OverDrive Reports Record Digital Borrowing in 2019

From Publishers Weekly:

Public libraries around the world generated a record level of digital content circulation in 2019, providing patrons access to more than 326 million e-books, audiobooks and digital magazines, a 20% increase over the previous year, according to a report by Rakuten OverDrive, a digital distribution vendor for libraries

According to the report, 73 public library systems in five countries each loaned over 1 million digital books over the past year, including eight systems that hit the million loans mark for the first time. Among the top digital library lending systems are the Toronto Public Library (6.6 million digital loans), Los Angeles Public Library (the top U.S. library with 5.9 million digital loans); and the National Library Board of Singapore (the top lender outside of North America with 4.2 million loans).

According to the OverDrive report, the increase in digital borrowing represents the “library’s role as a valued discovery channel” for publishers and authors. Nevertheless, the OverDrive report on digital lending comes in the wake of continuing concerns by publishers that digital borrowing may undermine book sales. These concerns have led to a continuing dispute between publishers and libraries over efforts by some publishers to restrict the ability of libraries to offer digital access to their titles.

According to the OverDrive data, the number of e-books borrowed rose 15% in the year to 211 million; digital audiobooks borrowed jumped 30%, to 114 million, and 59 million children’s/young adult checkouts took place, a gain of 27% over 2018.

Link to the rest at Publishers Weekly

PG thought publishers’ concerns about consumers borrowing physical titles from the library instead of buying them at bookstores had been resolved a long time ago. If lending libraries and the consumer behavior they enable were dangerous or fatal to publishers and physical bookstores, such damage would have manifested itself long ago.

If it makes sense for publishers to sell physical books to libraries with the understanding that the library is going to lend the book and the publisher will receive no incremental income from such loans, nothing about ebooks should really change the underlying business considerations. With the specialized software the library uses to lend a copy of an ebook and delete it from the reader’s device at the end of the loan, the likelihood that ebooks lent through the library are going to be pirated is lower than those sold (licensed) through Amazon where no such automatic deletion function is built into the ebook management system (at least to PG’s knowledge).

Here’s an excerpt from the help file of Libby, a popular (the most popular?) lending software used in the United States:

Books are automatically returned to the library on their due date. When they’re returned, they’re also removed from your Loans and deleted from your device (if downloaded).

PG has noted before that on a scale of most to least sophisticated marketers and advertisers, traditional publishers are at the bottom, just below used car lots and payday lenders.

Why?

Free samples are a long-time staple of advertising and promotion campaigns for a variety of products.

Perhaps there are physical bookstores that do not allow visitors to leaf through and read parts of books as part of the shopping process, but PG is not aware of their existence. Such consumer behavior is sampling. Amazon permits the same behavior in its bookstore. No one expects that everyone who samples a product will purchase it.

If sampling was not a reliable method of increasing sales, PG expects retail establishments would end the practice.

If a reader borrows an ebook from a library by an author she hasn’t read before, from the reader’s perspective, that’s another form of sampling. (In this case, the publisher receives some compensation from the library for licensing the book in the first place.)

If this instance of book sampling is successful and the reader enjoys the book, then returns it to the library and looks for the next book in the series or another book by the same author and finds a two-month waiting list to borrow that next book, the reader is only a few clicks away from buying the next ebook by that author on Amazon and starting to read it in a couple of minutes. The reader may even purchase a printed version of the book she has borrowed and enjoyed for her own physical library, sign up for the author’s and/or publisher’s email list, etc.

Discovering a great new author and buying other books written by that author is a far more frictionless process with ebooks than it is with physical books. Going to a physical bookstore to buy that book requires transporting oneself to that store, hoping the store stocks the book, etc., etc. Buying a physical copy of the book from Amazon involves a wait of at least one or two days.

The incremental cost of goods for the publisher in creating, storing, transporting, etc., a copy of the second ebook is probably zero. The same costs for a physical book are definitely more than zero.

A sophisticated seller would be overjoyed to sell products with no incremental costs of producing and transporting those products instead of dealing with the costs and friction involved in selling physical products. Bill Gates, Microsoft and a lot of other people and business organizations have become extremely wealthy from selling organized collections of electrons.

