ATG ORIGINAL: PUBLISHERS STILL UNSETTLED OVER THE FUTURE OF EBOOKS: PART 3  –  DISTRIBUTION TRENDS FROM OVERDRIVE’S STEVE POTASH

by | Nov 23, 2018 | 0 comments

By Nancy Herther

(Click here for Publishers Still Unsettled Over the Future of Ebooks: Part 1 – Public Libraries And The Reading Experience and here for Publishers Still Unsettled Over The Future Of Ebooks: Part 2 – Academic Libraries’ Perspectives)

Revenues from hardcover book sales have been estimated at $5.92 billion in 2017, an increase of 10.7% over the preceding four years, according to the Association of American Publishers. During the same period, eBook revenues declined by 36% percent, accounting for $2.08 billion in profits in the same time period. However, neither format is going away – things are just getting a bit more complicated. Both in the number of options, ownership and access terms…and distribution systems.

“SAVE MONEY. LIVE BETTER:” WALMART MOVES INTO EBOOKS

Seven years ago, Tokoyo-based Japanese ecommerce invested in Canadian eBook company Kobo in a deal that TechCrunch called “from a business and cultural perspective this is a perfect match.”  The article went on to note that “Kobo was founded by and spun out of Indigo, the largest book, gift and specialty toy retailer in Canada, in December, 2009. Since that time, Kobo has become a fierce competitor in the eBook marketplace, with a family of innovative ereaders, a wide range of ereading apps, one of the largest eBook catalogues, an innovative social platform and retail partners around the globe.”

Kobo continues to push eBooks, ereaders and with the infusion of cash from Rakuten, now operates across the globe. Nearly a year ago, Walmart announced a new partnership with Rakuten for a variety of B2B2C applications (business to business to consumer). This includes the online sale of groceries from Walmart in Japan, and the sale of Rakuten’s Kobo labeled audiobooks, eBooks, and ereaders in the U.S. In August Walmart launched a full eBook and audiobook catalog on Walmart.com, including a library of over 6 million titles ranging from bestsellers to key indie titles and children’s books. This includes a monthly subscription audiobook system which is similar to Amazon’s Audible; however, much less expensive than the Audible product ($9.99 versus $14.95).

In order to provide service and widespread promotion, Walmart is using its widespread network of brick-and-mortar stores across North American to seed interest and provide limited service in-store.

In addition, Walmart aims to capitalize on its brick-and-mortar stores to help boost Walmart eBooks. The company intends to sell a limited number of popular titles via digital books cards in stores by way of digital books cards across their 3,500 store network. Kobo ereaders will likewise be available both online and in-store; however, Walmart eBooks will also be readable on iOS and Android applications to increase their market appeal. But customers won’t need to own a Kobo device to read these titles. Instead, the eBooks can be accessed through co-branded iOS and Android apps, which also launched recently.

These efforts expand the options for users, but haven’t killed the brick-and-mortar options either. According to the American Booksellers Association (ABA), “over the past 10 years, there has been a national resurgence for independent bookstores. Nationally, new stores are opening, established stores are finding new owners, and a new generation is coming into the business as both owner/managers and frontline booksellers. For the ninth year in a row ABA bookstore membership has grown, with stores operating in more than 2,400 locations.”

A CONVERSATION WITH STEVE POTASH

Steve Potash founded OverDrive in 1986 to serve the needs of mostly public libraries for distribution and service. This was at a time when few foresaw the revolution in technology that was to up-end the publishing industry. For OverDrive, the rise of the internet and digital books in the 1990s caused the company to refocus their service mission, and launch their content distribution service in 2000. Today, “along with the industry’s leading digital reading platform, OverDrive now offers the largest digital content catalog in the world to more than 40,000 libraries and schools in 70 countries and the highest-rated apps that are built to create reading happiness.” With the purchase of OverDrive by Rakuten in 2015, the company changed its brand name to Rakuten OverDrive and the infusion of resources only further’s OverDrive’s dominance, especially for public libraries across North America. Steve shares some of his experience, vision and perspectives with ATG.

NH: In the past two months we have had announcements on new eBook terms from both PRH and Macmillan/TOR, as well the new Panorama Project. Are publishers still so unsure of the role of libraries, or is this one of the few channels they feel they can still control? Do you see the Panorama Project as making a difference? I know that OverDrive is one of the sponsors.

Steve Potash: OverDrive introduced public libraries and institutional lending for popular trade eBooks and audiobooks 16 years ago.

Steve Potash

Since then we have seen an ongoing evolution of access models offered and adopted by publishers to balance their commercial interests to promote retail sales for print and digital, while still providing libraries broad public access to popular titles. Changes over the years have included HarperCollins’ 26 circulation limit policy per unit and term limitations from Simon & Schuster and others.

I am delighted to report that the majority of changes to library lending models have actually increased options for libraries and schools. Today more trade publishers offer their titles for libraries to promote and lend as simultaneous access models. We also have had a surge of publishers and authors promoting their titles for simultaneous access as part of digital book clubs and city read programs.

