Macmillan publishes a work of fiction

Steve Potash

Steve Potash

Founder & CEO, OverDrive

@overdrivesteve

Aug 01, 2019

Macmillan, a global publisher of science fiction and fantasy, offers a catalog of many great works of fiction.  John Sargent’s recent letter to Macmillan authors, illustrators, and agents, regarding Macmillan’s changes to their library lending terms for ebooks, and the justification for the same, is another work of fiction.   This work of fiction was used to justify a new policy to embargo newly released titles for library lending for 8 weeks from date of publication.   Rather than creating demand for a new title with ebook marketing and then delighting readers with access to each new Macmillan title on the day of publication, libraries large and small, as well as library consortia, will be permitted to purchase only one (1) copy of each title.   The story of how they arrived at this discriminatory practice that denies access to an author’s new work is a doozy.

Let’s start with the faulty key premise.  In the letter, Macmillan claims that when they test-windowed a selection of Tor ebooks for library lending, it resulted in an increase in retail ebook sales.  This conclusion fails to provide any reference or data of scope and scale.  With the exception of a few Tor best-selling authors, the vast majority of Tor ebooks and their authors have few to zero units of their ebooks available in US public library catalogs.  Without Macmillan sharing information on the starting point for the Tor pilot, any change (increase or decrease) is meaningless.  For example, going from two to four ebook units in retail sales is a 100% increase.  For the Tor ebook catalog, fewer than 100 units of recent titles were sold to libraries nationwide.  Added to the reality of the few available units, the library lending model is self-limiting.  How a few dozen copies of an ebook that only one user can borrow at a time or wait weeks to borrow impacts retail sales is a mystery.  When Mr. Sargent was asked for data to support this conclusion by the Wall Street Journal in its July 25, 2019 article, Mr. Sargent “declined to be more specific.”   The reason is clear, the Tor experiment was unremarkable.

In 2015, a similar test was conducted with unremarkable results.  This test used best-selling titles from several UK publishing houses in a study, jointly commissioned by the Society of Chief Librarians and The Publishers Association, funded via the British Library Trust and Arts Council England.  The results were predictable.  The study concluded that withholding new ebook titles for library users to borrow had no material impact on retail sales.   From the study results: “Commercial impact:   From publishers, there is no evidence that the pilot damaged their e-book sales.”   See:  https://www.publishers.org.uk/EasySiteWeb/GatewayLink.aspx?alId=18916

Macmillan doubled down with this sci-fi and fantasy realm with more fictional data.  Mr. Sargent’s letter claimed that “45% of the ebook reads in the US are now being borrowed for free from libraries.”  No definition of an “ebook read” was offered, nor any details or data sharing on how this conclusion was reached. This claim, offered without any support, is ridiculous.

The data that I am aware of and is available to Macmillan on their ebook use in libraries includes:
1) Their sales of their titles to libraries; 2) The number of units purchased by each library; and 3) limited checkout info for their titles.   For Macmillan to invent a new data metric called “ebook reads” – a metric that Macmillan has based an entire business strategy on, and that paints libraries as villains – requires at the very least a thorough explanation of their new invention.

Macmillan also overlooks a key concept in building its case.  Library users borrow titles and place them on bookshelves, but often these titles are not read.  It should be the hope of every author that their title is selected, borrowed and hopefully read and enjoyed.  Public libraries provide a safe and welcoming place and online service to browse, borrow and read or not read a borrowed book.  That’s one of the most beautiful things about public libraries.  Unless Mr. Sargent and Macmillan have access to information on how public library users, in the privacy of their homes, access, or do not access, an ebook borrowed, the “45% ebook reads” claim is pure fallacy.  I request Macmillan issue a retraction or provide detailed information on how they reached that conclusion – for without it they have no basis for this ridiculous “ebook read” claim.

The WSJ interview with Mr. Sargent reports that retail sales of Macmillan ebooks produce revenue to Macmillan between $9 and $10.50 per ebook title, yet revenue from libraries “generate “as little as $1.15 per read for a title checked out 52 times.”  This is more nonsense.

