At a high energy midtown New York gala, the UJA-Federation of New York honored Steve Potash, president and CEO of leading library ebook distributor OverDrive, Inc., and Stuart S. Applebaum, emeritus executive vice president of Corporate Communications at Penguin Random House. UJA’s annual Publishing Division Dinner, held May 24, marked the first time the organization has acknowledged someone entirely dedicated to digital content with its celebration of Potash’s contributions.
OverDrive is working on a project that could ultimately enable the company to convert PDFs and other file formats into the industry-standard EPUB format for ebooks, without significant loss of formatting and functionality, CEO Steve Potash said during his “Crystal Ball” presentation, which concluded the company’s biennial Digipalooza user group conference in Cleveland, OH earlier this month.
After years of expressing concern about the potential impact that library lending might have on consumer sales, major publishers have good cause to take another look at the library market for ebooks, according to executives from library ebook distributors OverDrive, 3M, and Baker & Taylor. With consumer sales growth slowing, bolstering institutional sales will likely become more of a priority for major publishers. OverDrive CEO Steve Potash noted that publishers, like all for-profit companies, are always looking for growth, and “there’s still a lot a growth in institutions, and there [are] significant opportunities for growth in education…. If retail is flattening, you have to experiment.”
Leading library ebook distributor OverDrive was sold to Rakuten on March 19 for $410 million cash, more than 16 times OverDrive’s annual earnings of $25 million. The purchase from private equity firm Insight Venture Partners, OverDrive’s majority owner since 2010, is scheduled to close in April. OverDrive will become a subsidiary of Rakuten USA, the U.S. arm of Japanese e-commerce company Rakuten. CEO Steve Potash will continue to lead OverDrive, and its headquarters will remain in Cleveland, OH.
Public and school libraries that are part of OverDrive’s global network circulated 137 million ebooks, digital audiobooks, and other digital media in 2014—a 33 percent increase compared with 2013, according to statistics released by the company. Ebook circulation rose 32 percent, to 105 million, while digital audiobook circulation grew 38 percent, to 32 million. The OverDrive network also recorded 401 million visits to public library and school library websites powered by OverDrive, a 77 percent increase.
OverDrive is currently processing 350 million API server calls per month, and has supported 1.3 million checkouts via APIs to date in 2014, according to internal data given to LJ. API use has also risen steadily each quarter, with almost 233,000 checkouts during the first three months of the year, more than 529,000 in Q2, an estimated 692,000 in Q3, and a projection of at least 1 million during the final three months of the year.
Shortly after Simon & Schuster’s June 26 announcement that it had concluded a 15-month pilot test and would make its entire ebook catalog available to all U.S. libraries, Macmillan last week announced that it will make all frontlist ebook titles available to U.S. libraries as well. These moves mark a milestone in terms of the availability of popular ebooks, as Macmillan and Simon & Schuster became the final two of the “big five” publishers to allow U.S. libraries to license and loan all titles in their ebook collections.
When ebooks or other digital materials are not readily available in libraries, publishers “are missing a key conduit to a market that [they] can’t tap any other way,” Rebecca T. Miller, editorial director for Library Journal and School Library Journal, stated in her opening remarks for the “The Untapped Retail Channel: Public Libraries” panel on Friday, May 30 at the 2014 BookExpo America (BEA) conference in New York. Leaders from top library ebook and streaming media companies weighed in on this issue during an hour-long discussion.
Smashwords, the world’s largest distributor of self-published ebooks, on May 20 announced a new partnership with OverDrive that will make more than 200,000 ebooks from 80,000 self-published authors and independent presses available to libraries and their patrons via the OverDrive platform. All titles will be sold as perpetual, non-expiring licenses with no loan caps, and will be made available to patrons under a one ebook, one user model.
Streaming video is well established in the consumer market (YouTube has been around since 2005 and Netflix since 2007) but is still gaining momentum in the library market. It’s not yet a huge category—LJ’s Materials Survey included downloadable/streaming movies as a category for the first time in 2013, finding that the responding libraries spent 0.6 percent of their materials budget on downloadable movies, which represented 0.9 percent of their total circulation—but it’s certainly on the rise.