April 15, 2014

ALA, LaRue Respond to Hachette Price Increase

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The American Library Association (ALA) on Friday denounced Hachette Book Group’s decision to implement steep price increases on its back-catalog of ebooks sold to the library market. OverDrive broke the news to its customers in an email on September 13, stating that “Hachette will be raising its eBook prices on October 1, 2012 on their currently available eBook catalog (~3,500 eBook titles with release dates of April 2010 and earlier). On average prices will increase 220 percent.”

Update 09/17/12: In a later blog post, OverDrive notes that “In our initial email to library partners announcing the Hachette price increase, we made an error in calculating the percentage of the increase. On average, the cost of Hachette eBooks for libraries will increase by 104 percent, or 2.04 times the current price.”

ALA President Maureen Sullivan expressed disappointment at Hachette’s choice, noting that ALA had believed that the publisher was moving toward more favorable terms for libraries.

“When Hachette announced it was stepping back into the library ebook market this past May with pilots that would bring a selection of its recent bestsellers to millions of library patrons, the ALA welcomed this news,” she said in a prepared statement. “Leaving our meeting with them, we were pleased that they recognized libraries as strong partners—as direct customers and marketers of their titles, as well as integral community institutions that must be supported as a fundamental cornerstone of literacy. After these tentative steps forward, we were stunned to learn that Hachette plans to more than triple its prices for ebook sales to libraries starting October 1.”

In response to predominantly negative news reports on the story, Hachette released a statement arguing that the company believes these new terms will fairly reflect the value of ebooks to libraries, since unlike print books, ebooks do not need to be periodically replaced, and “there is no limit on amount of borrowing activity per ebook copy.” The statement added that Hachette will continue “working with libraries, Overdrive, and several other partners to gather information and explore various options for making HBGs ebooks available to readers in a rapidly changing digital world.”

But during a time when acquisitions budgets are stretched thin, and self-publishing is growing rapidly, Hachette’s decision could backfire.

The price increase “will greatly reduce the likelihood that we will buy their offerings,” said Jamie LaRue, director of Colorado’s Douglas County Libraries, which has pioneered the development of library-owned, library managed ebook collections during the past year. “As I’ve written elsewhere, most of our demand and use is for new materials, and there’s an explosion of independent and self-published writing. Clearly, this is the right time for us to develop some new relationships with people who actually want us to buy their books.”

Hachette currently does not offer libraries the opportunity to purchase its newest ebook titles, but otherwise, the decision mirrors a similar move by Random House, which raised its prices for the library market by 300 percent in March. Now, all three of the “Big Six” publishers that offer content to libraries either do so at a significant markup over retail, like Random House and Hachette, or with a lending limit, like HarperCollins.

Both models are far from ideal, said LaRue. “When publishers shoot themselves in the foot, why do they keep looking for a bigger gun? Here’s the deal: the job of the library is to gather, organize, and make publicly available the intellectual content of our culture. By pricing themselves exorbitantly, a publisher will lose library sales, and lose the exposure their authors might otherwise have experienced. Nobody wins, everybody loses.”

DCL recently began publishing ebook bestseller charts with notations explaining whether titles are available to libraries, and how much DCL will have to pay for a title in print and in ebook format, compared with retail.

“So far, we’ve gotten a uniform reaction from library board members, members of the public, and media: they are shocked,” LaRue said. “One county commissioner asked me, ‘So if the [Department of Justice] felt that consumers were being squeezed by the difference between $9.99 and $15.99, what will they say about the difference between $9.99 and $45.97? Or the refusal to sell at all?’ One wonders.”

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