First, the ebook model Macmillan uses to support this math is one they created: Two years or 52 checkouts, whichever comes first.  Macmillan also developed the library pricing for this model. For Macmillan to paint themselves as victims, in a reality they created, is dystopian.  Not only dystopian, it is victim blaming – as librarians are the victims of this flawed logic.  It blames public libraries and librarians for the work they do to promote reading, books, authors and help sell the publishers’ products.  It blames libraries for the millions of dollars they spend on Macmillan’s product, encouraging the reading of Macmillan books and authors.   And yes, it blames librarians for the success they developed for ebook lending.  Librarians are charged with accountability for every penny spent of taxpayer dollars and public funds.  All of the levers are under Macmillan’s control – yet the one that would be most impactful in the calculus – the amount Macmillan pays authors for their premium library ebook pricing – is one that is not even whispered in the stories.

Second, and worse yet, is the misleading method Macmillan used to argue that libraries produce revenue of $1.15 per title borrowed.  This assumes that most of Macmillan’s 19,000+ ebooks titles in their catalog were checked out at their maximum 52 checkouts, on or before the 2-year time limit expired.  Public library data compiled by OverDrive reveals that their $1.15 figure is misleading and untrue.

For all the Macmillan ebooks that libraries acquired for lending, 79% expired and were removed from library catalogs because the two-year term limit occurred first – not because they were checked out 52 times.  The data of actual lending of Macmillan ebook titles by public libraries supports an underutilization of the inventory.  The average number of times a library loaned a Macmillan ebook during the 2-year term for each title was 11.5 times (far from 52 checkouts).  Using this data, the average cost to the library to lend the title was $6.07 for every time a title is borrowed, 5 times the figure shared in the WSJ story.  Furthermore, this includes users who never opened the title or read it – so the cost for every “ebook read” is still higher.   This 11.5 average checkout includes Macmillan best-sellers such as Fire and Fury and others, which by all accounts is an outlier and overperformer.  For the vast majority (75% of Macmillan catalog of titles during the 2-year term) an ebook was checked out an average of 8.3 times each.

One thing I will predict, Macmillan’s one (1) unit per library limit for new titles released will make one of the reported statements come true.  As reported in the WSJ “Macmillan is betting that many consumers will be frustrated at the long waiting periods that are likely to develop if libraries have only one digital copy.”   Here they will succeed.  Their policy will frustrate their customers, librarians, fans of the authors, and ultimately, frustrate Macmillan authors and agents.

The anti-reader, anti-customer-centric, clearly anti-library sentiment is deafening.  There is zero acknowledgement by Macmillan of the reality that library ebook readers are Macmillan readers and customers.  The high degree of overlap between library users and book buyers is well documented.  Libraries build audiences for authors and books, promote reading and discovery, and are a most trusted source for recommendation on what to read next.  You can learn more about this from The Panorama Project Readers Advisory research and report.  See https://www.panoramaproject.org/

Publishers who have invested in and dedicated resources to understanding how readers and authors win in the library market know how restricting libraries’ access to authors’ work narrows their reach, discovery, audience, and retail sales.  For these publishers who recognize pre-release marketing and day of publication access to their new titles we are grateful. To Macmillan: End this planned new title embargo.  Abandon your plan to “frustrate” your customers and reconsider the disrespect this policy exhibits to the thousands of librarians and volunteer public servants that promote your products, advance literacy, and create the opportunities for your authors to be discovered and enjoyed.

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29 thoughts on this post:

  1. Very well said, Steve. There is only I’d underscore in addition. You made the point, but I’d really like to drive it home. Macmillan keeps trying to make the point that library eBooks being “free” as though they hand these out free to the libraries and they make $0.00 on each eBook in a library collection.

    I look at our invoices and I feel like our library is paying A LOT of money for something being characterized as “free.” The status quo is providing considerable revenue for Macmillan. However, they tend to discount that revenue and resource and treat it as though it is irrelevant.

    Libraries pay for the books, eBooks, and other online content that we provide and to discount it as “free” is yet another mischaracterization.

    Thanks for the analysis, the support, and keep the faith!

    1. And they don’t take into consideration the unlimited (and untracked) borrowing an average reader does with a hard copy. I personally e-read (preferably through a library for many reasons, mostly because I would hate to see them fail or be privatized, like Macmillan seems to want to create), but I purchase the first book in a series as a hard copy and loan them out to friends, family and colleagues to intrigue them. They then go out and purchase or borrow the rest of a series. That data isn’t being tracked, and it’s a cornerstone of how book marketing is driven by word of mouth. Well, except for those like me who track publishing schedules, heh.

