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HarperCollins, OverDrive Respond as 26 Loan Cap on Ebook Debate Heats Up

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By Josh Hadro and Francine Fialkoff Mar 1, 2011

In the wake of sustained criticism following HarperCollins's decision to limit to 26 the number of times an ebook can be lent—as first reported by LJ on Friday—both OverDrive and Harper took steps to repair the damage.

Today OverDrive released a statement on its Digital Library blog indicating that "[u]ntil we have time to review the effect of these new terms with our library partners, HarperCollins eBooks will not be listed in our Library Marketplace." Instead, librarians "will be able to review and order HarperCollins eBooks from a separated catalog."

OverDrive CEO Steve Potash directly tackled librarians' criticism that the company "failed to stand up for you and your readers," defending his company's role in moving ebooks and e-audio into libraries, in supporting the EPUB standard, and in developing mobile apps for library ebooks.

Potash also pointed out that he has been working with librarians for ten years now to make ebooks accessible in public libraries and that he will "continue to innovate, invest, and advocate for libraries so readers will have the best options for accessing digital books, anywhere and everywhere."

HarperCollins responds
After stating on Twitter that the company is "reading your posts & listening to our authors," HarperCollins has followed up with a statement of its own (reproduced below), expanding on the brief remarks initially provided to LJ. The letter contends that HarperCollins's previous policy of "selling e-books to libraries in perpetuity, if left unchanged, would undermine the emerging e-book eco-system, hurt the growing e-book channel, place additional pressure on physical bookstores, and in the end lead to a decrease in book sales and royalties paid to authors."

It also notes that a repurchase of an ebook license later after a book's release would come at a significant discount to mirror the lower price of a paperback edition.

Given that HarperCollins ebooks have often been licensed to libraries at a discount (in contrast to titles from some other publishers, which can cost upwards of 150% of list price), some librarians have cautiously agreed that the cost per circulation may be in line with expected value, a point HarperCollins stresses in its letter. For example, a $7.99 romance title at a 20% discount would come out to just under $0.25 per circulation; a $27 first-run hardcover equivalent comes out to slightly more than $0.83 per circulation after a fixed 26 loans. In addition, ebooks require no extra handling—labeling, adding theft-prevention, shelving—before they're ready to circulate, amounting to further savings.

Meanwhile, on his blog, ebook commentator Eric Hellman conducted a small survey asking, "At what price discount would your library opt for a 26-check-out ebook?"

Though there have been just over 60 responses, the vast majority indicate either that "no discount would be enough," or that a discount of 50% or more would be necessary to consider such terms.

However, a growing number of librarians believe the cost per circulation argument sidesteps the underlying rights issue. As indicated by calls for an ebook user's bill of rights and other agitations for legislative or judicial recourse, many feel that a fundamental shift toward licenses and away from ownership leaves libraries open to a potentially endless series of license term revisions.

For the blow-by-blow roundup of materials related to this change in terms, see librarian Bobbi Newman's Librarian By Day blog.

HarperCollins letter:

March 1, 2010

Open Letter to Librarians:

Over the last few days we at HarperCollins have been listening to the discussion about changes to our e-book policy. HarperCollins is committed to libraries and recognizes that they are a crucial part of our local communities. We count on librarians reading our books and spreading the word about our authors' good works. Our goal is to continue to sell e-books to libraries, while balancing the challenges and opportunities that the growth of e-books presents to all who are actively engaged in buying, selling, lending, promoting, writing and publishing books.

We are striving to find the best model for all parties. Guiding our decisions is our goal to make sure that all of our sales channels, in both print and digital formats, remain viable, not just today but in the future. Ensuring broad distribution through booksellers and libraries provides the greatest choice for readers and the greatest opportunity for authors' books to be discovered.

