Towards a library ebook business model that makes sense

Over the last week or so a huge issue has sprung up in the library and publishing world, which I touch on in my eBook Users' Bill of Rights post.

The publisher HarperCollins has restricting the number of checkouts an ebook version of one of their books can have before the library needs to pay for it again. The number of checkouts is 26 per year. Bobbi Newman collects a lot of relevant posts here if you're interested.

There was a comment on my post by William Dix:

Publishers are shooting themselves in the foot on this issue. As well as alienating a lot of the potential market with idiotic proprietary formats and frustrating DRM schemes. I do wish that more publishers would follow the example of Baen Books with their no DRM multiformat approach to epublishing.

I responded over on that post but I thought it would be worth expanding on what I said here.

Some more-or-less thought out thoughts and impressions.

The way I see it, HarperCollins' decision merely reflects the the book publishing industry's fears that the napsterization that hit the music industry a decade ago is immanent. They fear that their current business model based on selling physical objects will be undermined by the web without anything to replace it.

And with good reason. This is definitely a rear-guard action that is part of the publishers' long term losing battle to impose the same kind of monetization structure on digital content as for print.

The print business model grows out of scarcity. Physical objects cost money to produce and are by definition limited in numbers. The last time I checked, there was no scarcity of text to read online.

The only scarcity that is potentially exploitable in the online world is of good text and publishers need to find a way to insert themselves into the equation by convincing people that filtering the wheat from the chaff and organizing and curating the good stuff is worth paying for.

Libraries potentially blow up the scarcity of digital content by mutualizing community resources to share purchased or licensed digital content. In other words, we use the pooled monetary resources of a community to buy stuff for that community that most individuals wouldn't be able to afford on their own. With digital content libraries can basically share digital content with everyone without the same kinds of per unit costs that pad the bottom line for publishers.

If I have a digital file and I say I want to share it, that's great. But to somehow to say I can only share it with a certain number of people for a certain period of time is absurd. It's not like a physical resource that has a real, concrete scarcity attached to it. The scarcity that DRM tries to impose is completely artificial in the case of digital files. It tries to graft the limitations of a physical format where it doesn't belong.

Publishers fear and mistrust the kind of sharing libraries are committed to for precisely that reason. It exposes the absurdity of their false scarcity.

Let's say Harry Potter 8 comes out some day. Great. California's public library systems buy a few thousand copies of the physical book and pay some sort of fair price for it, say $20 dollars per copy. The people of California get to read those copies one at a time for as long as they last. When they wear out, California will buy new ones. If they get less popular at some point, they'll be weeded and probably sold off at book sales.

Now, those very same public libraries want to provide digital copies to their citizens who happen to have one of a range of devices that can read ebooks. How many copies do they buy? Well, just one, really. They only need one copy on their servers (or on a publisher's server) to share with the millions of people of California.

Of course, thousands or millions of people from California or even the whole world can actually read that one copy simultaneously because that's the way digital works. When I want to read something you have, I just make my own copy. The marginal cost of making that one copy is essentially zero.

That's where DRM comes in. Because that kind of arrangement doesn't work for the publishers or authors very well. They'll want to impose an artificial scarcity on the digital copy they "sell" to California so only a limited number of people can read it. In effect, even though California only really buys one copy, they'll want the transaction to look like they've really just purchased a bunch of paper copies that people just happen to be read on electronic devices. Publishers want to monetize every act of reading.

It's not hard to see parallels to the music industry here in the way that the publishers want to hide from the implications of digital rather than embrace them.

What's the answer? What should California pay for one digital copy of Harry Potter 8? $20? $20,000? $20,000,000? Maybe ten cents or a dollar for every time it's downloaded?

What's the business model that properly compensates content creators, that gets enough cash flowing to allow a book/ebook ecosystem to flourish and grow and expand. Most importantly, what's the business model that gets the content into the hands of the people that want it and that makes piracy irrelevant? That monetizes the reading transactions that need to be monetized and leaves alone the ones that don't?

I have some ideas, and I think they'll flow from the same kind of arrangement that companies like Morgan & Claypool, O'Reilly and others have forged in the academic and technical content spaces, a set of business model that libraries can work with, that often frees content, that trusts readers, that sees libraries as partners rather than adversaries.

Even business models that use DRM like Books 24x7 or Safari can be library-friendly.

When I talk to publishing people or authors and they get all worried about how libraries are denying them sales, the one thing I tell them is this: Think of libraries as the one partner in the content ecosystem that is actually willing to pay good money for quality content. Always has been, always will be.

Or I could be all wrong.

(All of this is as true for public libraries as for academic libraries. But I think that kind of speculation might be for another post.

And I'm still thinking of doing a giant link dump of all this HarperCollins/Overdrive/ebook mess.)

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Interesting blog. I watched the whole digitization of music and the evaporation of the big-label business model from close up. I've been moving towards 'business-model centric' for many years now.

Also, I'm about to do the book-writing thing, and I'm wrestling with the best strategy. I think I'll end up just doing it as a regular book though, and forget the whole e-book thing. I think the digitization of books is simply not so compelling as digitizing music and movies, for the consumer. I think for most of us, the physical paper book works reasonably well. Even compared to the digital version.

Mark I have to offer a counter point.

I first purchased a laptop last year exclusively to read ebooks on. That did not work out so well because it was to heavy and had to short of a battery life for my liking so I purchased an android tablet and copied all my ebooks over to my tablet and have been reading exclusively off the tablet for several months now.

I have no interest in going back to paper books for a variety of reasons, but the to most important ones are feeling I am helping the environment by saving a few trees, and the second reason is I can keep all my books in one place and access them no matter where I am at as long as I have my tablet.

As a protest to DRM and main stream publishers scarcity model, I only read ebooks from sites like smashwords or other ebook sites. Mostly free ebooks, but if I find an author I will buy whatever else they have for sale and usually get 5-6 books for the price of one if I purchased that one on Amazon.

The big 6 can either get with the Netflix model of subscription based reading or they can move over and let small hungry companies and free agent authors take their empire away from them.

The ball is in their court.......we the consumer have already scored and are head by 10.

Thanks, el, I appreciate your comment.

It's interesting you suggest a subscription rather than ownership based model for ebooks. That's mostly what academic science libraries use for some of our key ebook packages.