      I understand the want to relicense, and I do believe this avenue may be a good compromise, much like Saas software now (Adobe products and the like). But publishers need to remember those like myself never have to repurchase a hard copy to loan it out indefinitely. And we are doing good work in fanning the flames of book sales all by ourselves, with the help of social media and water cooler chat.

      I really worry that one day publisher strategy will lead to more Library closure and the privatization of libraries. Mega publishers like Amazon aren’t helping. I mostly worry for the children that only find their role models through their libraries’ lending programs, and having them devastated. Because really we are harming them more than anyone in this battle of licensing rights.

  2. Dear Mr. Potash,
    Thank you on behalf of my library for your well-supported and thoughtful response to Macmillan’s recent announcement on library e-books. Mr. Sargent of Macmillan has, as you point out, rightfully ignored one of the prime reasons why his company survives: the support of libraries helping readers discover Macmillan authors. I hope for unified action on the part of libraries to bring Macmillan’s false claims to the attention of the public, using your examples as one of the many reasons why Sargent’s decision is bad for libraries, bad for readers, and bad ultimately for writers.

  3. Thank you for this deep dive into the shady claims behind Macmillan’s attempt to throw the reading ecosystem into disarray.

    Any chance of building some kind of “Contact the Publisher” element into Libby? If there are more ways for readers to voice their concerns in the moment, the louder our collective voice can become.

  4. The notion that reading should be like a rollercoaster ride is ludicrous. No living soul will pay for every single copyrighted, published work they read, or for every time they read a thing, and libraries should not have to pay according to such a model either. As you say many borrowed books are never read at all. Some are terrible, and some are lent automatically when available after having been placed on hold by the patron. This scarcity may result in unintended ‘squatting’ when the patron lets the loan expire because their best intentions of reading the thing was never achieved.

    I’m pretty interested in the count of Macmillan e-books that were checked out zero times in 24 months. It should be acknowledged that libraries–custodians of other people’s money for the purpose of shared resources selection and purchase–enter into some of the same risk as publishers. Delaying new title availability is a definite ‘value-subtract’, for libraries as well as for readers.

  5. Thank you Steve, for standing up for libraries nationwide and worldwide. We as librarians seek to provide the best services for our customers that we can. If there’s one thing I have learned about libraries, it is that “we will prevail.” We need more advocates like you in our court.

  6. Clearly Mr. Potash is picking a fight here, without regard to all facts, which he claims is what Macmillan did in its letter. He is trying to designate victims and villains in this article, which comes across as a stilted and epic FAIL.

    Libraries were among the last to jump on the e-book bandwagon, and did so mostly reluctantly and only due to patron pressure. At least with paper books, a patron has to stop by the library. With e-books, patrons can order books from their homes.

    Writers’ incomes have dropped significantly since libraries made e-books available (in addition to piracy which is also hurting incomes). Mr. Potash leaves out an Author’s interest in being paid fairly for their work. Unlike the U.K., where writers are paid a yearly amount based on library borrows, writers make nothing in the U.S. for borrows – except for the hope of having readers, who will borrow more books in the libraries benefiting library traffic, again with the writer paid nothing.

    The price libraries pay for books is basically subsidized by writers and publishers. If a patron (myself among them) has to wait a bit longer for the newest hot book to be available, so be it. They may choose instead to buy it. Libraries getting up in arms about how publishers make their product available to them, which in turn legitimizes funding of libraries through taxes based on traffic, is self-serving. No one ever promised a public library would make a NYTimes bestseller available the day it was released.

    And lest you think differently, libraries treat books very much like product. In fact, “book sales,” where they often sell new books for .25-.50 cents, increase libraries’ bottom lines. How do these “book sales” favor the author or publisher? No royalties are paid.

    I would very much prefer a library ask for donations or participation in special events to bring in money, than to ultimately screw the author (and the publisher) as an end result. How are these annual “books sales” a public service? Especially when many of those books are given to the library at NO charge.

    The entire system is flawed.

