November 19, 2014

A Proposal to Buy Out OverDrive | Backtalk

By David Rothman

OverDrive recently got the big “get” of the library e-book world, the Harry Potter series. This Cleveland-based distribution service now offers J. K. Rowling’s darlings in text and digital audio to thousands of libraries and schools. No surprise. OverDrive’s people can work parties, trade shows and contract negotiations with the finesse of true wizards.

Do we want OverDrive, however, as American’s national digital library system for our public schools and public libraries, in effect? Remember, the national digital library issue to a great extent is really a K-12 and jobs one in disguise.

With the national interest in mind, U.S. public libraries should buy OverDrive with the help of a philanthropist or group of benefactors. Hello Warren Buffett, Bill Gates, Paul Allen, Steve Jobs’ family, Larry Ellison, Ross Perot and the like? Wallets ready? The possibility begs for discussion.

OverDrive is gearing up for expansion via a new $5-million-dollar-plus “world headquarters” with 300 employees expected in time, some 95,000 square feet, a 12-acre campus, a pond and two indoor basket courts. Shouldn’t librarians have a voice in such spending decisions, which could influence content costs? Or should they tolerate what could become de facto privatization and perhaps eventually get cut out altogether?

For now, OverDrive is the King Kong of the public library ebook market, serving “more than 15,000 libraries, schools, and colleges worldwide.”  Despite all the news coverage about Google’s millions of classics, most public library patrons strongly prefer contemporary commercial books, OverDrive’s main strength, and in the wake of the success of Kindles and iPads, OverDrive and rivals are rapidly increasing their hold on the public library market.

Get set for more of the same if libraries don’t buy OverDrive: increasing reliance on infrastructure from the private side. When a U.S. public-library patron requests an ebook, it commonly zips over the wires from an OverDrive server via a link from the local library’s ebook section created with the company’s help, or else OverDrive points them to the corporation’s partners at Amazon.

So what would be the benefit of libraries buying out OverDrive directly, or of a library-oriented nonprofit doing the same?

  1. Continuity, given OverDrive’s prominence on the public library scene. Steve Potash and associates could stay on as advisors to help effect a smooth transition – and the continuation of contracts with publishers. Like it or not, personal connections count in big-time publishing. Without Potash and crew, a national digital library system might actually be riskier, in terms of content choices. They are hardly infallible but stand more of a chance than latecomers who know copyright law, but not the right people – at least not to the extent OverDrive does. The less risk, the better the funding possibilities. Furthermore, OverDrive is already in touch with popular tastes, a “must.” Notice how badly OCLC bungled with NetLibrary in this respect and others? Without OverDrive to help public librarians balance out high-brow academics, a national digital library initiative might repeat OCLC’s debacle. To promote full-strength mass literacy and upper-level culture – both essential! – a digital public library system needs all kinds of people.
  2. Modernization of OverDrive to take better advantage of such new technologies as cloud computing (with offline reading options) and make it more interactive and better integrated with libraries’ collections. In the future, library-stable links could boost networked books.
  3. Reduction of middleman costs. For budget reasons or others, a dismaying 39 percent of U.S. libraries don’t offer downloadable ebooks.
  4. Less complicated use of new business models, allowing libraries to buy up unrestricted usage rights from consenting writers and publishers – even though old models could remain as well.
  5. More clout with e-library-unfriendly publishers than OverDrive now enjoys. Libraries buy their share of paper books and, beyond that, they could hire editors and create their own polished content – with detailed, localized marketing information. OverDrive’s sophisticated marketing and PR sides could help popularize gems from libraries and museums as well as the commercial variety.
  6. More financial-transparency and, obviously, more say by librarians over policies and practices.

With competition growing in the ebook business, some powerful business reasons exist for OverDrive to sell itself to libraries if the rewards are sufficient. The more widely people discuss the possible OverDrive purchase, the more attractive it might become for potential angels – along with related donations for the collection and infrastructure and staffing.

As for ongoing revenue, much of it could come from fees that libraries are already accustomed to paying OverDrive, as well as from subscription fees payable via federal tax-form checkoffs, with aid available for low-income people.

Following a recent governance workshop for the Digital Public Library of America held at the National Archives in Washington, National Archivist David S. Ferriero graciously gave us a memorable private tour of a vault area containing papers from George Washington, Abraham Lincoln and other immortals as well as a check for the purchase of Alaska. Right there, amid all the tangible history before my eyes, I couldn’t help but think the inevitable. If we can acquire Alaska from the tsar, why can’t our libraries buy OverDrive?


