E-book battle: Libraries, publishers square off on pricing

E-book publishers are worried about profits shrinking if libraries go digital, and they're hiking e-book prices. Stretched thin by lean budgets, libraries are slow to embrace digital content. Can the two sides reach a solution?

In the hushed atmosphere and among the staid bookshelves of your public library, a battle is brewing over digital content.

On one side are librarians, stretched thin by lean budgets, who are eager to get more electronic books into the hands of readers and satisfy a growing need in their communities. On the other side are publishers, jittery about slim profits, who are making it harder for libraries to get electronic content. Some publishers have raised e-book prices by up to 700 percent for libraries. Others are imposing new lending restrictions. Several major publishing houses aren't selling new e-books to libraries at any price.

"Everyone is trying to figure out what the actual business model is going to look like," says Belinda Boon, a collection development expert at Kent State University's library school in Kent, Ohio. "There have been a lot more efforts in recent months for libraries, vendors, and publishers to try to come to some kinds of agreements."

The standoff is hurting both sides.

For libraries, the tougher purchasing environment is hampering efforts to add electronic holdings, which libraries effectively lease through licensing agreements with distributors. The Tuscaloosa (Ala.) Public Library, for instance, says it paid $12 last fall for an e-book edition of Random House's fantasy novel "A Game of Thrones." Now the price has leapt to $105, according to Director of Collection Development Amy Patton – a 700 percent increase. (Random House declined to say how much libraries pay for individual titles.)

With so much uncertainty, libraries nationwide are thinking twice about building electronic collections. Thirty-nine percent of America's 9,225 public libraries have no digital lending program, according to a 2011 survey from the Chief Officers of State Library Agencies. Many would like to add more e-books, librarians say, but they're waiting to see if publishers back down.

"With so many question marks lingering over the digital world, you have libraries who won't fully embrace [e-books] because they don't know what the impact of that decision is going to be," says Lisa Rice, president-elect of the Kentucky Library Association.

Publishers have said little about their specific fears or strategies as they experiment in the library marketplace. They acknowledge libraries serve a public good, but insist they can't simply sell e-books in accordance with old models.

"The library e-book and the lending privileges it allows enable many more readers to enjoy that copy than a typical consumer copy," says Random House spokesman Stuart Applebaum in an e-mail. "Therefore, Random House believes it has greater value, and should be priced accordingly."

Random House raised e-book prices for libraries on March 1 and has since dropped prices on select titles.

Last year, HarperCollins sparked an outcry and inspired a boycott of its books when it announced that e-books sold to libraries would expire after being loaned out 26 times. E-books from Simon & Schuster have become unavailable to libraries. Penguin offers only its backlist, not new releases, of e-books to libraries. Hachette Book Group plans to start piloting an e-book program for libraries but didn't share details.

Of course, libraries have always given readers free access to books that publishers would like to sell, so the dynamics aren't entirely new. Distributors program e-books to be read by just one patron at a time and expire two or three weeks after the checkout date. Hence patrons who don't want to wait might still have an incentive to buy a copy. "Some libraries have a 'buy it now' button for people who don't want to wait," says Molly Raphael, president of the American Library Association (ALA). "So we're doing a whole lot, frankly, to drive people to buy."

But publishers worry that libraries might disrupt sales on new releases, just as publishers are trying desperately to adjust and stay profitable while protecting e-books from piracy.

"Some publishers are not seeing a lot of results in sales of e-books to make up for their huge investments" in digital publishing, says Sue Polanka, head of reference and instruction for Wright State University libraries and editor of "No Shelf Required: E-Books in Libraries." "They are very nervous and uncertain about what the future might bring, and so they're being very cautious."

Libraries' acquisitions accounted for 4.8 percent of all book sales in 2009, based on the latest available figures from the Book Industry Study Group and the ALA. E-book receipts grew from less than 4 percent of all book sales in 2009 to nearly 6 percent in 2010.