There is another recent option for libraries to add popular titles with no wait list under a “cost per checkout” model. We are now offering schools short-term lease terms for classroom sets of eBooks for students. All of these access models complement the principle “one-copy, one-user” model.

Recent announcements from Penguin Random House and TOR (Macmillan) are another step forward in fine-tuning the available models. I expect these terms to continue to evolve as more data is uncovered on how readers discover and embrace new authors and series, and purchase books. The Panorama Project has several research efforts underway to determine how libraries, both in their 16,000 locations in the U.S. and online through their OPACs, apps, and discovery services, promote books for readers to discover, and, in many cases, buy. The Panorama Project will be the first wide-scale data project seeking to understand the impact libraries have on book discovery and retail sales outside of the library.

NH: Pricing in the academic environment has been particularly difficult. Some eBook pricing is far higher than print (one university press charges $28 for a print and $750 for unlimited eBook access). Some textbooks are reportedly going for nearly $1,000 as eBooks. The PRH plan would require a subscription system, which would ultimately cost libraries thousands of dollars over time for ongoing access. Will academic/research libraries be able to work with these models?

Steve Potash: We expect academic libraries to curate and offer PRH titles that their readers want under the new pricing and access model. It may result in collections becoming more selective from authors and genres that align with the readership of the institution.  OverDrive has consistently advised all authors, agents, and publishers that their economic interests are lifted by offering flexible and reasonable terms to enable every library to acquire rights to not only frontlist titles but backlist and complete series of titles as well. As the new model rolls out to the market, we will learn how it impacts institutional buying patterns which may ultimately impact the publisher’s model going forward. The terms for library lending of digital books will continue to evolve so we should not assume any terms will be the only option in the future.

NH: Public library needs are different from those of academics/research libraries. How do you see eBook publishing and acquisition shaking out in the coming years.

Steve Potash: With a flood of content available from so many sources, publishers and authors need to compete for attention and mindshare from users looking for quality content. Books and long-form reading need champions to keep the long-term interests of book publishers healthy and growing. There are no better advocates for reading and discovery of books than librarians and the institutions committed to promoting reading and access to information from books.

I expect that outcomes from the Panorama Project will help provide data that impacts publisher and author appreciation for the values that libraries offer for their brand and titles. All commercial publishers are facing an increasing challenge to have their books discovered and appreciated from an increasing universe of free digital books and a myriad of digital content in other media formats. I expect to see premium eBook content continue to evolve and grow in value to readers and the institutions that supply access to them. We are moving quite quickly where mobile and digital formats for books are becoming the norm for many categories of books.

NH: You clearly have good contacts with other book jobbers. How are they faring in this environment? They have little power or control and in an increasingly eBook-only environment (if this were to dominate), how could they survive? Are jobbers trusted by publishers any more than libraries?

Steve Potash: OverDrive promotes reading in all formats and encourages the discovery and appreciation for print. Physical books will never go away and are a preferable format for millions of readers. This will provide book jobbers an ongoing role for all institutions and libraries. The momentum and more significant growth opportunities for book sales are in the digital realm. Authors and publishers have enjoyed a print sale, royalty reporting partnership with retail bookstore and book jobbers for 200 years. This is a trusted channel that provides consistent reporting and royalties to agents and authors. The newer digital book channels are evolving and will gain more support from authors going forward.

OverDrive is working with authors and publishers to provide transparency on library buying patterns for their titles to share information on where, how many, and use for their eBook and audiobook titles. We expect this new transparency for library and institution investment into digital books will result in a greater appreciation for the digital book channels through libraries. One area of significant growth for publishers and authors is the global market and instant access OverDrive provides for eBooks and audiobooks. Today, over 40,000 institutions in 72 countries are purchasing eBooks and audiobooks under a variety of access models to serve students, readers, employees, and others worldwide.

EXAMINING THE FULL PANORAMA OF LIBRARY-PUBLISHING LINKS

The Panorama Project is an open membership initiative that includes membership from libraries, publishing and distribution areas formed in August 2018. The formal Advisory Council includes a publisher, Skip Dye is the Vice President of Library Marketing and Digital Sales and Vice President, Director of Sales Operations at Penguin Random House, LLC ; and Todd Carpenter of NISO. Initial funding for the Panorama Project is being provided by Rakuten OverDrive, Inc.

The Panoroma website promises better clarity as well as relationships: “America’s publishers, booksellers and public libraries have been working together to connect authors with readers since the first libraries were established in Colonial times. That’s over 200 years of successful collaboration developing and serving America’s readers. Surprisingly, there’s never been a comprehensive study on the impact of public libraries on book sales — until the Panorama Project, the first large scale, data-driven research project focused on understanding the impact of library holdings on book discovery, author brand development, and sales.” Perhaps this will finally end the friction, distrust and confusion about the complementary roles of publishers and libraries.  We can hope.

Nancy K. Herther is librarian for Sociology & Anthropology at the University of Minnesota Libraries, Twin Cities campus. herther@umn.edu

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