Mandatory Ebook Licenses for Public Libraries

This content has been archived. It may no longer be accurate or relevant.

Note: The bill linked to at the bottom of this post appears to be pending in the Maryland legislature. It is not a law at this point.

PG is concerned about the mandatory nature of this bill in part because he did not see any limitation on the definition of who or who not is a “Publisher” and, thus, who would be subject to the provisions of this bill, if it were to become a law.

In PG’s mind, it would be one thing if the Random Houses of the world were governed by such a law and another if indie authors were also subject to such a law.

While PG expects that a great many indie authors might be willing to grant ebook licenses to public libraries in principle, he is concerned that, due to the unequal bargaining power between a state agency and an indie author, the author might be intimidated into granting a public library license on terms that are very disadvantageous to the author.

As an example, if the State of Maryland presented the author with a “standard” ebook license that pays the author $1.00 per year for licensing an unlimited number of copies of her ebook to every library in the state, such a license might deprive the author of a significant amount of royalties compared with the royalties the author might have received from Maryland readers for a $2.99 ebook listed on Amazon.

At least some avid Maryland readers might automatically resort to library to borrow an ebook instead of buying a reasonably-priced ebook from the author.

With physical library books, there is a certain amount of friction in the borrowing process, time required to travel to the library, locate the physical book, wait in line for a librarian to check the book out, then return to their home, followed by a second trip to the library to return the book with a potential fine if the book is returned late. There is much less friction in borrowing an ebook from the library and no fine because the library automatically terminates access to the book when the allotted time for the loan has expired.

The existence of this sort of physical friction in the borrowing/return process is a consideration for at least some portion of the reading public. PG has purchased more than one book instead of waiting until he could visit the library to check it out (if it wasn’t already checked out).

It is common for some people to assume that library books are primarily a benefit for readers who might not be able to afford to buy books they would like to read. However, there is nothing in a typical public library structure that distinguishes between a patron who is wealthy from one who is under financial constraints that make it difficult for him/her to afford to purchase even a reasonably-priced ebook.

Particularly in the case of ebooks which can be located and accessed online from a library as easily as they can be located and accessed online from Amazon, PG is concerned that doing so might become standard practice for more than a few readers who simply prefer to spend their money on something else they’re required to pay for instead of purchasing an ebook at a cost that is well within their budgets.

In an arms-length negotiation between two parties with equal or near equal bargaining power and financial resources, a reasonable agreement concerning an ebook license for a library might certainly be negotiated.

However, when one of the two parties is a state agency with access to state-employed lawyers and the courts of that state and the other is an individual author who may earn a few hundred dollars a year from her self-published ebooks, the power disparity is immense.

If this Maryland bill is enacted into law, there is little reason to believe that legislators or government officials in other states would not learn about Maryland’s law and pass similar legislation to help stretch their own library budgets further.

PG would be happy to hear from others who have more knowledge of this Maryland proposal or other similar bills/laws concerning the provisions of this bill in particular or the topic of mandated ebook licenses and public libraries in general. PG acknowledges that he may be making a mountain out of a molehill, but he is concerned about intentional or unintentional adverse impacts on indie authors.

Please share any thoughts or opinions in the comments.

Link to Bill

28 thoughts on “Mandatory Ebook Licenses for Public Libraries”

  1. At least some avid Maryland readers might automatically resort to library to borrow an ebook instead of buying a reasonably-priced ebook from the author.

    Sure. But, let’s recognize there is a substantial number of authors who routinely tell us library loans increase discovery, and can only increase cash sales.

    Truth in posting: I can’t see the linked bill.]

    • I’m having trouble getting the bill to embed, Elliot. Apologies to all who are also frustrated.

      I have place a link to the bill at the bottom of the post.

    • Increase discovery? I doubt it. I’d like to see statistical evidence that having an ebook at a public library increases later sales of that book. It might induce readers to look for other titles by the same author, but what if the author has written only one or two books?

      There is a parallel: entertainment venues telling local bands that they can’t be paid but will get “exposure” that will help their careers. As band members almost universally will state, that exposure never seems to lead to paying gigs or sold albums.

      • Bands get to sell tshirts and CDs.

