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Why E-books Are Turning the Library and Publishing Worlds Upside Down

Hands Of Desperation

Image by chris@APL via Flickr

If you ever wanted evidence that supply and demand aren’t the only forces in the economic game, now you have it. There may be an invisible hand, but there’s now a visible hand, and it’s throttling things back in the case of libraries and e-books. The visible hand is the hand of publishers, and its goal is to slow the transition to e-books so that profit margins remain as robust as possible and the transition to e-reading remains manageable. Even as they do so, Amazon is being accused of being “predatory,” turning publishers’ knuckles white as they hold on for the ride.

Demand is outstripping supply in a world where supply should be endless. Adding insult to injury, librarians have one of their icons signing on with Amazon.com to curate sets of rescued book titles. And while publishers and librarians are both worried about what all this might mean for them, a unifying middle ground is hard to find.

An acute pressure points is that e-book demand has surged after the 2011 holidays, when millions of new e-readers were switched on. Immediately, libraries lending e-books fell behind, as a recent story in the Washington Post details:

Want to take out the new John Grisham? Get in line. As of Friday morning, 288 people were ahead of you in the Fairfax County Public Library system, waiting for one of 43 copies. You’d be the 268th person waiting for “The Girl With the Dragon Tattoo,” with 47 copies. And the Steve Jobs biography? Forget it. The publisher, Simon & Schuster, doesn’t make any of its digital titles available to libraries. Frustration is building on all sides: among borrowers who can’t get what they want when they want it; among librarians trying to stock their virtual shelves and working with limited budgets and little cooperation from some publishers; and among publishers who are fearful of piracy and wading into a digital future that could further destabilize their industry. In many cases, the publishers are limiting the number of e-books made available to libraries.

The ALA is attempting to address these emerging problems by meeting with the top executives at Macmillan, Simon & Schuster, and Penguin later this month.

Publishers are nervous. Libraries are frustrated. Amazon has become a publisher and a major third-party for e-book checkouts at libraries. Apple has announced a textbook program. Google Books is far from dead.

The reliable contrast between abundance and scarcity is at the heart of the problem facing book publishers and libraries working their traditional exchanges.

Abundance creates one of the perceptual challenges for all involved — the perception that electronic resources are much cheaper and more abundant than physical items. In the age of scarcity, a publisher could sell one copy of “The Girl With the Dragon Tattoo” to a local library, and patrons would have understood what they’re competing for — a definite physical object that isn’t at the library when it’s checked out. Allow three e-book copies to be on deposit, and suddenly waiting for a copy seems odd. Out of the frustration this creates, pirating a copy seems a rational response.

Traditional publishers with their value chains and libraries with their place in the value chain are vulnerable. As Trey Ratcliff writes:

It turns out that tech companies — especially Apple and Amazon — are the new publishers. And this is, of course, because their technology disintermediates all the component steps required for a physical book. We have all seen the numbers about the growth of e-books and how every category is impinging on the traditional book categories.

Given the impressive profit margins of e-books, the ability for authors to sell a short book at a decent price (no demands for heft-making filler!), and marketing that works like magic with social media, e-books are allowing authors to move out of or avoid entirely traditional publishing houses, all while requiring less traditional editing and production work and selling in new ways — in short, a new value chain is emerging, the true sign of disruption. Books are being made, but in a new way, and with new players.

Attempting to live life the way they’ve always lived it — by preserving check-outs, throttling supply, and creating queues for e-books — publishers and libraries are only cementing their place in the past. One idea toward a different outcome? Perhaps instead of a library simply telling a patron that a book isn’t available, work with Amazon to create a consignment approach. The patron could have the book on their device for a week without charge and read up to 50% of the book in that time. If the e-book is returned to the library in that time, they can pick up where they stopped and it’s all still free. If not, they can buy the book (and the library gets a percentage of the sale), or they can wait it out.

Libraries have a great potential role in marketing e-books, but if they continue to think of themselves as the preservationists of physical artifacts, the emerging e-book platforms will leapfrog them. Publishers would also find a natural alignment here.

