October 31, 2014

Random House Reaffirms Commitment to Library Ebook Lending While Raising Prices to Wholesalers

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(This story has been updated  to include comments from ALA President Molly Raphael)

Random HouseAfter an “upbeat and productive” meeting with leaders of the American Library Association on Tuesday, Random House reaffirmed its commitment to library lending of the company’s entire portfolio of ebook titles.

At the same time, the company has announced that effective March 1 it is raising ebook prices that it charges library wholesalers such as OverDrive, 3M, and Ingram, which set the ultimate price libraries will pay to lease ebooks.

“Our commitment to libraries, as imperative to our momentum, if not to our existence as publishers, is greater than ever,” said Stuart Applebaum, a Random House spokesperson, who characterized the meeting with ALA as upbeat.

Applebaum said that the company’s titles will remain available for elending without any limits or barriers under a one copy, one user model.

“We are going to be reviewing our terms of sales, but not our commitment to the library market,” Applebaum said. “But whatever we do, it’s going to be with our library partners in full awareness and understanding of what we are doing and why we are doing it,” he said.

“There could be changes down the line but they are going to be reached by consensus, not by fiat,” he added.

Last week at the Digital Book World conference held in New York City, Steve Potash, the president and CEO of Overdrive, acknowledged the effort of Random House to serve the library market.

“Let’s show them and their authors what they deserve, our appreciation and support,” Potash said. But he also said that it is important to appreciate that all the Big Six are trying to get a grasp on a difficult business model, noting that Simon&Schuster makes all of its best-selling audiobooks available to lend even if it does not make ebook titles available.

“Even if they are still reviewing, it’s a changing and dynamic world … [and] they try to be nimble and we can’t chastise anyone because … they are cautious,” he said. “It’s a very challenging time for the Big Six in finding the right solution for their authors and keeping their agents all comfortable.”

Tom Mercer, the director of marketing for 3M’s cloud library, said he has had positive dialogs with all the Big Six.

“I’ve certainly gotten indications that most of the houses that are not currently selling ebooks to libraries are under review, and they are still trying to find a model,” Mercer said. “They feel they don’t understand what the impact is going to be and they don’t want to make the wrong move,” he said.

The rationale for the price hike to wholesalers, Applebaum said, was to align ebook pricing with the company’s digital audio business (such as books on tape) which historically “has digital audio books for library lending at a higher price point than digital audio books sold at retail.”

Random House is currently informing the distributors of the price change, and the company has been having discussion with various members of the public library community over the past week, including the meeting on Tuesday with Keith Fiels, ALA’s executive director, Molly Raphael, ALA’s president, Maureen Sullivan, ALA President-elect, Robert Wolven, Co-Chair of ALA’s Digital Content and Libraries Working Group and Alan Inouye, Director of ALA’s Office for Information Technology Policy. The group also met with senior leadership from Penguin, Macmillan, Random House, Simon & Schuster, and Perseus over the past few days, as planned.

[UPDATE] Raphael said the discussions were  “substantive and productive,” and that ALA would comment in more detail next week. She said the purpose of the meeting was ” to express our dismay about those restricting library sales but also to understand the concerns that publishers have in general in this new digital environment, including those who do sell to libraries.”

“We were able to genuinely engage during each of these meetings at the highest level and were encouraged, in each case, by the desire of both the publishers as well as our delegation to understand the issues faced by both entities,” Raphael said. “In each case, we reaffirmed our shared purpose of connecting writers with readers and our desire to find solutions, as well as identifying some specific steps that the publishers and ALA can take,” she said.

Madeline McIntosh, president of sales, operations, and digital for Random House, attended that company’s meeting with ALA as did a handful of other Random House executives, including Ruth Liebmann, director of account marketing.

To explain the company’s commitment to the library market while the other Big Six publishers withdraw from or limit it to varying degrees, Applebaum said that, while sharing concerns about piracy, Random House has confidence that its encryption technology is strong enough to support “all-out” library elending.

More significantly, he said the company continues to see libraries as an engine for its business, a position that echoes the findings of Library Journal‘s Patron Profiles survey.

“The leadership of Random House grew up in large part loving libraries and we believe libraries are indispensable in bringing readers and books buyers to our authors’ works,” he said. “It’s an emotional as well as a practical commitment in our support and our enthusiasm for libraries.”

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Michael Kelley About Michael Kelley

Michael Kelley is the former Editor-in-Chief, Library Journal.

Comments

  1. Is there any word on what they are charging Libraries for ebooks?

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