        As for library ebooks there is data but it is old and predates KU: ages ago, Eric Flint of Baen disclosed his book sale history before and after putting a title in Baen’s Free Library. His *print* sales saw a significant spike and a higher sales levels after the ebook went up, DRM free and in every known format including online and offline HTML. Across his other books *and* the book in question.

        The caveat being that Flint is a commercial book author, not a litfic book-a-decade author, with several popular series including one that is a small cottage industry unto itself, with dozens of authors contributing short stories, essays, and novels for a couple decades now. Also, his audience draws both from SF&F and history buffs. Plus the books are just really good reads.

        Still other Baen authors have reported similar experiences.
        Around the same time BAEN actually bundled CDs full of ebooks with the more prominent new print releases. For series books that included all preceeding titles plus titles from other series by the author and select others doing similar material. The CD images were and still are available online with official BAEN sanction with the understanding the collections were free to copy and distribute but not sell.


        (The image at the bottom of the page takes you to the reputable Fifth Imperium web page hosting the CD collections. As in safe to download.)

        The books in the collections are commercially available at regular prices and still sell fine which says something about their readership. Over the years they have received queries about contributions to support the Free Library and the answer is always “buy a book or two”. It is a useful promotional tool in a business with very few.

        This is just one data point (from a modest size genre publisher) but when you combine it with the reported successes from discounted promotions and permafree titles plus the continual growth of Kindle Unlimited it can be safely said that, at least in the commercial book arena, “free” exposure does lead to increased sales by reducing the risk to sample the unknown.

        How much of an effect it might produce will vary by genre, author, and book.
        But then, so does everything.

        The key point about the libraries is that tradpub can’t afford any significant marketing for midlist/backlist and no *continuing* promotion for anything, hence their obsession with launch window sales, the “fresh produce” model.

        Libraries are the only continuing exposure for their books and instead of trdating it as a promotional tool the BPHs treat it as a captive market to be squeezed for blood and the libraries’ old school culture lets them.

        No sympathy for either side here.
        Kobo and Smashwords managed to get deals with Overdrive to get Indie titles onto their catalog for libraries to buy cheap and the libraries reaction was to demand Overdrive ghettoize those titles into a separate, easy to ignore section.
        They both deserve what they get.

  2. One thing to remember is with most state laws, they can try to make it effective to out of state ‘publishers’ but like with the sales tax issue for online sales to out of state buyers you run into federal law and then you have the whole joy of collecting the fees, fines, or penalties.

    Same reason why the IRS and other tax agencies likes to have as much withheld on the front end by transactions of large easily punishable U.S. companies (such as payroll taxes and sales taxes for in store sales) and holds them accountable for non payment – not necessarily those who ‘owe’ the taxes.

    Good luck having the state of Maryland go after self publishers. And that law seems awfully vague on what a publisher is. Offering your book for sale on Amazon, are you technically in the business of Manufacturing and Selling the book?

    What do I know, I’m a tax accountant who deals with international tax compliance, not a lawyer on business law.

    • I think you’re definitely on a good path, Jonathan.

      Article I, Section 8 of the Constitution authorizes the US Congress “to regulate Commerce with foreign Nations, and among the several States, and with Indian Tribes.”

      This provision, generally referred to as The Commerce Clause, has traditionally been interpreted both as a grant of positive authority to Congress and as an implied prohibition of state laws and regulations that interfere with or discriminate against interstate commerce.

      One interesting aspect of digital commerce is that there is not necessarily any physical presence of a seller in the state where the purchaser of digital goods resides. Digital goods require no in-state retailer to deliver them to customers. The same has always been true for mail-order firms located outside a state that use the US mail or a shipping service to deliver physical goods into a state. Digital commerce does not, of course, incur any significant delivery cost these days.

      Amazon has recently caved due to larger political issues and voluntarily collects state sales taxes it is not legally required to collect. But for quite a long time (relatively speaking) US purchasers living in states in which Amazon had no physical presence could acquire products sold by Amazon without having Amazon collect a state sales tax that an in-state seller would have been required to collect on those purchases.