    Christine Witthohn
    U.S. & Foreign Literary Agent

    1. Regarding the spiteful and appallingly dishonest claims from the literary agent in this thread:

      1. The claim that libraries were reluctant to carry ebooks is patently foolish. Libraries were initially priced out of the ebook market, and two big publishers (including Macmillan) refused to sell to libraries for years despite coordinated pressure. This past month marks the fourth time, by my count, that publishers have changed licensing agreements to make ebooks more expensive and restricted (despite already charging libraries 2-4x retail price, and forcing rebuys within half the time that a print book would be replaced) just as libraries have started approaching parity with user demand. Claiming that libraries “were the last to jump on the wagon” is not only patently untrue, but an absolutely flabbergasting claim to make.

      2. There are multiple studies with quantifiable data pointing to the conclusion that library users buy books more often than non-library users. Repeating the “turning purchasers into borrowers” folderol with a more strident tone does not make it any less of a falsehood.

      3. The “nobody promised libraries they could get a book on release date” claim is pretty weird, considering that we’ve worked with publishers for decades on adhering to strict advertising and street date policies on bestsellers we receive weeks in advance, and are demonstrably better at following those policies than bookstores are. But the fact remains that we were promised that, in fact, through the doctrine of first sale. eBook licensing is an entirely separate issue.

      4. All of that garbage about book sales is, frankly, silly. Library book sales don’t sell new books, and if they do, they are donated copies that have been paid for. The rest are in fact the donations you so haughtily demand we ask for (we do! and our patrons respond!), and books that would otherwise be recycled or disposed of through the weeding process. In a retail environment, those get stripped and sent back to the publisher, and… surprise!… the author doesn’t get paid for them, because they were never technically purchased. In the library’s case, all of them were purchased by someone at some point (just like everything in a library’s collection), leading to a royalty percentage. So… yeah, you’re entirely incorrect. They then get fed directly back into library budgets, leading to more book purchases, and more royalty payments. If you still insist that is somehow nefarious, let me once again point you to the first sale doctrine.

      You need to understand that libraries are customers. We pay for books, using public funds that our communities have paid. This “free” nonsense is gaslighting, pure and simple.

      1. Can anyone explain to me how they came up with the per-checkout numbers? For an example, I’m looking at Douglas Preston’s new book “Old Bones” which come out August 20, 2019 from Tor/Forge by Macmillan. My library system has purchased 4 hardcover editions at about $16.00 per copy (a discount from $28.00 for purchasing through our library bookseller). If we were to purchase one ebook copy with a single-user 2 year limit, from our library bookseller, it is $65.00 per copy. This particular author regularly circulates a single copy 7 times in 2 years in our system. That makes his hardcover copy have a cost of $2.29 per checkout. Even if his new book circulates at the 52 checkout limit, the cost to the library is still $1.25 per checkout. If our ebook copy circulates at the same rate as our hardcover copy, then the cost skyrockets to $9.29 per checkout.

        Can you honestly tell me that the library hasn’t paid well for its use of such an item? And now we’re going to have to wait extra time to offer our “new” ebooks to our patrons? How many patrons only borrow books that they’ve heard about recently? Or only read books that feature in this week’s NYT Bestseller’s list? How many fewer checkouts will we get with a 2-month old book?
        -Melissa, public librarian

    2. Just a point of clarification, the number of books donated to libraries that actually make it into the collections is a very small fraction of what a library’s collection is made up of. The overwhelming majority of a library’s collection is purchased at market price or more (in the case of more robust library binding), from which authors receive royalties and and the sales count toward any advance they might have received from the publisher if it hasn’t already been met.

      As for book sales, these books are sold at such low prices because libraries have limited shelf space and must constantly replenish and curate their collection. Prices of 25 to 50 cents don’t really offset the cost of the staff, so the impact on a library’s bottom line is minimal, in those cases where they don’t actually cost libraries money. And they have even less of an impact on authors’ collected royalties as used book stores do, or (especially) used booksellers on Amazon.