David H. Rothman (davidrothman@pobox.com), an editor-writer in Alexandria, VA, runs LibraryCity.org and founded the TeleRead e-books site. Opinion pieces for Backtalk should be 850-900 words and submitted to Michael Kelley (mkelley@mediasourceinc.com)

 

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  1. Thanks, LJ, for publishing the proposal for the OverDrive purchase. Let’s hope this intrigues possible donors. For more, see a related LibraryCity item at http://librarycity.org/?p=4993. And meanwhile thanks also to DPLA Chair John Palfrey for his open-mindedness about the proposal (mentioned in the LibraryCity post).

  2. Librarian/Bookstore lackey says:

    I just wanted to point out that with Apple having their own ebook store, and Microsoft’s recent investment in B&N’s nook I doubt either one of those parties would be interested in giving libraries the means to more easily loan ebooks to their patrons. They, like publishers, would be too worried about ebook loaning infringing on their profits.

    It seems like a small point, but it made me skeptical of all the rest of the persuasive arguments in this post because that small point wasn’t thought about before being put out there.

    The idea does seem like a quick easy fix for all of the restrictions being placed on the ebook loaning market right now, but I wish this post had examined any of the barriers to libraries acquiring OverDrive (besides the price point). Like, why would OverDrive want to sell to libraries? I would think that the money they get from software contracts over the next ten years or so far outweighs anything that even Warren Buffet would be willing to dish out for little old us.

    And another small point, from a bookseller, I admit, but can we please stop using “Kindles” as a synonym for “ereader”? There’s at least one other device that is as popular, if not more so, than Amazon’s device. And it’s easier to use with library lending too.

  3. > I just wanted to point out that with Apple having their own ebook store, and Microsoft’s recent investment in B&N’s nook I doubt either one of those parties would be interested in giving libraries the means to more easily loan ebooks to their patrons.

    Thanks, but that actually strengthens my case for OverDrive to sell out; to protect the current library business, OverDrive will need all the allies it can get. As part of the public library system (and ideally an academic one, too, via shared infrastructure), OverDrive would enjoy more support (the opinion and financial kinds) than as a for-profit. Here’s to “the kindness of strangers”! Libraries and OverDrive need each other, especially if Steve Potash and friends want to expand the current cashflow with the help of libraries rather than see the DPLA and others throw a party without them. Furthermore, if Apple and the others made things too messy for libraries, technically or otherwise, there might well be government intervention, given the importance of public libraries as literacy-builders. A fifth of U.S. high school seniors are functionally illiterate, according to one study. Shouldn’t we do more, not less, to entice them to read?

    Beyond that, should public and philanthropic policies be set only by commercial interests–especially policies affecting public libraries? Also, can Microsoft and the rest dictate to Warren Buffett and other possible benefactors? Needless to say, Buffett’s pal Bill Gates could make a real difference if he lived up to all the publicity about his being a Carnegie-style friend of libraries and schools. Let’s hope that he could, especially with the library system’s possible contracting opps for MSFT. But if not–well, I’ve named a bunch of other possible benefactors. Ideally more than one billionaire would show an interest. A sure thing? No. But at least the idea is now out there on LJ’s Web site.

    As for B&N and other retailers, there are major positives, such as links from library catalogs to purchasing opportunities on the private side, not just from libraries. OverDrive and many others believe that libraries HELP retail sales. Not everyone has time to finish library books (and there’s also the possibility of using shorter lending periods in many cases to create friction to encourage purchases).

    I am not anti-retailer, just the opposite; I want a balance between public and private. If we value a diversity of content and freedom from government control, the solution isn’t one or the other. Let’s go for a mixed model!

    > They, like publishers, would be too worried about ebook loaning infringing on their profits.

    I’ve already explained–libraries HELP sales and will be especially important with so many brick-and-mortar stores vanishing. Librarians are marketers in disguise!

    > It seems like a small point, but it made me skeptical of all the rest of the persuasive arguments in this post because that small point wasn’t thought about before being put out there.

    The post had to be under 1,000 words. I’d love enough space to examine all the angles. But I’m delighted to be able to use the comments area.

    > The idea does seem like a quick easy fix for all of the restrictions being placed on the ebook loaning market right now…

    It’s hardly a panacea, but, yes, via better technology, more seamless checkout procedures and new business models phased in with close consultation with publishers, libraries could make life a lot easier for borrowers of e-books.

    >… but I wish this post had examined any of the barriers to libraries acquiring OverDrive (besides the price point). Like, why would OverDrive want to sell to libraries? I would think that the money they get from software contracts over the next ten years or so far outweighs anything that even Warren Buffet would be willing to dish out for little old us.

