How should eBooks be priced? Librarians and publishers weigh in : The Indicator from Planet Money Long gone are the days of hauling sixty books home from the local library. With eBooks, the worlds of Fahrenheit 451 to Harry Potter are at your fingertips with just a tap. But what's the price behind the click?

The surprising economics of digital lending

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At the Whatcom County Library System in Washington state, they have a print copy of "Fahrenheit 451." You know, this is the Ray Bradbury dystopian novel about a society where books are outlawed. They're set on fire instead of read. Now, the library bought its print copy of this classic 12 years ago, and it is still going strong. Carmi Parker is a librarian in Whatcom County.

CARMI PARKER: It has circulated about 100 times, which is really good.

WONG: It hasn't, like, disintegrated yet after 100 times.

PARKER: Yeah. I think maybe it's the people who are reading that particular book are careful about their books. I'm not sure.


The Whatcom County Library also has a digital version of "Fahrenheit 451," but the library doesn't own that e-book. Instead, it pays $60 to license that digital copy for two years.

PARKER: So if we want to offer that for the next 10 years, that's $300. And I can buy the paperback for $17.

WONG: Same title, different formats, very different pricing. This is THE INDICATOR FROM PLANET MONEY. I'm Wailin Wong.

WOODS: I'm Darian Woods. The pricing of e-books is a big source of tension between libraries and publishers that has occasionally bubbled over into public disputes, boycotts and even contentious court cases.

WONG: Today on the show, we look at the economics of digital lending and how the debate over pricing exposes big questions about what it means to pay for, own and access information in the digital age.


WONG: You probably think of a library as owning everything in its collection - books, CDs, DVDs. My local library even loans out mobile hotspots and ukuleles.

WOODS: Well, I shouldn't have bought that ukulele then.

WONG: (Laughter).

WOODS: And when it comes to physical media, like print books, the library does own them. It paid to acquire them. And under a copyright law known as the first-sale doctrine, a library that owns a book can just loan it out. It doesn't need to pay a fee or ask for any permission from the publisher.

WONG: But for e-books, the first-sale doctrine doesn't apply because, well, there's no sale.

PARKER: The heart of the matter is libraries don't own any of this in the same way that they own print.

WONG: Instead of buying digital books, libraries license them, and they actually license them from distributors - these middlemen of the publishing industry. One of the biggest e-book distributors is a company called OverDrive. They make the app, Libby, which you've probably used if you've ever checked out an e-book from your public library.

WOODS: Yeah. So I use this myself. You know, you just have it on your phone. You don't even need to visit the library. You can put a title on hold. You can borrow it. You can read it. And you return it all through the app.

WONG: Carmi Parker's library started offering e-books in 2011. At that time, it paid an average of $14 for a single e-book license, similar to the retail cost of a print book. That e-book could be loaned out one at a time, and the license was perpetual, meaning it never expired.

WOODS: But around 2018, the big publishers started capping new licenses at two years. So for these new licenses, after 24 months, that digital copy would expire, and libraries would have to pay again if they wanted to keep offering that title.

PARKER: At the time, you know, many librarians were extremely concerned about what it would mean for their collections. And when they switched to 24, they did not lower their prices.

WOODS: Carmi says that her library's average cost for an e-book license has tripled in the last decade. That far outpaces the increase in print book prices.

PARKER: We can't even remotely afford to re-license everything that we licensed. The really high unit prices on digital books don't make any sense to me because it means libraries are buying fewer units. And it seems to me that publishers should want libraries to have as broad a range as possible.

WONG: But librarians and publishers don't always have the same priorities. Publishers, of course, are businesses, and their authors need to sell books to make a living. Publishers are concerned that digital lending cannibalizes e-book sales because it's so easy to borrow an e-book from the library for free. Industry data shows that aside from a pandemic spike in 2020, e-book revenues have declined since 2014, while digital lending through libraries keeps growing.

