalable.
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CPC is tantamount to an e-book rental model. (When I asked Eric Hellman for a name for this model along the lines of PIP, he replied “it’s just rental.”) Some early e-book services in the U.S. offered rentals, which were met with indignant backlash from people who insisted that “ownership” was the only acceptable model — never mind that whether you actually own a downloaded e-book is debatable — and that rentals were some sort of evil plot to deprive people of their rights (although e-book rental has been successful outside the U.S., such as in Japan and South Korea). Now libraries are eagerly embracing rentals, albeit ones users only pay for indirectly through taxes; Hoopla digital has already signed up public library systems in Boston, Philadelphia, Chicago, San Francisco, and Los Angeles.
Link to the rest at Copyright and Technology
PG says this one more problem for traditional publishers who have used publishing contracts that provide for different (usually higher) royalties for the licensing of rights than they do for the sales of physical books or the “sales” of ebooks (which Amazon and others say are “licensed, not sold” to Amazon customers by publishers).
So far, most publishers have ignored this problem (by choosing the lower royalty rate for ebooks by pretending they are sold, of course) instead of facing it by amending their publishing contracts for ebooks to clarify royalties (and hopefully raise them for authors).