10 thoughts on “OverDrive Reports Record Digital Borrowing in 2019”

  1. If it makes sense for publishers to sell physical books to libraries with the understanding that the library is going to lend the book and the publisher will receive no incremental income from such loans, nothing about ebooks should really change the underlying business considerations.

    A fundamental change in the nature of the good really does change the underlying business considerations. Physical books and eBooks are very different. A consumer has to physically go to the library or bookstore to get the physical book. For eBooks, he merely clicks. That’s a big deal in terms of transaction costs and the relative total cost.

    We now have a situation where consumers can get a book in four major ways: 1) Go to store and buy, 2) Go to library and borrow, 3) Click eBook on Amazon, 4) Click eBook on library.

    Consider the subset of consumers who get all their books online. They can now 1) Pay online for a physical book, 2) Pay online for an eBook, or 3) click for a free eBook. That represents a fundamental change from the past, and from the paper world. This consumer now has a choice between paying for a book, getting the identical good for free, or getting a very close substitute (sub for paper book) for free. And his transaction costs are very low.

    Paying and free are important variables.

    We have no reason to accept the notion that there was no manifested damage long ago without data. We don’t know. Lots of people make assertions that libraries have no effect on retail sales. They back that with opinion and untested speculation. There is a plausible case to be made on each side, but without the data, both cases remain speculation.

    And the sophisticated seller? He will carefully consider his total situation, total revenue, total profit, substitution effect, cross-promotion, and cross elasticity of demand. He’s sophisticated. He doesn’t make single variable decisions.

  2. Agree with everything, PG, but I will add a word about print books. The digital age has also sucked out some of the incremental costs of selling print books. Books now tend to be printed in short print runs close to the point of delivery instead of mountains of books shipped from warehouses in New Jersey. Not quite print-on-demand, but close. This slashes shipping and warehousing costs and makes ordering books much faster. My daughter ordered an out-of-stock book from a local bookseller the other day and I was surprised that she was able to pick it up the same day at close to Amazon prices. Local short run printing also reduces upfront investment and some of the risks in print publishing. Note also that the expensive practice of allowing free print returns appears to be phasing out. I think these cost reductions have been driven by competition from digital media, although the competition may be indirect.

    I’ve said before here that I believe there is some truth (just some, those guys are amazing in their obliviousness) in the trad publisher’s statements that print is coming back. Our library stats (admittedly one small system) show paper circulation flat or declining for a number of years, but now picking up. I once believed that paper books would become luxury items like leather bindings, but I talk to many people, especially young people, who are at home with both paper and screens and want both. I expect paper usage to continue to decline for a while, but to stay around for a long time to come.

    Lately, I’ve found myself reading paper with a digital version at my side for word searches and quick dictionary and network look-ups. For me, it’s a new mode for serious reading that I am becoming fond of.

    Finally, Rakuten’s Libby is great, really worth trying, but not on Windows, where, unless they have fixed it, it is a massive CPU hog.

    • Marv – Thanks for the detailed inside perspective.

      A very long time ago when I worked at a large advertising agency, I knew something about that era’s printing processes.

      I would love to find a short-run operation close to where I live so I can see how they handle the printing process and, particularly, the change-over from one job to another. They must be able to change very quickly without a lot of manual adjustments in order to make their business work out financially.

      As far as print is concerned, my observations on a limited sample is that pre-school age children and younger like the properties of the book as an object in addition to contents. They also seem to enjoy page-turning, including doing it themselves, to reveal new images, etc. It’s almost like a little ritual that they appreciate.

      • Can’t help you find a short run press, but I’ve read something about them, and the publisher who handles my non-fiction books on computing (Springer/Apress) has told me something about it. Amazon does most of their printing. Springer drop ships books to me from Portland OR, so I believe Amazon has a printing plant in that area. I know Amazon has other plants all over NA and the globe, although I’m not sure of the details. They apparently keep their printing plant locations as close as their data center locations.