    Again, I was up against space limits, but I did write: “With competition growing in the ebook business, some powerful business reasons exist for OverDrive to sell itself to libraries if the rewards are sufficient.” A longer draft mentioned such rivals as 3M. OverDrive investors for now are up against Amazon and others with far, far more resources. Here’s a chance for OverDrive to team up with libraries to lock in its position of leadership in the library lending market.

    > I would think that the money they get from software contracts over the next ten years or so far outweighs anything that even Warren Buffet would be willing to dish out for little old us.

    Who’s “little old us”? You with OverDrive? ;-) Either way, remember that under this proposal, OverDrive’s library side would go from being a mere vendor to PART of the library system. With the proposed deal, OverDrive will be on its own and the libraries just might defect to 3M. The reborn OverDrive could tap the expertise of Harvard and others in the academic world and even contract with 3M and rivals; far, far better than competing with them.

    > And another small point, from a bookseller, I admit, but can we please stop using “Kindles” as a synonym for “ereader”? There’s at least one other device that is as popular, if not more so, than Amazon’s device. And it’s easier to use with library lending too.

    Maybe I’m overlooking something, but I mentioned “Kindles” by device name in only one place–where I wrote: “Kindles and iPads. I’m happy to acknowledge the existence of Nooks, especially the new glowing kind. And Kobo e-readers, Sonys and the others. I think the context made clear what I was driving at. While iPads are not dedicated e-readers, they and other tablets are probably the real future of e-reading, along with, of course, phones.

    For now, I hope that “little old us” in Cleveland will be open-minded and consider the dangers of of NOT selling out if the price is right. Let’s see if I can scare up a decent offer. Beyond that, I’d like to think that librarians and friends at OverDrive would want to do what’s right for the profession and at least consider this as one of the factors. Without an OverDrive sale to libraries or a related nonprofit, they risk being bypassed in time.

    Thanks,
    David Rothman
    LibraryCity.org
    davidrothman@librarycity.org
    davidrothman@pobox.com
    703-370-6540

    • I of course meant, “Without the proposed deal.” – DR

    • Librarian/Bookstore lackey says:

      My point about the “Kindles” was more of a general lament and not necessarily directed just at you. I keep seeing “Kindle” used as a catch-all term in the media, and I’m hoping that at least librarians could agree not to use it as a synonym, since Nooks have been more library-friendly from the start. :)

      And my comment about Apple and Bill Gates wasn’t that OverDrive and libraries shouldn’t try to team up via a philanthropic corporate sponsor, but just that your comment inviting Bill Gates and Apple to help out was too idealistic, being that their business interests would lead them to not want people getting books for free. Warren Buffet though, we should totally approach him. He’s all about spreading the wealth lately, so I think he’d at least consider it.

    • LB/L, I know your heart’s in the right place, and I agree with you about the risk of people confusing “Kindle” with the general term of “e-reader.” As for Bill Gates being a donor – as well as Steve Jobs’s survivors – who knows? I won’t count out anyone. Remember, Gates over the years has probably sold off a lot of Microsoft stock to diversify. Enough to make him less Microsoft centric? I don’t know. He is still chair and the largest individual shareholder. I just wanted to be fair and avoid preconceived notions. As for Apple being generous corporately for an OverDrive buyout, I won’t count on it – I’m simply hoping it’ll do the right thing and not get in the way. Thanks again for your thoughts, and I’m glad you agree with me about the Buffett possibility, hardly a sure thing but definitely worth a shot. – DR

  4. teetop says:

    I think you are overestimating the influence of Overdrive. “More than 15,000 libraries, schools, and colleges worldwide” sounds like a lot, but it isn’t, really, especially when most of those institutions are already chafing against the vendor’s restrictions. I think once the major library vendors like B&T, Ingram, Ebsco and the rest catch up–and they are all making headway–Overdrive will seem less monolithic. There’s nothing about them that suggests they have an inevitable monopoly. They have footholds in a significant number of markets, but once those contracts are up many will be mandated to go out to bid. Vendors who can sell libraries books or at least lease them on more favorable terms will doubtless make inroads as this process continues.

    • Once again, I’m always grateful for points strengthening my case that OverDrive would be smart to let libraries or a nonprofit buy it. Yes, there are risks in NOT selling out!

      With OverDrive part of America’s public library system, it would enjoy more clout and be able to pick up technical expertise not only from Harvard but also from now-rivals, who could serve in certain cases as contractors!

      Meanwhile OverDrive is into cloud systems even if it could always benefit from the others’ experience.

      > Vendors who can sell libraries books or at least lease them on more favorable terms will doubtless make inroads as this process continues.

