Books, Business Models, Commerce, Copyright, Research

PDA and Inter-library Loan

A few years ago I posted a note to the Liblicense mail group to the effect that sooner or later, inter-library loan would disappear. This was not a welcome post for many people, and I now have come to believe that my comment was technically correct, but that the affordances of ILL will persist, though from a different source.

For print books, ILL makes perfect sense. Publishers of print books pretty much forget about them when they leave the warehouse.  In the past, after a print book was published, it would remain available (that is, in print) as long as it was profitable to keep reprinting it. Most books at some point went out of print. What copies remained were on library shelves or in the collections of individuals. So if a library had a patron who requested a title that was not in the library’s collection, the only recourse was to search for the book among used-book merchants (not as easy task as it is now with Internet commerce) or to borrow it from another library. Over time, the systems for loaning books got more sophisticated and efficient. To this day, ILL is a feature of all academic libraries, which are organized into networks for borrowing and lending.

ILL is not free. There are significant administrative costs in handling and shipping books around. I have heard estimates of this cost that range from $25 to $40 per volume. Perhaps readers of this blog have more recent information, but it is not possible to move physical goods around without incurring some costs. On the other hand, none of this money finds its way to publishers and authors. ILL, in other words, is a distribution method set up and managed by librarians with no involvement of publishers.

And that is why publishers don’t like it. Of course, they don’t have much to complain about if a book has gone out of print, but they have always believed that ILL erodes their market and that they should be able to find a way to profit from it.

With e-books, everything changes. Since the “first sale” doctrine of copyright law  does not apply to digital texts (since exchanging a copy requires someone to make a new copy), publishers can and do restrict ILL for electronic books. A few publishers have broken this mold, but most publishers fear that ILL raises the dreaded scenario of selling a single copy of a book and then watching as it is loaned repeatedly from library to library, essentially obliterating any further market for that title. It is a property of digital technology that such digital sharing costs almost nothing and can be accomplished with a single mouse-click. It is for this reason that I asserted that ILL would disappear in due course, because it destabilized the market for books once all the books were digital.

Patron-driven acquisitions (PDA), however, has properties that may mitigate this. Let’s run through some scenarios:

  1. The scenario for print books. Library A has a very large collection. Library B, which is located nearby, is much smaller. One day a patron of Library B requests a print book that is not in Library B’s collection.  Library B first attempts to purchase the title, but it is long out of print and is very expensive to purchase from antiquarian booksellers. So Library B turns to Library A for help. With an ILL system in place, the book is loaned to Library B for a specified period of time, after which the book is returned to Library A’s collection. The patron’s request has been satisfied (though it took some time to make the book available), but the libraries have incurred some costs in handling the loan. After the loan is complete, Library B does not have a copy of the book in its collection. So there is a fair amount of cost for a transitory gain.
  2. The scenario for e-books, no ILL, and no PDA. Library A has the ebook in its collection, Library B does not. A patron requests the book from Library B, but with no authorized ILL program, Library B cannot provide the book by borrowing it from Library A. There is no monetary cost in this, but the patron leaves unsatisfied.  No one is happy with this scenario.
  3. The scenario for e-books, no ILL, but with PDA. Once again, Library A has the book in its collection, but Library B does not. What Library B does have, however, is a relationship with a PDA vendor, which has the title in its catalogue. The patron searches on Library B’s OPAC, finds a record for the title, and requests it. It is delivered with the speed of an ebook. If the patron simply browses the book a bit, there is no charge. If the patron reads a significant chunk of the book, the library is charged for a rental.  If the patron reads a great deal of the book, the library purchases the title outright.  In this scenario, Library A is not involved with the transaction. Library B is pleased to be able to provide the book to the patron, though it incurs some cost (though perhaps less than the cost of the entire book and perhaps less than the administrative cost of borrowing a print book). The patron is satisfied. And here is a new development: the publisher is compensated for the use by Library B.

An emergent property of PDA, in other words, is that it may solve the ILL problem for e-books, providing a quick way to satisfy patron requests, perhaps at a reduced cost, even as publishers get a return on their investment.

This ILL scenario may even coax some publishers, who are wary about PDA, to participate in these programs.  Since PDA may erode book sales, some publishers would rather that PDA would simply go away. But the ILL scenario claws back some of the lost revenue.  Indeed, there may be other ways to regain revenue lost to PDA programs (assuming that PDA will in fact reduce book sales in the first place), some of which will only be discovered as PDA programs become more widespread and provide more data for analysis.

E-books and PDA represent significant changes to the supply chain for books. There is a whole new ecosystem under development here, and the precise workings of this environment are only now coming into view.