WOODS: Libraries want to get books into people's hands, too, but just not through sales. And they say that digital materials expand access of people who can't get to a physical library or might have a disability that keeps them from using a print book.

WONG: So figuring out fair pricing for e-books is, like, this balancing act, juggling the desires and financial realities of publishers, authors, libraries and readers. And things really came to a boil two years ago with a dispute over digital lending that has divided the book world.

WOODS: Public libraries aren't directly involved, but they're paying very close attention to this legal case because it could affect them. The dispute involves the Internet Archive. It's a nonprofit that keeps this online repository of all kinds of digital materials that anyone can access. It's been around for almost 30 years.

WONG: Yeah. It's got scholarly works and long-forgotten periodicals, even old computer games and filmstrips. But the Internet Archive also operates something called the Open Library, where scanned versions of books are available for anyone to check out for free.

WOODS: So from the perspective of a borrower, this doesn't really change very much from your e-book borrowing experience. But behind the scenes, it's very different. The Internet Archive doesn't pay to license the e-books in its Open Library project. Instead, the Internet Archive acquires a print copy of the book, and it then makes a digital version available to borrow one at a time. And this model is called controlled digital lending.

SANDRA ENIMIL: What you own is what you can loan.

WONG: Sandra Aya Enimil is a copyright librarian at Yale University Library who's a supporter of controlled digital lending and has been watching the case. She has a law degree and a library science degree, so she has, like, the combined powers of a lawyer and a librarian.

WOODS: Double threat.

WONG: And Sandra says controlled digital lending is meant to mimic what happens with print books.

ENIMIL: You have one physical copy of it. Then you loan out one digital copy, and the physical copy is sequestered. It's not made available for other people to come and get it.

WOODS: I mean, this is a super creative solution to copyright law, but it sounds as though we're not entirely sure whether this is legal.

WONG: Yes - because, you know, one person's creative copyright solution is another person's egregious copyright violation.

WOODS: Right.

WONG: And so in early 2020, four publishers filed a lawsuit against the Internet Archive, and they sued after the website temporarily removed the waitlist restrictions on lending. This was during the early months of the pandemic.

WOODS: The Internet Archive says this was an emergency measure to help students and other people while schools and libraries were shut down. But the publishers sued the archive for copyright infringement, saying the website is copying and distributing books without compensating the people who created that work - the publishers and the authors.

WONG: We reached out to the Association of American Publishers. Their general counsel, Terrence Hart, said the Internet Archive is committing systematic theft. Terrence said, quote, "the Internet Archive is not a real library. It only masquerades as one," unquote.

WOODS: Fighting words.

ENIMIL: Part of the tension is for a publisher - they're looking at it and saying, now this thing is digitized, and we're not getting anything for that because you now are just using it and circulating it, but we haven't gotten any money for that. And then our response is, but there was money exchanged when we first bought the physical thing. We did pay for it.

WOODS: But the publishers say, all right, well, you paid for the print book, but it is still illegal under copyright law to reproduce it, to distribute it or change it into a new format by digitizing it. And the publishers entirely reject the idea of controlled digital lending. Terrence at the Association of American Publishers called it a rhetorical smokescreen, and he said, quote, "it has just about as much legal validity as the concept of dibs, which is to say none at all," end quote.

WONG: A judge has yet to rule in the Internet Archive case. But librarians like Carmi and Sandra are watching the proceedings closely because the fallout could have implications for how digital works are valued and lent out. Sandra, for her part, is trying to stay hopeful.

ENIMIL: Even though I mentioned that, you know, libraries and publishers are coming at this from different perspectives, I do think that there is some kind of middle ground that we can eventually get to, and I hope we do because we need each other.

WOODS: Maybe they could start a book club together.

WONG: This episode of THE INDICATOR was produced by Corey Bridges and Nicky Ouellet with engineering from Robert Rodriguez. Kathryn Yang checked the facts. Viet Le is our senior producer. Kate Concannon edits the show. And THE INDICATOR is a production of NPR.

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