      As for the hope of having readers, it’s a little insincere to suggest that people who read books at libraries ONLY read books that they get through libraries. The bottom line is that people like owning things, and library patrons buy books from authors that they discover at libraries all the time. For the patrons who can’t afford that, we’re here to help support them in reading, *as well as* in finding jobs and professional training, getting secure in housing and food, and so many more social programs. This in turn gives them more access to money, which in turn leads to… you guessed it, buying books.

      Libraries are some of authors’ biggest advocates, and publishers know this otherwise they wouldn’t pay gobs of money to have a presence at the American Library Association’s annual meetings every year and literally hand out thousands of advance reader copies for free at them. Literary agents can work this angle too, and I hope you’re doing your clients the service of doing so.

      -Peter

    3. I love my local library. In a county that has nearly 20 percent adult illiteracy, the library is the public agency doing the most to solve that serious problem. It’s our most commodious cooling station on 100-degree days, our ONLY free daytime cold weather shelter on the 0 degree days. All are welcome, and the library is one of few, pleasant, free, centrally located meeting places. And books! Long live the library…
      That said, Mr. Potash attacks Macmillan’s data, and I too would like to see the sample size, genre parameters, sales figures, A/B comparisons, and so forth. But to imply that Macmillan published a result contrary to fact makes no sense. If libraries really do boost sales, provide advertising services, and find authors new readers… Macmillan is cutting off its nose to spite its face.
      In fact, Mr. Potash presents no data to refute the contention that libraries cannibalize sales and erode revenue. This is not a new concern. It’s been looming since 2012 when libraries got into the ebook lending biz. If Macmillan’s numbers stink, let’s do some proper research, and come up with some defensible findings. In this age of data-data-data and ten-minute surveys from every retailer to complete a sale, we can do better than finger-pointing and yeah-butting.
      Good decisions are made based on good information, and as a community of people who make our living around books, we apparently don’t have that information.
      As an author, I am HAPPY to accept some reduction in sales and revenue to keep the library doors open, even if libraries find me no new readers and never advertise my titles. But libraries need to understand that many pieces of my revenue pie have already been spent simply to get my book to the starting line, and that’s before we discuss pirates, scammers, bootleggers, the commercial subscription model, counterfeiters, and other threats to my livelihood.
      Let’s get some good data, and see what it tells us. Then we can define the problem, and start talking about how to solve it on mutually agreeable terms.

      1. I can say that the number of books I’ve bought after reading them from the library approaches single digits. But that’s because what I read from the library is mostly stuff that’s either for research purposes or would not be read more than once anyway. I’m not usually interested in buying a new book for a single read (used – sometimes a different story if the price is low enough).

        As for e-books with limits on the number of reads or the time available – that’s not sales it’s rental; counting it as a sale is fiction. I’d be interested (vaguely) in knowing how much authors get paid for e-book “sales” vs. paper. Then, with e-books often costing more than paper the rental gimmick is even more an abuse of the customer, library or otherwise. The only way I’d see a rental making sense for a library is for surplus books needed when a new one comes out, to meet demand for people checking it out to decide whether to buy it.

    4. From what I understand of copyright law, at least in the U.S., a purchaser of a physical book can dispose of it in any manner they choose. You, yourself suggested that folks could donate books to the library. Some books are sold at garage sales, others to used bookstores who, in turn resell them. I frequently donate books to our high-school library.

      A library, as the owner of a physical book (donated or purchased from the publisher) has the same rights any other owner would. That would include selling them at a steep discount. This typically happens after the supply of a title outstrips the demand. This frees up shelf-space for new titles, which will be purchased from the publisher.

  7. As always, Steve has challenged the lazy logic and distorted data of Macmillan with knowledge and perspective that comes from being a library user and public libraries’ truest friend.

  8. Most know that MacMillan is full of it, but it is their ship to set alight and send burning to the bottom of the bay. Which they seem to be doing with great glee. I broke down some of the math of Sargent’s claims the other day on my own site, and yeah, nothing about them makes sense. Declining author payouts are because of internal issues, not external. Sands, they’ve got a $15 ebook sitting in the top 100 on Amazon.

    On the plus side, MacMillan taking this stance means that there’s about to be a gap in the market which Indie authors and pubs will quickly and willingly fill, and with far better terms all around. $60 for a single copy? Start contacting some Five-star indie authors, Overdrive! We’ll fill the gap to bursting, and for far less!