About Joseph Esposito

I am a management consultant working primarily in the world of digital media, software, and publishing. My clients include both for-profits and not-for-profits. A good deal of my activity concerns research publishing, especially when the matter at issue has to do with the migration to digital services from a print background. Prior to setting up my consulting business, I served as CEO of three companies (Encyclopaedia Britannica, Tribal Voice, and SRI Consulting), all of which I led to successful exits. Typically I work on strategy issues, advising CEOs and Boards of Directors on direction; I also have managed a number of sticky turnarounds. Among other things, I have been the recipient of grants from the Mellon, MacArthur, and Hewlett Foundations, all concerning research into new aspects of publishing.

Discussion

14 thoughts on “PDA and Inter-library Loan

  1. In scenario 3, how does Library B know how much of the book the patron read? Can they track advancement through pages?

    Posted by Gwen Taylor | Mar 13, 2012, 9:32 am
    • The various PDA services currently available have different ways to track usage and also offer the option of short-term rentals. Libraries may make the decision to keep renting a book or at some point to acquire it for its collection. It’s necessary to work through the offerings of the various vendors to get a grasp of this. I suspect that over time, the offerings of the vendors will come to resemble one another.

      Posted by Joseph Esposito | Mar 13, 2012, 9:42 am
      • I agree with Mr. Esposito and would like to add a couple of comments regarding strategic e-book acquisitions:

        Although STL (short term loan) resembles PDA (with the same triggers) it is a separate program from PDA, and can have different profiles and fund codes. STL can be a lower cost alternative to ILL, and is a cost effective way to support programs without committing the funds needed to purchase e-books.. Users can turn up to nine pages or spend nine minutes in a book without incurring any costs. Triggers are 10 minutes or 10 page turns, or a copy, print or download. Covers, Index or Table of Contents are not counted as page views or timed. At ebrary, a one day loan cost is 10% of the purchase price, and a 7 day loan is 15% of the purchase price, and in most cases would cost less than the cost of ILL. We are seeing libraries willing to pay for up to three loans before triggering a purchase, because in their experience with over half these titles, a purchase never occurs and the library saves money. The content is available immediately and other patrons also have full use of the e-book during the loan period. This is ideal when a professor wants a class to read a particular chapter, for example, but may never need this same title again. A professor can create and share a URL link to a particular chapter or page in the book, along with highlighted text and notes within the user Bookshelf feature of the platform.

        Posted by Oliver Kelzenberg | Mar 14, 2012, 8:39 pm
        • Nice advertisement slipped in under the cover of a comment. The problem I perceive is that when it is presented in this way is that it appears that there is collusion between the library and the vendor to reduce spend. No wonder publishers panic when they read descriptions such as this. What libraries and our vendors need to do is show how schemes such as this increase appropriate spending. A book needs to compete on its inherent value and is bought on its value to the library and the patrons. If we work from this ebrary advert it looks as though a library gets the best of both worlds and the publisher misses out on revenues due to the convenience of PDA. From what I have read and assessed at peer libraries this is not the case. The coverage is improved at libraries and expenditure is consistent or higher. I am obviously happy that my users get 10 minutes of free browse for all the books at ebrary but less happy if this continues to convince publishers that libraries are only in this for free content and they continue to withdraw their content further from libraries. We should also avoid spam comments where possible.

          Posted by Steven Bell | Mar 15, 2012, 11:30 am
  2. Why do you think that the amount the patron reads will determine whether the library buys or borrows from a PDA program? It seems that factors like a library’s budget, where they are in the fiscal year (and what remains in their PDA account), and the subject matter of the book might be more influential factors. And while it would be nice to be compensated for what wasn’t compensated for in the past, what reassurances do publishers have that the rental revenue won’t actually be cannibalizing sales revenue? How do I know this is a new revenue stream rather an alternative revenue stream? This is important to publishers because rental revenue is going to be less than sales revenue, and rental revenue will be split 50/50 with the author where as 80% to 90% of sales revenue goes to the publisher. So let’s say it’s a $100 book. If I can sell it to library B I make around $70 from which I pay the author $10 for a royalty and I keep $60. If library B borrows it from the PDA platform I’m likely to get around $10 from which I pay the author $5 and keep $5. This means I need that platform to lend that title 12 times before I recover the same revenue I would from one lost sale. Is that really going to happen? On the other hand, will one of those renters be a former purchasing customer? I’m thinking there’s a better than one in twelve chance that they are.

    Posted by Tony Sanfilippo | Mar 13, 2012, 10:18 am
    • This sounds like the doom and gloom of grey sky thinking that rests on publishers of all shapes and kinds at the moment. Just because something is possible it does not mean that it will actually happen. What Joseph and the guy from EBL are saying (see below) is that at the moment some libraries are spending hundreds of thousands of dollars on freight to get print books from one library to another. You, the publisher, get no money from that transaction. Here, under this controlled model you get revenues for that transaction. And, under PDA, if it is loaned a few times you get a full purchase. So whilst in your negative measurement there may only be a 1 in 12 chance of a purchase, from what I reckon there is 100% of you getting nothing by not engaging in the activity. If the books are good enough they will get purchased, no?