While publishers and libraries search for e-book answers compatible with patron expectations, Amazon, Apple, and others are developing platforms that will slowly guide book publishers and libraries into the future — a future in which they may or may not exist.

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About Kent Anderson

I am the CEO/Publisher of the STRIATUS/JBJS, Inc., the home of the Journal of Bone & Joint Surgery, JBJS Case Connector, JBJS Reviews, JBJS Essential Surgical Techniques, the JBJS Recertification Course, PRE-val, and SocialCite. Prior to this, I was an executive at the New England Journal of Medicine. I also was Director of Medical Journals at the American Academy of Pediatrics.

Discussion

25 thoughts on “Why E-books Are Turning the Library and Publishing Worlds Upside Down

  1. It turns out that tech companies — especially Apple and Amazon — are the new publishers. And this is, of course, because their technology disintermediates all the component steps required for a physical book. We have all seen the numbers about the growth of e-books and how every category is impinging on the traditional book categories.

    Apple and Amazon are NOT publishers, they are distributors. Despite all of their technology, they have not yet figured out WHY JK Rowling sold so many books. Until publishers start to focus on creating content and adding value, they are hastening their own demise.

    Posted by meg white | Jan 24, 2012, 12:05 pm
    • Amazon holds writing contests, selects titles to publish from self-published works in its store, and has a publishing operation many authors use. They are a publisher. Apple is headed in the same direction.

      I agree with your last sentence, but also until they create a distribution system that includes them intrinsically, they may find that recreating “publishing” is easier than creating “platform.” In that case, they are really at risk.

      Posted by Kent Anderson | Jan 24, 2012, 12:12 pm
    • From: http://beyondthebookcast.com/publishers-face-future-with-growing-concern/

      “[Amazon's] a publisher now. They’ve announced they’re going to publish more than 400 titles throughout the rest of this year.”

      Posted by Kent Anderson | Jan 24, 2012, 12:19 pm
      • Agree, but this has nothing to do with the content of your article. As you clealry describe and suggest Library should tap into Amazon and Apple fullfilment capability. The fact they are moving first steps into direct publishing is totally irrelevant. I like the fullfillment idea because it would allow to upsell a book to a punter that wanted instead just borrow a copy and also benefit the library with extra funding. How to get this into practice is a different can of worms.

        Posted by fullmounty | Jan 24, 2012, 1:14 pm
  2. Kent, maybe Amazon and Apple are not only distributers and publishers maybe they are the library too. Your post raises two questions: 1) in the age of digital books why do we need publishers and 2) why do we need libraries (or I should say; why do we need Fairfax Library). I see no reason why Apple and Amazon couldn’t fill all three functions. Clearly both companies are heading in that direction.

    I disagree with you on only one point. Supply and demand are indeed the only forces that matter in economics. The activities of publishers you describe here are designed to limit supply. Print publishing created huge barriers of entry, which was why publishing companies were so profitable in the past. Amazon has upended that applecart. Whether that is good or bad depends on where you sit, I guess.

    The interesting question is; what will happen when these two companies come to dominate publishing? Will they use their power to increase their profit margins? Amazon, for all its success, isn’t impressively profitable (and their profit margin is below their five year average – which means that in spite of their growth and economic power, they have become less profitable). It will indeed be interesting to see how this plays out. Though I agree with your main point, you won’t find me going out and buying Amazon stock. The technology is too disruptive, choosing a winner in this game would take true genius or blind dumb luck.

    Posted by Mark Danderson | Jan 24, 2012, 5:07 pm
    • You caught that I was manipulating the supply-demand idea for rhetorical purposes. I certainly agree that they’ll ultimately drive the outcome here, as well. But publishers and libraries are going to fight it with their visible hands.

      Amazon is an anomaly right now, so focused on service that slim margins are fine. In fact, it was founded on the notion that thin margins over a long timeframe are worth more than fat margins that evaporate overnight. I see their point. They’ve been able to take over so much of the online economy by keeping their margins thin. But, humans being weak, it’s probably inevitable that greed will rear its ugly head some day there. At which point, they’ll be skewered by their own sword, as a competitor will just undercut them.