      Although I think every state has what is usually called a “use tax” equivalent to the state’s sales tax that the in-state purchaser is supposed to pay when she/he/it purchases goods from an out-state seller who is not required to collect sales taxes due to the interstate commerce clause, in practice, it is not economically or politically practical for a state to go through the process of requiring use tax returns from ordinary citizens and enforcing such an obligation. In practice, businesses with accounting departments that make large purchases of goods from out of state represent the large majority of use taxes actually collected by a state.

      Those who have crossed the border separating a state which collects high sales taxes (or state liquor taxes) from a state which does not collect such taxes has been likely to encounter one or more signs promoting retail establishments in the non-taxing state not far from the border that say something equivalent to “No State Taxes on Beer!”

      When news came out about Amazon’s change in policies that resulting in the company voluntarily collecting sales taxes for every state in the US, I half-expected to see some Amazon competitors start promoting their no-sales-tax policy for out-of-state purchasers. I haven’t seen any such advertisements, perhaps by chance or perhaps because large Amazon competitors have decided such actions might attract unwanted federal legislation addressing the subject.

      • PG, I thought that South Dakota v Wayfair back in 2018 had reversed the old Quill decision and allowed states to require retailers to collect sales tax even if they have no physical presence in the State?

        • By 2018, I was long out of law school (which was the exclusive site of my education about sales taxes), so Quill is as far as my knowledge goes, M. I’ll check out the South Dakota case when I get a chance.

          As an old lawyer said to me when I was a young lawyer, “The old laws are the best laws.”

          I will check the case you mentioned, however.

        • That’s correct, to a point.

          Wayfair does allow states to collect sales tax so long as it is not an unreasonable burden. Under the present interstate compact (there were 38 states who were members in late 2019, the last time I checked; the pandemic has sort of changed priorities!), that means that Vendor X in jurisdiction X’ is required by law to collect sales tax in jurisdiction Y’ if either of:

          (a) Vendor X maintains a physical presence in jurisdiction Y’; or

          (b) Vendor X, during the most recent twelve calendar months, shipped either 200 orders or $100,000 in retail value in goods into jurisdiction Y’, regardless of Vendor X’s business in any other jurisdiction

          Most shipping consolidators, however — like a certain Seattle-based e-commerce behemoth that both consolidates third-party shipments and sells stuff on its own account — have begun assuming that they’re subject to (b) above, and started collecting sales tax in all 38 jurisdictions.

          Notably, California and Pennsylvania were not (again, at the end of 2019) members of that interstate compact… and their sales-tax authorities are among the most pernicious… so for all practical purposes, any business doing $100k gross should count on being assessed sales tax everywhere in the US, despite the “limitations” of (b). And there are vastly overpriced services out there that offer to do all of that “work” for you, if you’re a vendor (such as selling copies of your faaaaaabulous life-changing cookbook from your garage that you had printed up by Thomson-Shore before the bankruptcy).

          By now, y’all have probably spotted the hole in (b): It doesn’t consider digital deliveries, nor services (e.g., web design services that would otherwise be subject to sales tax, even in both jurisdictions). So there’s more fun to come… especially once one starts considering whether Texas gets a cut. (Dallas is a major transfer node for ‘net-based communications, especially for those foolish enough to use a certain Arizona-based vendor for their domain services.)

          And, of course, it gets even more fun if you sell at conventions or conferences out of state.

          • Agreed that this general topic is a total mess, C.E., and suggest (again) that Wayfair has made it worse.

            One thing that bothers me about this entire subject is the idea that somehow, the courts have to figure out how to help states get around the fact that states can’t manage to collect Use taxes from their own residents (something states are clearly permitted to do, but tends to be unpopular politically and a lot of work for little return) by allowing states to concoct some method to force sellers who have been born in and have never left Alaska to pay sales taxes on goods they mail to Mississippi.

  3. As a foreigner I’m not ashamed to admit my almost total ignorance of the rich history of the interpretation the American Constitution and of the impact of legal arguments and decisions on the meaning of what might otherwise be thought of as clear and obvious words*.

    However, your constitution states that Nor shall private property be taken for public use, without just compensation. My understanding is that intellectual property is covered by this clause and that “just compensation” is set at market value.

