Why Penguin is worried about the role of Amazon's Kindle in libraries

Penguin Group – citing security problems – has put a hold on the distribution of new e-books to libraries.

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    Publishers view e-books in libraries as more threatening to sales than physical books because physical books wear out – but e-books do not.
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Citing security concerns, publisher Penguin Group USA  is suspending the distribution of new digital titles in libraries and will no longer allow libraries to loan any e-books for Amazon Kindle e-readers, the publisher announced Monday.

"We have always placed a high value on the role that libraries can play in connecting our authors with our readers," Penguin Group said in a statement Monday. "However, due to new concerns about the security of our digital editions, we find it necessary to delay the availability of our new titles in the digital format while we resolve these concerns with our business partners."

While distribution of all new Penguin e-book titles will be halted in libraries, older Penguin books will still be available in certain e-book formats. And of course, physical Penguin books, old and new, will continue to be available. But no Penguin e-books, new or old, will be made available for public libraries to lend through the Kindle, at least for the time being.

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It’s worth noting that Amazon recently formed a partnership with a top library e-book supplier, OverDrive Inc., that “vastly increases the Kindle’s presence in libraries and encourages patrons to visit Amazon’s website and buy books,” according to Canda's CBC.

OverDrive CEO Steve Potash said OverDrive and Penguin were “in the process of looking at new terms” for libraries.

There may be a number of factors behind Penguin’s decision. Lending digital books has been problematic for publishers. First, there are concerns that digital books can be easily pirated, especially when a third party such as a public library, is brought into the equation.

And publishers view e-books in libraries as more threatening to sales than physical books. Libraries stock multiple physical copies of popular titles and as they wear out, purchase new copies. Of course, that’s not the case with e-books. For these reasons, Penguin isn’t alone in restricting e-book lending in libraries. Simon & Schuster and Macmillan don’t allow any of their titles to be lent as e-books in libraries and HarperCollins restricted their usage by capping at 26 the number of times a library can lend a HarperCollins e-book. The move angered librarians, as does this current move by Penguin Group.

Perhaps the most telling reason for Penguin’s decision, however, is concerns over Amazon’s power in the digital market. In its recently announced Lending Library program, Amazon is allowing its Prime members to borrow one e-book per month from a selection of titles. Though Penguin, along with other publishers, decided not to participate in the program, some publishers discovered their books were still being included in the Lending Library selection. [Correction: This article originally mistakenly stated that Penguin books were included in Amazon's Lending Library selection. They were not.] Amazon said it didn’t need permission to include these books, per contractual agreement, but many publishers – and the Authors Guild – disagree and are calling Amazon’s policy a breach of contract and illegal.

Penguin’s move may be a strike back at Amazon, or an opportunity to consider its options without the pressure of having its e-books in circulation at libraries. Will more publishers crack down on Amazon? Will Amazon's competitors – Barnes & Noble, Kobo, and Sony – benefit or will they be targeted, too?

Stay tuned. This likely won’t be the last such instance of disputes between publishers, Amazon, and libraries.

Husna Haq is a Monitor correspondent.

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