Recorded Books, NetLibrary in Suit

Dispute over issues of exclusivity, contract breach, customer service

By Jennifer Pinkowski -- Library Journal, 8/15/2007

Recorded Books and NetLibrary are suing each other for breach of contract, violation of copyright, unfair competition, and defamation, among other charges, according to documents filed in U.S. District Court in Baltimore. So far, service to the 1700 libraries that subscribe to Recorded Books’ content through NetLibrary seems largely unaffected by the litigation.

The dispute comes three years into a licensing and distribution agreement that made approximately 2000 e-audiobooks from Recorded Books, the world’s largest provider of audiobooks, downloadable through NetLibrary, a division of OCLC.

According to the claim filed May 31 by Recorded Books, based in Frederick, MD, the deal was supposed to be an exclusive one. Yet NetLibrary entered into agreements with the Bibliographical Center for Research and SOLINET to distribute e-audiobooks from publishers such as Random House (which includes Books on Tape and Listening Library), Listen and Live Audio, and Blackstone Audio, according to Recorded Books. On May 4, Recorded Books subsequently notified “numerous” subscriber libraries that the contract had been terminated and that no Recorded Books content would be available through NetLibrary after May 31.

NetLibrary quickly fired back with its own letter, assuring librarians that Recorded Books content would indeed be available after May 31—and for the following three years. Revenue benchmarks set in the contract had been met, which triggered an automatic extension of the agreement to 2010, according to NetLibrary.

Recorded Books’ initial suit charged NetLibrary with both breach of contract and copyright infringement, the latter stemming from NetLibrary’s continuing distribution of Recorded Books’ content. NetLibrary’s counterclaim, filed on June 19, says content from other e-audiobook providers is allowed as long as Recorded Books consents to it—but that Recorded Books refused to meet with NetLibrary to do so, causing NetLibrary to “suffer economic damages.”

Recorded Books filed a preliminary injunction to force NetLibrary to stop distributing its content. As of press time, the injunction was still pending. (Check libraryjournal.com for updates.) Neither company would officially comment on the litigation or the impact on subscriber libraries.

“Subpar” customer service is another reason Recorded Books terminated the contract, according to its complaint. Cited in the suit is Iowa City Public Library (ICPL), which in January lost NetLibrary service for a week while the latter tried to fix a longstanding glitch over user authentication, according to the Recorded Books complaint.

ICPL librarian Kara Logsden confirmed to LJ the week-long “shutdown” but wouldn’t say whether it was the result of poor service. ICPL has since dropped NetLibrary for its main competitor, OverDrive. NetLibrary protests that of the libraries with e-audio subscriptions, Recorded Books identified only 14 alleged complaints. ICPL was unaware it was mentioned in the Recorded Books lawsuit, which initially got little notice.