      But guess what? They’re middlemen. Don’t libraries need more control of their destinies—and less markup (and I don’t mean the e-file-related kind!)? A reinvented OverDrive, without the middleman markups and with more clout via the publib connections, could be Kong forever.

      > More than 15,000 libraries, schools, and colleges worldwide” sounds like a lot, but it isn’t, really…

      If I recall right–I don’t have the stats in front of me–more than half of U.S. public library systems use OverDrive.

      Just keep in mind that certain activities are better handled by government, with the commonweal in mind. Do we want to privatize the Pentagon? While I want the retailers to fare well–in an earlier reply I’ve told how they could under the plan, through catalog links to e-store options and a more interest in reading–let’s not confuse Amazon with public libraries and the need for a true national digital library system. A hodgepodge of vendors would be no substitute. And OverDrive is the closest to A System.

      Thanks,
      David Rothman
      LibraryCity.org
      davidrothman@librarycity.org
      davidrothman@pobox.com
      703-370-6540

  5. Peter Atkinson says:

    Disastrous idea. Libraries don’t generally run efficient organizations, leaving a library-owned OverDrive very vulnerable to for-profit competition, the publishers who already seem to dislike us, (in part because we don’t do a good job of helping them understand how providing us with content increases their revenues), could easily choose to stop selling to a new library-owned OverDrive and implement a limited loans model, or a new start-up could easily appear in the space. Someone could come up with a new pricing model, publishers could decide to operate a library-ish service to readers…and that’s just with a couple of minutes thought. No, this is just a recipe for disaster. If we could just demonstrate to publishers that libraries are good for them, all of these types of problems would go away.

    • Excellent idea, actually.

      Peter, for-profits aren’t always paragons of efficiency, either, not with their overpaid CEOs and the rest; and keep in mind that I’ve proposed that the current OverDrive crew hang around as advisors at least to help bring librarians up to speed. Remember, too, that the reinvented OverDrive wouldn’t have the same middleman markup and could be better integrated with libraries than could private vendors. Beyond that, if libraries don’t act, they’ll be bypassed. What’s more, if publishers try to set public policy by denying their ware to libraries, they risk the possibility of legislation and legal fights. The reinvented OverDrive would have Harvard Law on its side. Also, who says libraries can’t themselves be in the content creation business to augment commercial offerings, especially if publishers won’t cooperate?

      More importantly, yes, you’re right about libraries doing a lousy job of explaining how they’re GOOD for publishers’ revenue and potential revenue. This is a deficiency that can be corrected. Let’s not let this detail get in the way of an improved business model. If certain publishers are too dense to understand, then rivals will steal their business.

      Thanks,
      David Rothman
      LibraryCity.org
      davidrothman@librarycity.org
      davidrothman@pobox.com
      703-370-6540

    • Peter Atkinson says:

      Well, I can’t agree with the proposed solution but I definitely agree with the analysis of the situation. If we could just effectively tell our story we wouldn’t need to wonder about this. :)

      I believe that if could develop a rock solid brand message, one as clear and pervasive as Apple or any of the other leading corporate brands, publishers would understand that we are a positive to their bottom line and our funding sources would understand that our role in developing a community makes us no less essential than the police or fire services.

      Ideally this would be done by national and/or state/provincial organizations but a solid local brand will work too because of how we operate. Until then, everything else is just rearranging deck chairs on the Titanic.

      Okay, maybe not the Titanic. The Flying Dutchman? The Minnow? The Queen Mary? (Metaphors for absent leadership, survival in a much reduced role and faded former glories as appropriate).

  6. Thanks for your further thoughts, Peter. I’m all in favor of better PR, but that’s no substitute for the additional clout that this proposal would bring to the library world–while also growing the bottom lines of publishers through the trimming of middleman’s fees, expansion of the market, etc. I’d actually like to see the creation of a Librarian / Content Providers complex to lobby for more library appropriations at all levels – a great way to grow publishers’ revenue while also serving the public. Hey, the Pentagon in this respect is an example well worth emulating; contractors and Defense work together so much more smoothly than do librarians and publishers! People need to worry a less about pie slicing and a lot more about growing the size of the pie.

    Cheers,
    David

    • P.S. What applies in the U.S., yes, applies to Canada and many other places as well. Moreover, as part of the library world, a reinvented OverDrive could be more respectful of local content and work better with other national digital library systems. DR

    • Peter Atkinson says:

      Thanks for the thoughtful replies; you’ve almost got me convinced. We have the same end in mind and that’s always a good thing.

  7. Absolutely, Peter!