        The presses run off standard pdfs, probably the same pdfs you prepare for CreateSpace and now Kindle print on demand. (I’ve discovered I can print bound copies of my books for beta readers through Amazon much cheaper than Kinkos will print loose sheets.) There are a limited number of sizes and papers available, but the range is expanding. The presses and book handling are highly automated. A pdf goes in one end and a pallet of books appears on the loading dock at the other, untouched by human hands. Ingram has a similar service, although I know less about them.

        I mentor a few high school kids and I have teenage grandsons. They, and our youth program librarians, are my main sources on kids attitudes toward paper and screens. I observe that teenagers now don’t distinguish between paper and digital as much as adults. Digital is not special to them– they’ve never been without interactive screens– but paper is not special either. If anything, they associate digital with school work, paper with recreation, although they are astonishingly deft at handling key boards and game controllers.

        I’m in a waiting room now with limited connectivity, but I’ll try to find some links to material on short run digital presses later.

        • My two kids won’t read ebooks, although lord knows I have offered them.

          School systems severely limit the use of student-owned electronic devices, partly to make sure that reading is actually reading, and partly just to limit liability if something happens to a device. Books taken to school from home effectively have to be paper. Books home from school are always paper. Students have a library on-site – it’s as if you had a branch library at your workplace. Elementary students have mandatory weekly school library visits, and classrooms are awash in paper which is often donated by students who moving up through the grade levels and leaving older material behind.

          I have mentioned before the success Scholastic has selling paper into classrooms. Those single-fold newsprint sheets listing cheap (and cheaply made) books are still a thing. The classroom becomes a store for paper books, and when they arrive and are distributed those paper books are a treat. Twice a year they convert our elementary school library into a store, and every student visits the store before it ‘opens’ to make a wish list. The internet is leveraged as well. That single-fold newsprint flyer? Everything in it and more is available online. Put in a teachers name, pick out the books, pay by credit card (and open an account to save your information for subsequent visits) , and your order will be delivered to the classroom along with all the others.

          And even though Scholastic titles are available in electronic format and are available from many library systems via Overdrive, everything I describe above is all paper. It’s not a huge surprise that they prefer it. My kids can use a web browser, they can read a wiki page, they can scroll social media feeds and chat online with their (vetted) friends, but when it is time to curl up with a read, they insist on a paper book. As a kindle-lover, it is almost maddening, but there you have it.

          • I think this varies district to district, system to system. In our district, a lot of homework and other projects are on line. I don’t see kids here repulsed by digital, but they don’t think its special either. For what it is worth, I base plans now on an assumption that people in the future will demand a choice between digital and paper. As a digital lover– I began reading books digitally long before kindle– I’m surprised.

            • Based upon a limited sample of elementary and middle-school students with whom I am related, they receive and submit all assignments on iPads provided by the school to every student (or at least every student in gifted/talented classes). (I take no credit for any of these children’s talents or accomplishments.)

              For many assignments, grading is easy for the teacher because it’s done via the school’s computer system. Parents have access to their children’s test results online so they can get an early alert if there are any problems their children are encountering.

              • Oh yes. The teachers are online with websites, and the high school uses SchooLoop – http://www.schoolloop.com for assignments, up to the minute grade reporting, homework submission, yadda. There are chromebooks all around. That still doesn’t change what I describe in my post above.

  3. Lots of paper is supported by the fact that there is no eBook for the title. Demand for those titles is a demand for paper.

    EReaders are terrible for anything with tables, graphs, equations, maps, etc. They are wonderful for narrative prose.

    The software for eReaders could make an iPad or laptop superior to paper, but I haven’t yet seen it. Imagine collapsing any book to the first sentence of every para, having multiple pages open on two 22-inch monitors, thumbnails scattered around the margins of the screen linking pages with maps/tables/graphs from the subject book or some other book. Click a para or sentence and have it added to a separate document.

    Long ago, I used to highlight things in textbooks, then type the highlights on regular old paper. (I type very fast.) Just add that function to the eReader software. I suspect the major impediment to all this may be copyright and bootlegging.

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