      Posted by Steven Bell | Mar 14, 2012, 5:30 am
      • I am less likely to be removed from an existing approval program if I don’t participate in PDA than if I do. And I’m not sure that some of my customers are still as interested in purchasing what is good and instead seem to be distracted by what is popular. That is my concern with PDA. Our books will rarely, if ever, be popular. Our books are very good, but difficult. Whether or not they are collected and preserved shouldn’t be decided based on PDA trigger criteria. That is appropriate for novels, not monographs. And it’s worth noting that in the humanities, if we allow popularity to determine what is published, which PDA will inevitably cause, tenure will eventually be determined by that same criterion. PDA is probably appropriate for public libraries, but not ARLs.

        Posted by Tony Sanfilippo | Mar 14, 2012, 8:38 pm
    • One way you get equal or even more revenue: Given: flat library budget. But instead of spending $100 for a single book, which it doesn’t know for sure will get much or any use, the library provides PDA access to ten of your books. There’s a good chance that this tenfold increase in content will result in as much, if not more, revenue for you from the multiple uses of the content. Secondly, at most academic institutions, even the highest paid faculty members are rarely going to buy a $100 monograph. They’re going to try to get a free review copy, illegally photocopy much or all of it, wait to find a used copy online, etc.

      Posted by Rob Melton | Mar 15, 2012, 7:01 pm
  3. Thank you again Joseph. Will you be covering any of this recent PDA work at the AAUP in Chicago as I’m considering attending? Chicago in June is never a bad idea. I saw an interesting discussion by someone from EBL last week relating the birth of PDA to ILL. They were saying that the birth of PDA was probably in 1886 when the first ILL was ordered. I think that this was a fact drawn from the book you reviewed last year and may yet be apocryphal (I am yet to finish the book). They continued by saying that ebooks have offered technical solutions to the cost and speed of print ILL for the past decade and PDA is just an evolution of ILL. He went on to explain the commercial benefit to publishers as a consequence of this shift and their experiences of implementing PDA in place of ILL for libraries in Europe and Australia. All very interesting and it reminds me that I should finish that book.

    Posted by Steven Bell | Mar 13, 2012, 10:27 am
    • I will be participating in a panel with colleagues at AAUP this year to review our project on PDA and its implications for book publishers. Yes, Chicago in June is a great attraction, but Chicago is wonderful year-round for those who can brave the climate.

      Posted by Joseph Esposito | Mar 13, 2012, 10:31 am
  4. The CCC already offers a service to libraries with its “Git It Now” program that is more cost-efficient and time-effective than traditional ILL: http://www.copyright.com/content/cc3/en/toolbar/productsAndSolutions/getitnow.html. Although it is focused on articles now, there is no reason it could not be extended to books and/or book chapters.

    Posted by Sandy Thatcher | Mar 13, 2012, 2:54 pm
  5. Seems to me that there is an opportunity for a different model: Publisher-Direct ILL. For a time limited access period, libraries could “rent” e-titles directly from the publisher (or ebook/distributor acting as aggregator) to offer a single patron access – but without a longer term purchase obligation. In an e-world, even with multiple players in the mix, publishers could offer this for less than the current p-work ILL cost model.

    PDA is very much a frontier: like any emerging market dynamic, expect multiple variations of the theme as all interested stakeholders (publishers, libraries and patrons) invent, experiment and compete until a broadly held set of community standards develop.

    Personally, I find the current concept of “what is e-ILL” discussion a little trade book driven – i.e. rooted in the concept that a “true use” will look at the book more or less from cover to cover – that the value lies in the amount of content perused..vs the solution access provides. That’s not true in the reference world…nor in the journal world. And as a researcher, do I find the value of a work any less if I find the information I am looking for in a few pages…or chapters…or the entire work? Is there value in NOT finding the content/”answer” I was looking for? (Think in terms of patent research – not finding information can be more valuable than finding it!) Afterall, in the database world, the fewer clicks between ‘question’ and ‘answer’ is really the value equation everyone is chasing.

    I also think it worth questioning can one loan something one doesn’t own? (Yeah, I know options traders do this; but look at the mess that has got us into.) As we all move from an IP/content ownership world to an access rights model, I think of a lot of the embedded assumptions on who can do what, with what are going to change.

    No doubt some publishers will worry and moan about lost sales and channel conflict. Similarly, I wouldn’t be surprised to see ILL advocates look to carbon copy the print driven model into the e-world – in part because it was a library vs “vendor” originated and mediated solution. But the real answer looks at discarding practices and limitations driven by legacy print issues – and figuring out how the format change to “e” enables enhanced solutions.

    Posted by Brandon A. Nordin | Mar 13, 2012, 6:04 pm

Trackbacks/Pingbacks

  1. Pingback: A Publisher’s Strategy for Patron-Driven Acquisitions (PDA) « The Scholarly Kitchen - May 21, 2012

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