  9. Thank you on behalf of our library, our patrons and our budgets. Please continue to speak reality and truth to publishers who consider libraries their enemies, and not as valuable partners in promoting their authors and titles to readers, and who forget that libraries are a large slice of the book market themselves.

  10. Our libraries serve people no matter their income level. The idea that people will go buy a copy of an e-book because they have too wait too long on their library’s hold list is crazy! People wait months for the print copies and are used to waiting for their holds. As a collection development librarian, I will probably not purchase Macmillan titles until after the 8-week period to avoid a long wait list of users that we could potentially not fulfill. Libraries have helped promote Macmillan authors and provide materials to all patrons. Many libraries will be unable to supplement their e-book copies with print copies so Macmillan has really just hurt themselves in this decision.

  11. Is it even legal for a business to limit the # of items sold to a certain class of trade (libraries) vs other classes (retail)?

  12. In my opinion, there are two additional items that need to be thought through. I do not have the data, except for me as a single point of reference.

    1. I read (actually most often listen) to two to four books per week through the library system. There is no way I would purchase that many books – full stop. If I did, it would sum to about $4,000 per year. (Audio books are generally more expensive than ebooks.) So Macmillan is not losing money by me. It is actually gaining, as I often recommend books to the library system.
    2. I often recommend books to friends that I have read through the library system. Most of whom purchase hard cover or ebooks, despite me telling them how great the library system is.

    Again, I am only one data point, but I suspect I am not unique.

  13. Years ago, when HarperCollins introduced a license which limited their eBooks to 26 uses, the overall consensus among professional librarians was that we should try to work out something with the publishers. When the big publishers finally came on board and started selling to libraries, this approach seemed to be vindicated. But it still left libraries at the mercy of the free market.

    Even if Macmillan backs off this time and other publishers decline to follow their lead, publishers still have the power to set licensing terms for eBooks and eAudio as they wish. This will happen again and again — it is not going to go away.

    In my opinion, librarians need to move rapidly to lobby Congress for some sort of “Right to Lend Act.” It may take a long time and may not succeed, but this is the only hope I can see to free us from the whims of the marketplace. Perhaps more importantly, the process of working toward a law to protect our right to lend will help bring the fundamental public library mission of free access before the public — it could even turn out to be a net positive for libraries in the long run.

    1. Good idea, Tim.

      When HarperCollins became the first to meter its library ebooks for 26 checkouts, I clutched my pearls along with everyone else. But now, as the person who buys the ebooks for my mid-size library, I think HarperCollins has the fairest of the metered models. Their prices are much more reasonable than the other big 5 publishers — $25-$30 for a hot new release, and usually much lower — $5.99 or so — for backlist titles and the romances that circulate like hotcakes. So I might have to re-license a popular item fairly quickly, but at about $1.15 per checkout at the top price, that’s reasonable, and the 23 cents or so per checkout at the low end is great. And if it’s not a fast mover, it stays available in my catalog for years, costing no extra money. Contrast that with the ones that expire after 1 or 2 years, or worst of all, the ones that expire after 2 years OR 52 checkouts. I’ll take the HarperCollins model any day.

  14. What are some actions I can take on an individual level to express distaste for these practices? I love my library and the electronic resources they offer.
    Write angry letters?
    Boycott?
    Any thoughts?
    Thanks for this article and all of the responses. Very insightful.

  15. I was not aware that library e-books are limited to 2 years or 52 checkouts. That’s ridiculous. So a library isn’t buying e-books from McMillan (or other publishers with similar policies), it’s renting them. That’s a waste of taxpayer funds in my opinion. Especially since (as with Amazon and B&N in many cases) it’s likely that the e-books actually cost MORE than the paper ones.

    I would totally understand it if libraries stopped offering e-books from publishers with these policies, and concentrated on paper books. Seems backward, but once bought the paper book stays bought as long as the library wants to keep it.

  16. I read the copy of his letter to the ALA and librarians. About the ebooks, he says that “to the reader, they are free” as if this were a bug in the system! Of course they are free to me, the reader – this is a FEATURE of the public library system in this country. It is a feature that makes this country great. This ridiculous plan by MacMillan is anti library, anti reader, anti education, anti literacy, anti democratic, and anti-American.