      Posted by Kent Anderson | Jan 24, 2012, 5:30 pm
    • Question 2, “Why do we need libraries?” might have been rhetorical, but I’ll attempt a response anyway. Although sometimes it seems like “everybody” has their own ereaders, the truth is that most people do not. Even those who may be able to use cell phones as ereaders could not afford to pay $9.99 or more per title to buy all the picture books they want to read to their children (which would be awful on a cell phone anyway), or other books they may need for school, personal growth, leisure reading, etc. There is a distinct digital divide between the haves- and have-nots that is only growing, and that falls along predictable lines in income, education, and race: http://www.pewinternet.org/Reports/2011/E-readers-and-tablets/Report/Demographics.aspx.

      Any democratic society is obligated to make the resources necessary to have an informed citizenry available to all people — and those who most desperately need access to books are the same ones least likely to be able to afford them. Libraries fulfill an absolutely vital role in our society by democratizing access to information. Go into any public library and you will find it full of young children, senior citizens, and others who are using the print books and have no interest in buying ebooks from Apple and Amazon. But as materials increasingly move to digital-only formats, unless libraries are allowed to provide access to these ebooks, etc. to their patrons, the digital divide will begin to grow exponentially.

      Posted by Susan Timmons | Feb 17, 2012, 3:09 pm
  3. Given that E-books cost money, why should they be abundant? More narrowly, why should the library have anticipated the surge, if there even is one? How big is this line, in people per copy, compared to the waiting lines for physical best sellers? Is this even unusual? And what does it mean to say that S&S do not supply libraries? Are we talking about some special library programs, with limited availability because they are experimental, that all publishers a do not participate in? Surely libraries can buy S&S books.

    It seems like you folks are taking a small issue, which may not even be a problem, and turning it into a revolutionary vision. Perhaps we should analyze the specific problem first. It sounds like an opportunity for publishers, not the beginning of the end.

    Posted by David Wojick | Jan 25, 2012, 7:55 am
    • I don’t know who the “you folks” in your comment refers to, but this post is about how a convergence of attitudes, beliefs, and commercial forces are making this a big deal — publishers playing defense when they could be on offense, libraries caught betwixt and between and not having acted on possible alternative forms of self-definition, customers bewildered by the fact that e-resources are scarce, and the entire effect of this suddenly confused and busy landscape.

      Into this, new entrants can firm up their beachheads or establish new ones. It looks like the thin edge of the wedge, and that can presage change. Who is positioned best? That’s the question.

      Posted by Kent Anderson | Jan 25, 2012, 8:29 am
      • The folks are you and Mark. You see entering wedges for vast changes, while I see the normal local confusion that always accompanies technological revolutions. There are a thousand middle-sized issues like this at the present time. The industry is articulating an issue tree, which is the standard structure of progress. It is a fascinating issue but not that big. While positioning for the library trade E-book market is an interesting issue, the future of publishing is not on the line. Are libraries even a significant market for best sellers?

        The widespread belief that digital products should somehow be free is indeed a major confusion causing factor. But it will not be resolved by coming true.

        Posted by David Wojick | Jan 25, 2012, 9:45 am
  4. It is hard to see Amazon and Apple fulfilling the traditional role of the library, even with the steady increase if not complete take over of the digital format. Libraries have always been the place to find an obscure book that is no longer in print, and they may have the only copy. Libraries have also been the place to find large collections of materials for deeper research on a specific topic. And finally libraries have skilled people who can apply critical thinking to digital searches to cut through all the clutter and come away with something of value.