Our prior e-book policy for libraries dates back almost 10 years to a time when the number of e-readers was too small to measure. It is projected that the installed base of e-reading devices domestically will reach nearly 40 million this year. We have serious concerns that our previous e-book policy, selling e-books to libraries in perpetuity, if left unchanged, would undermine the emerging e-book eco-system, hurt the growing e-book channel, place additional pressure on physical bookstores, and in the end lead to a decrease in book sales and royalties paid to authors. We are looking to balance the mission and needs of libraries and their patrons with those of authors and booksellers, so that the library channel can thrive alongside the growing e-book retail channel.

We spent many months examining the issues before making this change. We talked to agents and distributors, had discussions with librarians, and participated in the Library Journal e-book Summit and other conferences. Twenty-six circulations can provide a year of availability for titles with the highest demand, and much longer for other titles and core backlist. If a library decides to repurchase an e-book later in the book's life, the price will be significantly lower as it will be pegged to a paperback price point. Our hope is to make the cost per circulation for e-books less than that of the corresponding physical book. In fact, the digital list price is generally 20% lower than the print version, and sold to distributors at a discount.

We invite libraries and library distributors to partner with us as we move forward with these new policies. We look forward to ongoing discussions about changes in this space and will continue to look to collaborate on mutually beneficial opportunities.

To continue the discussion please email library.ebook@HarperCollins.com

Sincerely,

Josh Marwell
President of Sales
HarperCollinsPublishers




Reader Comments (34)


When I first heard of HarperCollins’ plan to charge for only 26 circulations I was as incensed as the rest of the library community, but as I consider the proposition, I think the plan has potential. Much like the bestsellers that many libraries lease during the peak interest period; this proposal could evolve into something that allows librarians to provide large scale access while titles are “hot” without cluttering up our digital shelves once the rush is over. I think HarperCollins should consider a dual pricing structure that allows permanent purchase with no limitations and a greatly discounted price tied to either number of circulations or to a specific time period. This could become a win/win for everyone.

Posted by Lisa Marie Loranc on March 1, 2011 04:32:08PM

I ran the stats today and my library has over 61,000 books that have circulated more than 26 times. Many of these are paperbacks. If the cheaply bound paperback can circulate 43 times without needing repair the arbitrary limit of 26 is unreasonable.

Posted by Paula Laurita on March 1, 2011 04:34:03PM

As a school librarian, I do not want a book I have purchased to simply vanish. It would be impossible to keep track of disappearing books, removing catalog records, etc... If Harper Collins would invoice us electronically with a "renewal fee" at a fair discount price after say, 18 months, I would be inclined to deal with that approach. I pay a hosting fee to Gale Cengage for electronic reference books already. For those titles no longer in electronic demand, I could decline the fee and those could disappear. I much prefer a purchase for a period of time rather than a certain number of checkouts.

Posted by Carol Brown on March 1, 2011 04:39:13PM

What Harper Collins is doing makes sense for them as a publisher that does not want to give away the store. The actual cost to libraries for each loan is still quite low, and with a re-purchase (at paperback prices) will even be lower. This pricing model is not unreasonable. Essentially libraries are leasing the book. And that is okay. There are many, many positives with electronic books for public libraries. When magazines went electronic we all saved a lot of space and gave our users improved access at the same time. We are at a point of revolution in how people are going to access and read books. Amazon electronic books are outselling hardcovers by a three to one margin. My suggestion is to have OverDrive set up a mechanism that will allow any library that wants to do so to charge a modest (let's say $0.99) per circulation to users. As a Nook user I will still jump up and down with joy if I can get that book on my reader for this very low price. I cannot see a great outcry from the public at charging a fee for use. (Now all you purists out there, please remember what century we are now in.) Any libraries that don't want to charge a fee, that is fine with me, and I'm not advocating fees for other items. This is just one that would be easy and makes sense. Libraries do have a role to play here and the publishers recognize our importance in promoting their product. I believe Harper Collins has come up with a win for them and for libraries. Let's quit moaning and groaning and realize that this is a sensible, low-price solution.

Posted by Bob Raz on March 1, 2011 04:44:55PM

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