    So can anyone who understands the interpretation of the takings clause tell me whether the proposed forced licensing is a “taking” and, if so, would the current KU payment for a full read of the book represent a fair market value?

    * Based on my reading I console myself with the belief that this ignorance extends not only to the greater part of those in the American population who post online opinions, but also to most legislators.

    • The takings clause is one of tbe biggest fronts in the war over individual (property) rights between big government statists and constitutionalists. There have been in recent decades several high profile legal fights over local governments carrying water for corporate “investors” by invoking Eminent Domain seizure at less than market value, not for public use but for ffo-profit external corporations. Most have ended poorly.,keep%20the%20property%20they%20have%20owned%20for%20decades.

      Other Fronts in the war against the Consitution include the willful marginalization of the Tenth Amendment with the never ending federalization of local services and unfunded mandates, the attempts to end the Electoral College without an amendment, the creation of “implied rights” which allows Congress to shirk its duty to define a true (Privacy) right, plus the incrrasing trend of the Imperial presidency ruling by decree and through non-elected nor congressonally vetted “Zsars”.

      The consitution is increasingly ignored and soon won’t be worth the parchment it was written on…
      …unless a lot of somebodies do something. And some of tbose “somethings” won’t be pretty.

  4. I believe that this is the inevitable “Otter be a law!” response to the efforts by the Big Four to boost their profits on their front list books. (My opinion is that the embargoes and other shenanigans with library acquisitions will only increase their flop rate on “sure thing best sellers.”)

    Or it could be a rent seeking maneuver by the people at Overdrive.

    Or both.

    In any case, as usual, the bill is so poorly thought out and written that it will inevitably be wrongly interpreted by a fresh hire in the Consumer Affairs Division that knows nothing of the publishing industry – but is well attuned to who has the deepest pockets to dip into.

  5. Who defines if you are in the business of “MANUFACTURING,PROMULGATING, AND SELLING”? What if your book is part of an expensive program (financial, weight loss, marketing, etc.) and you don’t sell it separately? What if selling through your own channel (Scholastic, etc.) is a huge part of your business plan?

    I’m no expert, but it seems that audiobooks aren’t included in this, but “digital imagery” is, so might that be interpreted to include video versions of books, plays, mags, and news, as in TV shows and movies? Sigh… nothing like sloppy legislation to keep the lawyers employed (no offense meant PG).


      So, audio books are included.

      And PG is one of those lawyers that wears a cape – he swoops down and saves people from the speeding trains of bad contracts!

      • My cape kept getting dirty plus when I used the black one, people sometimes mistook me for a judge, WO, so, these days, I’m pretty much sticking with a skin-tight body suit with a depiction of the scales of justice on the chest (AKA above the belly bulge). Plus a winged helmet in my old school colors.

  6. If libraries are behind this, it’s time to reexamine their place in society. At prevailing prices, books are no longer scarce goods.

    We can probably make a good case for research libraries, but what is the case for libraries providing mass circulation for the latest romance or thriller? Why are they necessary immediately upon publication?

    The bill is a clumsy attempt to make books an economic public good. How does the latest Stephen King fall into that category?

    Show of hands. Who here here has authored a novel of such social import that it warrants the full force of government to wrest it from the clutches of the author? [Sitting on my hands.]

    • This assumes that every reader has space to store books; particularly to store books that will be read only once; and that the full purchase price (“discounted” from list or otherwise) is the appropriate measure of value for that one read.

      Especially if that one read stops after a chapter with the temptation to throw the book against the wall.

      Even more especially if we’re not talking about the very newest releases, but older material ranging from six months to six centuries (or more!) old.

      And that’s before getting into questions of inappropriate censorship, but that’s for another time.

      I’ve been in “rental library only” countries, and there’s a profound difference in voluntary literacy (choosing to read books) than under the US model — especially in small-town and rural areas. It’s one of the prices we pay; I think it’s an incredibly cheap one.

      • It assumes nothing.
        Who cares how much storage one has for romances and thrillers?
        Who cares it someone throws a book at the wall?
        What does any of that have to do with government mandated sales to favored buyers?

