From Bloomberg Law:
States that want to give libraries a better deal on e-books are watching a publishers’ suit against Maryland, the first state to set terms for how digital books are distributed for public borrowing.
Library associations, including the American Library Association and several state groups, have been pushing for state laws to require publishers to distribute digital works to libraries on “reasonable” terms that the states would set. The groups say libraries pay too much for electronic books and should be able to get them at lower prices.
The bills and the law enacted in Maryland have set off alarm bells for authors and publishers who fear the legislation encroaches on copyrights.
Similar suits to the one in Maryland by the Association of American Publishers might follow if bills in other states move forward, copyright attorneys, publishing industry lobbyists and others said. They say the bills propose a radical rewriting of the copyright system that only Congress is able to change.
. . . .
“The Maryland case is very, very significant because we’re hoping and believe the court will say, ‘You can’t do this. This is unconstitutional,’” said Keith Kupferschmid, the president of the Copyright Alliance, a nonprofit that represents a broad group of creators. “And, presumably, other states would at least be a little more cautious. Hopefully they wouldn’t introduce the bills at all.”
. . . .
Library officials back the bills so they can loosen restrictions on the number of digital works that can circulate and not let publishers dictate pricing terms, said John Chrastka, the executive director of the EveryLibrary Institute, a nonprofit that advocates for library funding.
The Rhode Island and Massachusetts bills are based on the Maryland law. Supporters hope the bills can either be redrafted to avoid similar lawsuits or that the Maryland court will throw out the case.
In New York, Brianna McNamee, the New York Library Association’s director of government relations and advocacy, said the bill Hochul vetoed will likely be tweaked based on recommendations from her office.
“The bill’s viability in its current form is contingent on that pending litigation in Maryland,” McNamee said. “In a perfect world, if the suit goes away it would be our hope that it would provide reassurance to the governor and her staff that New York state won’t be sued upon enacting similar legislation.”
It’s not clear that the Maryland law is preempted by the Copyright Act, said Alan Inouye, the senior director of public policy and government relations for the American Library Association. The AAP’s claims aren’t valid in terms of copyright law because it’s actually a matter of contract law, Inouye said.
. . . .
The Maryland law and the similar legislation are preempted by the federal Copyright Act, which gives copyright owners a bundle of exclusive rights, including being able to decide when and how their works are distributed, Mary Rasenberger, the CEO of the Authors Guild, said.
The AAP and proponents of the lawsuit said they support public libraries and that libraries are essential in expanding readership, but the Maryland law has the potential to harm creators and weaken the copyright system.
“The public libraries are an important piece of providing public access, but they don’t operate alone in a vacuum,” said Maria A. Pallante, the CEO of the Association of American Publishers.
The Motion Picture Association, the National Music Publishers Association, and the News Media Alliance also oppose the bills because they say there could be a potential domino effect in states also creating compulsory licenses for other creative works besides e-books.
“The other industries are concerned because if states start doing this,” Rasenberger said, “then the next thing down the line is going to be movies and television programming.”
Link to the rest at Bloomberg Law
PG has suggested on many prior occasions that traditional publishers are foolish in their pricing strategies for ebooks because, after the first copy of an ebook is created, additional copies cost the publisher no more to produce.
In a perfectly-sane publishing world, ebooks would always cost much less than printed books and still generate a much higher profit margin without killing any more trees and shipping physical books long distances from the low-income nations where they are printed.
PG suggests that Amazon’s pricing sweet spot for ebooks per its KDP royalty structure is $2.99-9.99. That’s where the 70% royalty is payable. Everywhere else in the 99 cent to $200 price range permitted by Amazon, the royalty is 35%.
To the best of PG’s recollection, this pricing/royalty strategy is identical to the policy created by Amazon at or near the introduction of its ebook self-publishing option for authors that gave authors who didn’t feel a publisher added value (or couldn’t find a publisher for their books) direct access to what has become by far the largest bookstore in the world.
One of Amazon’s motives for setting and maintaining this royalty structure, indeed for putting a lot of effort to make self-publishing easy in the first place, was the attempt of major US publishers to force Amazon in increase its prices for all books to the suggested retail price set by publishers.
Amazon hadn’t grown into the international giant it is today and American publishers were more focused on killing Amazon to avoid this sort of discounting below their fancifully-created suggest retail pricing structure in order to preserve their effective monopoly over the market for books found in traditional bookstores.
Times have changed greatly since then – lots and lots of physical bookstores have gone out of business in the US (and perhaps elsewhere) and ebooks have become a significant source of income and far more significant source of profits for traditional publishers selling through Amazon.
With respect to ebooks licensed to libraries, traditional publishers have forgotten nothing and have learned nothing. The incremental cost of ebooks licensed to libraries over ebooks licensed to Amazon and other online bookstores is also effectively zero, but publishers still want to charge libraries more for exactly the same collection of electrons as Amazon offers for much less.
PG thinks there are some copyright issues in the states’ litigation claims, but this collection of lawsuits and the potential for yet another loss in court for traditional publishers reflects (in PG’s stupendously humble opinion) the ongoing stupidity of those individuals and conglomerates running traditional publishing in the United States.
Too much greed in the library sales department could end up costing publishers much, much more over the long run. It’s a risk the publishers didn’t have to take, but they did so anyway.