Ebook Vendors Anticipate Big Five Licensing Terms Becoming More Flexible

After years of expressing concern about the potential impact that library lending might have on consumer sales, major publishers have good cause to take another look at the library market for ebooks, according to executives from library ebook distributors OverDrive, 3M, and Baker & Taylor. With consumer sales growth slowing, bolstering institutional sales will likely become more of a priority for major publishers. OverDrive CEO Steve Potash noted that publishers, like all for-profit companies, are always looking for growth, and "there's still a lot a growth in institutions, and there [are] significant opportunities for growth in education.... If retail is flattening, you have to experiment."
All Eyes on You Big Library Read June 2015After years of expressing concern about the potential impact that library lending might have on consumer sales, major publishers have good cause to take another look at the library market for ebooks, according to executives from library ebook distributors OverDrive, 3M, and Baker & Taylor. U.S. consumer ebook sales experienced 3.8 percent revenue growth in 2014 to reach $3.37 billion, according to the Association of American Publishers (AAP) StatShot Annual survey, released in June. (In comparison, revenue for print books and journals rose 4.6 percent, to $27.9 billion.) While 3.8 percent growth is certainly respectable, it's a far cry from the doubling ebook sales experienced from 2010 to 2011. They almost doubled again from 2011 to 2012, before flattening in 2013 and rising slightly last year. As a result, bolstering institutional sales will likely become more of a priority.  OverDrive CEO Steve Potash noted that publishers, like all for-profit companies, are always looking for growth, and "there's still a lot a growth in institutions, and there [are] significant opportunities for growth in education.... If retail is flattening, you have to experiment." There’s plenty of territory ripe for such experiments. David Cully, president of retail markets and executive VP of Merchandising/Digital Media Services for Baker & Taylor, noted that "publishers, over the last several years, were reluctant to develop lending models, and wanted to make sure that lending models didn't, in any way, affect their retail consumer business. So they developed lending models that had various guardrails." While other lending models, including pay-per-circ, metered reading, and unlimited simultaneous access, have existed in the library markets—via platforms such as Odilo, hoopla, Freading, Total BooX, and BiblioBoard—until recently the big five have largely stuck to the now-traditional one-book, one-user model, with terms that typically involve significant price increases versus retail, or pricing comparable to retail but restricted by loan caps. Cully, however, noted that he expects terms to become more favorable to libraries as major publishers begin to compete for a share of the institutional markets. "I think what tends to happen, is that the models of publishers, over time, tend to seek their own levels and become similar...and we're still in the early stages," he said. Tom Mercer, marketing manager for the 3M Cloud Library, agrees, noting that "all of the publishers are evaluating their model now that they've been in [the library market] for a while. There was a lack of data, now they all have data. I think, for the most part, publishers believe [libraries are] a good business to be in. It doesn't detract from their consumer sales. So I think there's more of an openness among them to think about different things." Rodrigo Rodríguez, the CEO of Odilo, which in June became the fourth vendor to offer library lending licenses from all of the big five publishers, wrote in a statement to LJ that "Odilo is exploring different lending options (more than the one-user, one-copy model) with all of our publishers, including the big five. Recently we have seen some of our publisher partners adopt our Pay-per-Use model for library lending, along with featuring it in our new BookClub. We hope to work with the big five to show them the value in these new options."

