Amazon withholds its ebooks from libraries because it prefers you pay it instead

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From The Verge:

Amazon is withholding ebook and audiobook versions of works it publishes through its in-house publishing arms from US libraries, according to a new report from The Washington Post. In fact, Amazon is the only major publisher that’s doing this, the report states. It’s doing so because the company thinks the terms involved with selling digital versions of books to libraries, which in turn make them available to local residents for free through ebook lending platforms like Libby, are unfavorable.

“It’s not clear to us that current digital library lending models fairly balance the interests of authors and library patrons,” Mikyla Bruder, the global marketing chief at Amazon Publishing, told The Washington Post’s Geoffrey Fowler in an emailed statement. “We see this as an opportunity to invent a new approach to help expand readership and serve library patrons, while at the same time safeguarding author interests, including income and royalties.”

At the heart of the issue is a debate over whether libraries, which often pay far higher than retail price for physical and ebook copies of books, ultimately harm publisher sales by letting people check out copies for free. In the age of mobile apps and widespread Kindle usage, borrowing an ebook is now easier than ever — you need a library card and the Libby app, and you can then place holds and eventually check out ebooks that can be sent directly to your Kindle e-reader or app to access for a limited time.

Yet publishers, not authors, decide the fate of a book’s various distribution deals, and Amazon apparently does not want libraries lending its ebooks, at least not under whatever terms have been discussed. That means many of the authors the company has signed onto its publishing imprints — like Mindy Kaling, Trevor Noah, Andy Weir, and Michael Pollan — are available to read only if you pay the full retail price. That’s true when those same authors have expressed support for libraries and free book lending, as Pollan has to The Post.

Amazon is reportedly negotiating with a nonprofit, the Digital Public Library of America, to coordinate the selling of its ebooks to libraries, but The Post notes that the deal would not include any self-published works or Audible audiobooks. And making matters worse, Amazon is allegedly not negotiating — and hasn’t for years — a serious deal with OverDrive, the maker of the Libby app that’s used by many libraries around the country.

Instead, OverDrive CEO Steve Potash tells The Post the company and Amazon have an “ongoing dialogue” in which OverDerive has communicated its “willingness to innovate in an effort to support their business strategy.” Amazon did not immediately respond to a request for comment.

Link to the rest at The Verge and thanks to Carolyn for the tip.

As regular visitors to TPV already suspect, misinformation is rampant in the OP.

Here’s a bullet-point list:

