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Smarter Libraries through Technology: High Stakes for Digital Lending in Public Libraries

Smart Libraries Newsletter [February 2020]

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It's hard to imagine a topic of greater impact to public libraries than digital lending. Public libraries continue to invest higher proportions of their collection budgets to digital content. As illustrated in Figure 1, public libraries in the United States have steadily increased their investments in digital content. In 2017, the last year for which statistics are publicly available from IMLS, digital resources exceeded over $374 million. Most of this spending goes to subscriptions to digital lending platforms and licensing of e-book and audiobook titles. While aggregate spending on print materials by US public libraries has diminished since 2008, it has held steady in the last few years. If these trend lines continue their current course, access to digital materials may surpass acquisitions of print materials within a few years.

Patrons love library e-book lending services. In a recent press release, OverDrive reported a 20 percent increase in public library e-book and audiobook lending in the last year, with 326 million checkouts. Seventy-two libraries exceeded over one million digital loans. These figures include only the transactions carried out via OverDrive's own platform. Adding in those done via competing platforms, the volume of transactions is considerably higher.

Today, digital lending by public libraries faces enormous challenges. The pricing and lending terms offered by the publishers are not especially favorable to libraries. In recent months, the limitation set by Macmillan to offer only a single copy with no simultaneous use for an initial embargo period for new titles has sparked outrage by libraries, leading to some boycotts of digital content from this publisher. In previous rounds, the requirement for libraries to repurchase titles after a set number of lending transactions sparked concerns. The broader dynamics of library lending in relation to digital sales to consumers by the publishers and distributers remains an unresolved conversation. In a recent call, Steve Potash, CEO of OverDrive, reflects a view that most publishers see positive benefits in digital library lending, with those imposing restrictive terms not necessarily representative of the publishing industry.

In recent days a major industry event has taken place that has the potential to make a major impact on the public library digital lending ecosystem. The transfer of ownership of OverDrive from Rakuten to KKR, which also owns RBmedia, sets the stage for a possible consolidation of immense scale. Although the sale of OverDrive has not yet finalized and any consolidation is speculative, this event warrants close consideration by the library community. Such a consolidation into digital lending superpower raises concerns as it narrows options and choice. But it also may represent a beneficial advantage in the balance of power in the dynamics between those representing library interests for favorable terms in digital lending versus the pressures exerted by the publishers. It is possible that an organization with more clout could help libraries win more favorable pricing and terms.

This issue of Smart Libraries Newsletter features the proposed acquisition of OverDrive by KKR. It includes the details of the transaction currently available and context related to the business environment and the background of the companies involved. Readers can expect ongoing coverage of any additional events that might unfold, including any partnerships or consolidation among OverDrive and RBmedia or other related organizations.

View Citation
Publication Year:2020
Type of Material:Article
Language English
Published in: Smart Libraries Newsletter
Publication Info:Volume 40 Number 02
Issue:February 2020
Publisher:ALA TechSource
Series: Smarter Libraries through Technology
Place of Publication:Chicago, IL
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Record Number:25068
Last Update:2022-11-14 05:39:38
Date Created:2020-04-20 11:27:05