    Posted by Richard Schneider | Jan 25, 2012, 10:13 am
  5. Yesterday I attended a meeting of the “Audience and Participation” workstream of the DPLA at the Dallas Public Library. One major issue was how to justify continued funding of local public libraries if they cannot continue to provide their patrons with some of the books, like new popular fiction, that they have always relied on such libraries to supply. Concerns were expressed that if commercial publishers stop producing print books altogether and just publish ebooks, and yet are not willing to allow libraries to “lend” the new ebooks, libraries may become just storehouses of older books, becoming less relevant to their local patrons and thus less worth supporting with taxpayer dollars. Mention was made of public libraries using Espresso machines to turn out print copies, effectively becoming local bookstores (as those continue to disappear from the scene). But even more important was the vision expressed by a number of people of how public libraries, working cooperatively with historical societies and other local organizations, could actually play a role in helping generate new content. One librarian from North Texas described how public libraries in this state had not historically been repositories for records and documents reflecting the history and culture of blacks but how, with the involvement of Baptist churches, an entire history of blacks in the state was recovered as the churches encouraged their parishioners to come forward and provide oral histories, family photos and other records, and the like, all of these documents being digitized and organized by the libraries into a new rich archive that scholars could then use to write the history of these people based on these documents, which scholarly publishers like university presses in the state could publish. All of these digitized records and the scholarly publications (if done open access) could then be further organized into a national-level DPLA system. That is an inspiring vision indeed and shows how, despite the disruption you talk about here, completely new opportunities for libraries may develop and their new identities in facilitating the production of user-generated content could justify public taxpayer support and surely engage local citizens in contributing to a larger DPLA effort that would benefit everyone.

    P.S. Regarding the Nancy Pearl project with Amazon, don’t forget that there are other initiatives like that of Eric Hellman (who was at yesterday’s meeting) with Gluejar that will restore out-of-print books to wife public usage as ebooks via crowdsource funding and thus make them available free to end users, rather than making a profit for Amazon. Which model is better for the public?

    Posted by Sandy Thatcher | Jan 25, 2012, 1:03 pm
    • Probably apropos of nothing, your comment made me think also of the assumed source of lending books, which is donations from patrons. With print books, we probably donate ourselves 50-75 books each year to our library, and others in town do the same. They don’t keep them all, but some make it to the shelves for lending. With e-books, you can’t donate an old book to the library. Hmmm.

      Posted by Kent Anderson | Jan 25, 2012, 3:37 pm
  6. David, if the emergence of Appel and Amazon into publishing and the transfer from print to electronic aren’t big issues (for print publishers) then I would be frightened to hear what you think is a big issue. But then you misrepresent my position. Whether this company or that is “on the line”, in the scheme of things, is indeed no large matter. I agree with you there. I don’t believe that the future of publishing is “on the line.” The future of S&S, the Fairfax Library and any number of small and large publishers might be “on the line” but I never held the position that publishing was on the line. I can’t speak for Kent.

    Music downloads destroyed the business model of big and powerful music corporations. It did not however, destroy the music industry. I have no doubt that ibooks will indeed destroy the business model of many publishers and perhaps libraries as well (the jury is out on that issue for me), but the technology will not destroy the publishing industry. My point was and is, this technology is so disruptive I would be loath to choose a winner (when betting my own money). I believe that Kent’s point was that the current players in the industry need to stop trying to protect their old profitable businesses and they need to face this technological change head on. If they do not, they will be beaten by the likes of Apple and Amazon. This is a point on which I heartily agree with Kent.

    Posted by Mark Danderson | Jan 25, 2012, 1:23 pm
  7. How does the emerging e-book and e-publishing trends compare to the digital music revolution? Once upon a time, the large record companies controlled what music got recorded, distributed and sold. Their marketing drove what was played on commercial radio and therefore what got into consumers’ ears. Consumers then had to go buy a physical recording (usually with more songs than they wanted to listen to).

    Now in the digital age, the largest distributor of music is Apple (not counting file sharing sites like limewire, etc.) With low-cost recording software, almost anyone can now record their music, upload it, share and sell it.

    Will the boom in e-readers have an impact on print publishing like mp3 players had on music? Will self-publishing of ebooks become as common as “indie” recordings in basements and garages? Is Amazon going to be the iTunes of books?

    Posted by Lee | Jan 27, 2012, 9:13 am
    • If the parallel holds up, then what we’ll find is many more authors being able to gain some exposure for their work at relatively low cost while fewer of them will be able to live off of their craft and fewer will become big-time authors backed by major publishing houses. Maybe that’s a good thing, maybe not.