1. At present, OverDrive is the only effective way for ebooks to get into libraries, at least in the US.
2. Amazon Publishing, Amazon’s counterpart to a traditional publisher (albeit with better royalty terms) is a small fry compared to traditional publishers. Book wholesalers that provide physical books to bookstores don’t carry Amazon Publishing books and, even if they did, a great many physical bookstores would refuse to carry Amazon Publishing’s books because Devil Bezos.
3. PG believes that OverDrive’s prices, to the extent he understands them, are also higher than they need to be for an online service that is effectively a complete ebook lending system with, to the best of PG’s knowledge, no need to integrate with the various physical book management systems libraries may employ.
4. To the best of PG’s knowledge, OverDrive doesn’t have any serious competition in ebook lending, at least in the United States, and charges libraries accordingly.
5. OverDrive is owned by KKR, a major US-based private equity firm.
6. Private equity firms typically acquire assets with a plan to sell them or take other steps to take cash out of their investments. One strategy that some private equity firms utilize is to load an acquired firm up with debt, putting the proceeds of such loans into the pockets of the owners of the private equity firms, then sell the debt-burdened companies to someone else. As with some other Wall Street financial types, private equity firms are often ready and willing to throw sharp elbows on their way to a profit. PG doesn’t know if KKR has done any of these things with OverDrive, however.
7. Per an article in American Libraries from December 31, 2019, reporting on the sale of OverDrive to KKR,
   • “OverDrive holds the dominant market share as the leading provider of digital content to libraries, with more than 43,000 libraries subscribing to its content lending platform. The OverDrive catalog currently offers 4.5 million books and audiobooks from more than 25,000 publishers. More than 95% of public libraries in the US and Canada rely on it for digital lending and other services. Though public libraries represent the largest portion of OverDrive’s customers, the company also works with schools and corporate libraries.
   • “[T]he acquisition of OverDrive is a “financial investment,” in which the buyer, usually a private equity firm or other financial sponsor, expects to increase the value of the company over the short term, typically five to seven years. Financial investments by private equity firms typically take the form of leveraged buyouts, where the buyer contributes only a portion of the purchase price and secures loans from investment banks to meet the full amount negotiated with the seller. Financial buyers control the business strategies and operations of their portfolio companies via placement of representatives on their board of directors, usually in proportion to their ownership stake. The company itself is saddled with paying off the debts, but these transactions provide the company with new capital to fund business expansion and product development.
   • “KKR also owns RBmedia, one of the major suppliers of audiobooks to libraries. In a transaction announced in July 2018, KKR acquired RBmedia from Shamrock Capital Advisors. As with OverDrive, this investment was made through its KKR Americas XII Fund. KKR’s investments in RBmedia and OverDrive were shepherded by Richard Sarnoff, a veteran of the publishing industry and chairman of media, entertainment, and education for KKR.
   • “RBmedia offers a subscription service for consumers in addition to its library lending platform. The company, at the time known as Recorded Books, was acquired by Shamrock in August 2015. The previous month, Recorded Books acquired competing audiobook publisher Tantor Media and in May 2014 it acquired HighBridge Audio, partially consolidating the digital audiobook industry.
   • “Will OverDrive and RBmedia merge? Such a union would signal a major consolidation in the digital content industry for libraries and schools.
   • “Ebook lending occurs within a highly consolidated publishing industry dominated by the Big Five and Amazon. Some of these corporate forces perceive library lending as intrusive and are not motivated to offer favorable licensing terms. Pricing models that place restrictions on the number of copies available for lending, the number of circulations allowed before the title must be relicensed, and temporary embargos on front-list titles present significant challenges for libraries. OverDrive’s dominant market share in this area could add substantial clout to library interests in negotiating more favorable pricing and terms.
   • “KKR’s Christmas Eve announcement sounded many alarm bells in the library community. Concerns include the negative impact of private equity ownership and industry consolidation.
   • “The possibility of a merger between OverDrive and RBmedia into a new superpower is a more valid concern. In sectors involving the sale of products and services, fewer competitors lead to higher consumer prices. But in an arena where pricing is controlled more by publishers than distributors, a larger player could optimize library interests in future negotiations of prices and lending terms.
   • “As library investments in digital content continue to rise and spending on print stagnates or falls, the dynamics of this sector bring high-stakes ramifications for public libraries.”

1. In PG’s electronically-driven humble opinion, traditional publishers overprice their ebooks to Amazon and everyone else. That’s good news for indie authors because they can make a lot of money for each ebook licensed/sold via Amazon while still offering their readers a lower purchase price than traditionally published books would cost.
2. PG expects that Amazon’s lawyers are worried about antitrust problems, but he wishes that Amazon would develop its own system to support library ebook lending. PG has no doubt that Amazon’s system would work better than OverDrive does (PG uses OverDrive via his local library to borrow books from time to time and finds it to be clumsy and outdated. KKR hasn’t appeared to have put much money into improving the user experience of those who use OverDrive.)

PG has one final note – Jeff Bezos owns The Washington Post, which was the source for much of The Verge’s OP. When he acquired the paper, there was lots of Sturm und Drang among the Amazon-haters about how Bezos would ruin the Post and stifle the voices of opposition to Amazon represented by The New York Times, etc.

While PG believes the Post is fully-capable of ruining itself, it appears Bezos isn’t stifling the editorial side of the newspaper for Amazon’s benefit as predicted.