Here’s the hypothesis: virtually all academic libraries buy print books from Amazon, and within a few years, virtually all academic libraries will have PDA programs in place. At some point these two trends will intersect, beginning a significant restructuring of the marketplace.
Let’s start from the beginning. Although no one thinks of Amazon as a library wholesaler, just about every librarian I have spoken to tells me that his or her library buys some books from Amazon. In some cases the number of these books is said to be significant, in some instances the number is small. Larger libraries may occasionally dip into Amazon’s inventory when a rush order is needed, but smaller libraries may order from Amazon routinely, in part because of price, in part because of overall service. One librarian wrote me recently to say that her library purchased all of its print books from Amazon. I don’t know how exceptional that library is, but it is clear that Amazon is now a meaningful and growing force in provisioning academic libraries.
As publishers watch their sales through Amazon continue to grow, they may wonder where all those books eventually end up. It’s a good question, for which Amazon alone has the answer, and Amazon ain’t talking. My guess is that Amazon is fulfilling sales to individuals (essentially in competition with other retailers such as Barnes & Noble), sales outside the U.S. (where it can be hard to source English-language texts), and sales to libraries. A sales report that lists Amazon as an “online bookseller” tells us very little since Amazon has a reach and ambition that goes far beyond anything this industry has ever dreamed of before. The question is, online bookseller to whom?
We can imagine, then, a continuum, with the largest ARLs on one end, and community college libraries on the other. In between we have smaller ARLs, some pubic institutions, and liberal arts colleges. Amazon’s sales along this continuum are not spread evenly, and there are some bumps here and there, but it’s fair to generalize and say that the smaller the academic library, the greater Amazon’s role. That’s to speak of Amazon’s position purely in relative terms, however. Since the major ARLs are so much bigger than the libraries at smaller institutions, it’s possible that the actual purchases by the major ARLs from Amazon are higher in absolute terms than the sales to the smaller libraries, even though Amazon is less important to a large library than to a small one. The fact is that we don’t have the data for this. It would be great if would get it, though, but that is in the future.
Curiously, we have a somewhat similar situation with PDA. My interviews with people in the PDA supply-chain suggest that there are now about 500 PDA programs around the world. (If anyone has better or more recent data, I would like to know about it.) That number is likely to grow very quickly in the next year or two; we shouldn’t be surprised to see it double, as library consortia are now sending out RFPs to vendors. This means that 20-30 libraries could come on stream with PDA from a single sales call. It’s not impossible to imagine that there will be 1,000 PDA programs in place by 2014 and to project further into the future and state that all libraries will someday be working with PDA.
Here again, however, libraries will take to these new PDA program in various ways. (By the way, if it’s not clear, I am only talking about formally published books here, the output of publishers like university presses and such firms as Palgrave Macmillan and Routledge and the intellectually serious titles from such trade houses as Random House and Basic Books.) The very largest libraries, for example, may lean toward traditional collection-development programs, using PDA only in areas deemed to be nonstrategic to their collections. Smaller libraries, on the other hand, may opt to use PDA exclusively, preferring to develop a library based on access to community demand rather than one that is in itself a cultural monument. And the libraries that sit between the biggest and the smallest will have differing levels of involvement with PDA, depending on the nature of their institutions, their philosophy of collection-building, and the personal outlook of their senior staff. PDA, like Amazon’s sales to libraries, is, in relative terms, more important to smaller libraries than to big ones, but in absolute terms, we just don’t know, as the purchasing power of a major ARL could make greater purchases and rentals from its nonstrategic PDA program than can a small library, where PDA is central to the institution’s operation.
So, Amazon and PDA alike: very important to the small guys, less important to the big guys. But a factor for all libraries great and small.
And that’s where the analogy breaks down because of this one stubborn fact: Amazon is selling print books to libraries, whereas most PDA sales are for ebooks. Amazon, of course, would like nothing better than to take its Kindle catalogue to the library market, which would gobble up those titles greedily, but publishers, rightly fearful of Amazon’s growing dominance, are loath to grant Amazon the requisite rights to make library sales and lending possible. As for print PDA, yes, it is a factor in the library market today, but it’s a small one. Most of the time when a library has a print PDA program in place, it is as a fallback when the digital edition of a title is not available.
I imagine that there is a head of library markets for Amazon who is thinking about this, and this individual is not happy. The library book market is said to be about $1 billion in the U.S. (but does anyone know where that figure comes from?), and here is Amazon, the leading purveyor of ebooks, and there is the library market, which is prepared to move to a largely digital solution much more rapidly than consumer markets–and Amazon’s ebook program is locked out of that market. Amazon being Amazon, we should look for a bold solution. This is, after all, the company that bought Alexa, Lexcycle (maker of the Stanza reader), Audible.com, Shelfari, and so much more. We should not be surprised to see Amazon’s strategic problem solved with a flourish of the checkbook.
Of course, Amazon could in theory enter the library market for ebooks directly without an acquisition, but I doubt it will for the simple reason that Amazon would have to round up the publishers one by one to get digital rights (since the current rights for the Kindle consumer offering don’t apply to library lending), and publishers will resist this. And this is one of the key arguments for an acquisition strategy: it is far less expensive to make a small number of shareholders of the acquired company very, very rich than to take the time and trouble to negotiate with thousands of publishers.
Amazon would not be acquiring a PDA company for the software platform to deliver PDA programs. For Amazon’s engineers, building a content-management system of that kind would not be much of a challenge, perhaps an assignment they would give to their summer interns. What it would be acquiring is a list of customers and contracts that are already in place with publishers. Such an acquisition would put both libraries and publishers into a tight spot. Would a library drop a service simply because Amazon owned it? I don’t see why, especially if Amazon brought to this new venture the same commitment to customer service that we see in the consumer market. As for publishers, who have more reasons to resist, they would have to unwind current PDA contracts with the new owner (that is, Amazon). But these contracts are already earning money for publishers. It is one thing for a publisher to say, I am not working with Amazon now and I don’t want to; quite another to say, Well, I already have PDA revenue coming in, but I am going to be a defiant hero and cancel my contract with Amazon, putting me in a position to miss my budget this year and have to crawl before my Board of Directors, pleading for mercy. With Jeff Bezos, as with the Borg, resistance is futile.
The purpose of this meditation is not to deliver yet another angst-filled blog post about the horrors of capitalism or the stifling of free speech or any other of the over-the-top fulminations that characterize so much talk about books today; nor is it an attempt to drum up some lucrative M&A business (but I would be happy to have lunch . . . ). Rather the point is to come up with scenarios against which strategic plans can be made. Publishers now have a glimpse of what Amazon is likely to be doing with consumer book markets and now should be thinking about a significantly restructured library market. The question is, What investments should be made today to ensure a publisher’s viability and growth in the years ahead? May I suggest a newfangled online bookstore?