Check it out

In the consumer market, this willingness to experiment has manifested primarily in business-to-business marketing efforts, intended to facilitate discovery by offering limited-time access to bestsellers or popular titles. For example, HarperCollins has partnered with American Airlines and JetBlue on promotions that enable passengers to sample select titles while in flight. Hachette has worked with Qantas airlines on a similar promotion called “Stories for Every Journey.” This spring, Simon & Schuster announced a partnership with mobile distribution platform Foli that uses geolocation technology to enable people to read as much of a selected title as they want, as long as they stay in one location. The partnership kicked off with David McCullough’s bestselling biography, The Wright Brothers, which was made available to visitors at the National Air and Space Museum, the Wright Brothers Memorial in North Carolina, and at 50 airports nationwide. While none of these experiments have involved libraries, there are indications that these major publishers are once again seeing the important role that libraries can play in marketing and discovery. For National Library Week in April, Simon & Schuster announced that for every ebook or hardcover copy of Bryan Grazer’s new title, A Curious Mind: The Secret to a Bigger Life, sold at retail, the publisher would donate a one-year ebook license to a public library or school library. Another example is HarperCollins’s ongoing participation in OverDrive’s Big Library Read promotions, which OverDrive initially launched in May 2013 with Sourcebooks, featuring Four Corners of the Sky by Michael Malone. HarperCollins partnered with OverDrive on the second Big Library Read promotion later that year, enabling 6,500 libraries and schools to offer Jane O’Connor’s Nancy Clancy: Super Sleuth for unlimited ebook and audiobook checkouts for two weeks in September, 2013. The publisher has been a regular partner in the program ever since, most recently participating in a Big Library Read in June that featured Kate White’s summer 2014 title, Eyes on You, selected by votes from OverDrive libraries. For publishers, it seems like a low-risk, high-reward promotion. The reviews are in, hardcover sales have already tapered off after one year, and then thousands of libraries, in communities throughout the country, prominently feature the title on their websites and promote the book and the author via reader recommendation, potentially lifting consumer sales of an author’s other work. In the case of Nancy Clancy: Super Sleuth, the title is also the first book in a series, which could encourage readers to purchase subsequent titles after getting hooked. “For HarperCollins, Sourcebooks, and others who have been in Big Library Read promotions, they’ve had triple-digit lift for the author,” said Potash. “The book that was featured, at the end of the two weeks, had dramatic sales, because there was so much interest in the title. And then there was a lift for [additional titles by] the author.”

Looking ahead

Bloomsbury USA, while not a member of the big five, is a major publisher that recently participated in a new type of promotional licensing model that OverDrive describes as “book club pricing.” As part of Multnomah County Library’s 13th annual Everybody Reads community reading event in January and February, Bloomsbury allowed OverDrive to sell Multnomah 200 two-month ebook licenses for The Residue Years by Mitchell S. Jackson. Although the licenses were temporary, these terms enabled the library to save thousands of dollars compared with purchasing standard licenses. (In an indication of demand, an additional 200 temporary licenses were purchased during the promotion to eliminate holds lists.) This type of model is one way in which publishers might respond to a common complaint: The standard one-book, one-user model creates bottlenecks when titles are most popular, but most libraries can’t afford to purchase dozens of copies of every bestseller. Particularly in cases in which libraries must already accept terms that involve loan caps, why shouldn’t licensees be able to make all of a title’s limited checkouts available when that title is most relevant?

Getting schooled

Potash expects other publishers to begin considering book club pricing options for public libraries, because a related model is performing so well in schools. “Classroom sets opened the door,” for book club pricing, Potash said. “Some of the fastest growth we’ve had for trade publishers has been in schools.… it became imperative that we started to have [other] models that met the needs of that market.” The classroom set concept is simple. Each student enrolled in a history class will need to have their own ebook license to read an assigned biography, for example, but only for a limited time. HarperCollins and Penguin Random House are currently offering these types of packages to schools through OverDrive. “It allows the school or the teacher to say, ‘We want this ebook, for this set of students, for one year, in some cases six months, in some cases 90 days,’” Potash explained. "Using their present lending models, (one-copy, one-user, or metered access) classroom sets provide deep discounts for limited term access." In addition, midlist and backlist titles continue to present an area ripe for experimentation with libraries. “Publishers are always interested in how to move backlist,” said Mercer. “The first six months are when a book is going to make 80 percent or more of its revenues. That’s a very finite period.… So, I think publishers are comfortable with their frontlist models. But how do you expose more backlist to readers? Is it different price points? Different models? They’re definitely looking at their data and trying to see what’s working out there.”
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Julia wagnet

Can't wait for more options. Also, I wasn't familiar with the OverDrive promotion mentioned. We're still new, at the English Montreal School Board, to OverDrive. Hopefully we can make the most of this resource, taking advantage of offers like this!

Posted : Jul 28, 2015 04:53

Dominic Broadhurst

I think this is a really interesting article and raises a number of key points and ones we have been trying to address with the Books Right Here Right Now project at the University of Manchester. We are looking to develop new forms of instiitutional models for e-textbook acquisition and supply to our students, but are hampered by old models of supply from the publishers. In particular their reliance on the old 1-1 model which is simply outdated and unsutainable making no reference to usage or real value. In fact they are trying to weld on an old print supply model in a brand new digitial world.

Posted : Jul 27, 2015 08:57



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