      Posted by Sandy Thatcher | Jan 27, 2012, 10:42 am
      • I expanded on my thoughts in a blog post at TrendSurferBlog.com. thanks for spurring my thought process!

        Posted by Lee | Jan 27, 2012, 12:46 pm
        • I read the post and offer this further parallel: in earlier times, the only way musicians could make it big time was to get a recoding contract with a major record label, which offered entree to radio station play, concert tours, and other types of promotion; similarly, trade publishing houses provided the only way for authors to get their books exposed to readers through major book review media, the big retail bookstores 9including the chains), and other types of promotion (such as interviews on TV and radio). The digital era has broken down those walls and allowed creators to reach their audiences directly. The “big time” is still controlled to a degree by the big players, but the entry ramp is not exclusively controlled by them anymore. This change will put more pressure on the big players to justify what added value they offer to the process.

          Posted by Sandy Thatcher | Jan 27, 2012, 2:48 pm
          • Hi Sandy! I think you’re spot-on! Barriers to entry keep getting lower, but there will always be a place for the big players. Smart ones will notice where the independent authors or musicians have developed a following then sign them to a contract for the “big time”. It already happens a lot in the music business – I don’t know as much about publishing.

            -lee-

            Posted by Lee | Jan 27, 2012, 3:13 pm
    • This author takes a stab at answering your question, at least for the textbook market:

      http://pandodaily.com/2012/01/19/ibooks-author-is-not-going-to-hurt-publishers-it-might-even-help-them/

      Posted by David Crotty | Jan 28, 2012, 8:51 am
      • Publishers are charging exorbitant prices for e-books. In reality once the printed book is produced the electronic versionj costs little to produce and distribute.
        I publish need2knowbooks in the U.K.
        we have over 100 titles and plan 4 new titles every month for 2012.
        We sell paperbacks through trade outlets but make e-books absolutley free of chargethrough our website: bigbookgiveaway.com
        We find this actually has a positive effect on traditional book sales by building ‘brand awareness’.
        Obviously, we are not popular bwith the likes of Amazon etc.

        Posted by ian walton | Jan 28, 2012, 12:10 pm
        • What if you’re only doing an electronic version of the book, no print? Are the costs still just as trivial? What if half your sales are eBooks? Should they be expected to cover half the production costs? Is this exorbitant?

          Posted by David Crotty | Jan 28, 2012, 2:33 pm
  8. Libraries no longer generally think of themselves as the preservationists of physical artifacts, and most are keenly aware of the inadequacies and frustrations of e-book offerings currently available to them. Libraries and librarians are definitely struggling to find our place in the changing world, but increasingly, that means being a gathering place, a community place, in addition to a place in which or through which patrons access collections. Libraries do want to work with publishers (and are, in fact) and with Amazon; your consignment scenario sounds like a good one, except that the Kindle Owner’s Lending Library would probably stand to make Amazon a lot more money in the form of Prime sign-ups and Kindle book sales than it could with library co-sales.

    Libraries that offer e-book checkouts to their patrons are offering the only deals that have been struck at this point. There are stand-out exceptions, such as Douglas County (CO) Libraries, the nascent unglue.it, and authors who license their works in Creative Commons, like Cory Doctorow. There are e-book champions, like Librarian By Day Bobbi Newman, and the Librarian in Black Sarah Houghton. As you mention, ALA is meeting with publishers and has task forces of smart people talking about the problems. Libraries stood by while music transformed from physical to digital and now offer download packages that must be minuscule in comparison to iTunes sales. Books, however, are a library’s traditional core offering; what will a library without books look like? More distressing is the question: what would the have-nots do if we can’t figure this out?

    Posted by cindiann | May 18, 2012, 1:07 pm

Trackbacks/Pingbacks

  1. Pingback: Physical to Digital, Expert to Masses – Two Trend Currents « TrendSurfer - Jan 27, 2012

  2. Pingback: Apple and Textbooks: A Second Look « The Scholarly Kitchen - Jan 31, 2012

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