        • It assumes that libraries are, at present, operating equivalently to all other prospective purchasers. Umm, no. The reality is that libraries are disfavored purchasers. If this was truly an instance of “you have to give the libraries bigger discounts than offered to the trade,” that would be a valid objection. It’s not the case, however, either in terms of the proposed legislation or present practices. (An e-book acquisition by a library is typically highly time or circulation limited and still costs four to six times what you or I would pay for the same file(s) at Amazon or in the iStore or from Kobo, and we’d get to keep it forever. There are similar, if somewhat less extreme, problems with printed materials.)

          Neither the proposed legislation nor the libraries are asking for advantages — just a level playing field. And the echoes of the 1950s and 1960s in there get a little bit louder when one realizes the racial disparities in this country among those who can build their own book collections… (which is a note only that the facts are different than I think were assumed and is not an accusation of ill-will of any kind).

          • CE, is it not true though that the ebooks I “buy” are actually only licensed to me and I’m not permitted to do with the files what the library wishes to do, namely loan the files outside my household group? Surely the libraries don’t want to be level with the field in which I’m playing but instead want to purchase on a preferential basis?

            For an indie author, the fairest result would be if they were paid the current market rate for a loan every time the ebook was loaned out – there would be no restrictions on simultaneous loans – with the cost of this public good falling on the public as a whole via taxation. I doubt that there is any desire amongst the legislators to direct this level of funding to authors, who mostly can’t afford significant campaign contributions.

            • Well, the publishers claim that they’re only licensed. I’m not at all sure that’s correct; e-books are not software. We’re getting into law-journal-article land here, though, and I’ve got a backlog of about twenty articles on that topic (and have read over a hundred in the last couple of decades).

              Don’t get me started on music digital downloads.

              The fundamental problem is pushback on the basis of immediate profit against long-term system viability, particularly by the equivalent of “absentee landlords” — across the spectrum (I’m thinking here of the estates of one James Joyce and of one A. Conan Doyle as counterweight to the ownership of Hachette).

              Mike, you’ve raised a good point. The problem is that the shouting that “We say it’s a license, therefore it is a license” resembles an absurdist Pirandello play more than reality. Of course, “absurdist” goes right along with both “legal doctrine” and “publishing” so….

              • The NY pbook publishers tried the license tactic last century. What they got in return was First Sale doctrine.

                The digital issue is still being debated in the EU…
                …and ignored in the US as nobody is trying to build a used ebook business and publishers are studiously avoiding taking commercial pirates to court.


          • I assume nothing. I specifically do not assume “that libraries are, at present, operating equivalently to all other prospective purchasers..”

            When government mandates both sales and price for any buyer, that’s a favored buyer. If the buyer is a library it’s a favored buyer. If the buyer is a member of a specific race, it’s a favored buyer. If the buyer lacks storage, it’s a favored buyer.

  7. I think other comment I should have made last night is, so this is technically saying you have to offer your item available to a library at a reasonable fee and then they put other qualitative on what you can and can not force the library to do.

    I would expect someone to argue government forcing you into a sale, I don’t think many judges and people are happy with the idea of private business being forced to sell their goods to x, y, and z. (As long as they are not discriminating in choosing to not sell to x, y, or z) of course my argument of a reasonable terms may be wildly different than the libraries.

    So charge them x amount t per borrow, like Kindle unlimited. (Or perhaps we just assume what my number of borrows will be, and all authors are very optimistic right? And if the library isn’t going to be, why do they want my book so bad?) And unless I’m mistaken in didn’t see anything preventing me from saying my terms include the fact you can only lend it out five times and then we negotiate again.

    I see I could have lots of fun with a libraries legal, technology, and accounts payable team if they really want to demand I play ball with them!

    Wonder if the law can be written using the same logic but in reverse. we can force the libraries to buy our book at reasonable terms to ensure liberty and ensure everyone has easy access to such essential literary wisdom! Should we really trust the Maryland libraries to know what is truly in their best interest? What if they curate it wrong? My 300 page dissertation of how to turn on a light switch with lots of pictures and diagrams may desperately be needed by all their libraries at very reasonable terms!

Comments are closed.