Macmillan dispute with Libraries over eBooks

There is a big dispute going on between Macmillan, one of the Big 5 Publishers, and Libraries

What is the Macmillan ebook dispute with Libraries?

In Nov 2019, Macmillan introduced a peculiar new policy

1. Libraries are now restricted to buying just a single ebook copy of a newly launch book from Macmillan for the first eight weeks after the book is released
2. Macmillan CEO John Sargent says this is because the first eight weeks are crucial to the sales of books, especially booksellers
3. He also cited growing fears that library lending was cannibalizing sales
   1. This gem – Given a choice between a purchase of an ebook for $12.99 or a frictionless lend for free, the American ebook reader is starting to lean heavily towards free

Libraries are, understandably, rather upset

1. They got a petition going and got 160,000 people to sign up
2. They have started boycotting Macmillan books
3. They continue to put pressure on Macmillan to withdraw its strange new policy

Some interesting details come up

1. Publishers charges five times the retail price to libraries. To be fair, libraries do lend out these ebooks repeatedly
   1. Libraries pay $60 for one copy of an ebook. Then they get to lend those out for 2 years
   2. Please Note: An ebook can be lent out only to one reader at a time. So if a library wants to have 10 copies out at once, it has to buy 10 separate copies, each for $60
2. 45% of ebooks published by Macmillan were being borrowed from libraries. That’s a big number and shows that ebooks are quite popular with Library customers
3. Macmillan has no data to back up its claims that ebook lending by libraries cuts into ebook sales
   1. It’s tried out this same policy with its Tor imprint. However, it will not share the data from that trial
   2. It does state that ‘anecdotally’ it believes that 8% of the people waiting for the ebook from the library, will buy it instead, if Macmillan does its 8 week delay
      1. So, Macmillan thinks it’s a good idea to upset 92% of people waiting for the book, for the revenue from the 8% that won’t wait
      2. Very strange
4. This gem from a senior industry analyst, Mr. McGinley – Higher eBook prices have sometimes been a way to apply the brake
   1. So people finally waking up to the reality that Publishers and Bookstores are holding back ebooks by pricing ebooks artificially high
5. Another gem from the same senior industry analyst, Mr. McGinley – Macmillan has a minor ebook market share compared with the other Big Five publishers
6. Currently, 605 out of 7,162 surveyed Libraries are boycotting Macmillan. That’s 8.45%
7. Libraries are very concerned about their readers blaming them for Macmillan’s policy
   1. They are right – readers will not understand the nuances
   2. Readers just want the books they want to read. They will not be willing to dive into the issue and understand the difficulty libraries are facing

You can read up more at

1. NPR Nov 1st article on Macmillan and Libraries Dispute
2. Slate has a well written article on Macmillan forcing libraries to purchase only a single copy of new ebooks during the first eight weeks after book release
3. Publishers Weekly covers Macmillan vs Libraries issue
4. ReadersFirst, run by an association of 200 Libraries, has a very good article about Libraries boycotting Macmillan, and what it all means

What Impact does this have on Libraries?

This hurts libraries in the following ways

1. For the first 8 weeks after an ebook is launched by Macmillan, Libraries do not have that ebook available for its readers, apart from one solitary copy
   1. As that is the period when demand for the ebook is highest, it is almost inevitable that lots of readers will be disappointed
2. As it is hard to explain to readers, especially those checking online, that it is a Macmillan policy decision, the Library will get blamed

There is also the very real threat that

1. This move by Macmillan encourages other large Publishers to do the same
   1. Which would become a real headache for libraries
2. A small percentage of readers, disappointed that the library doesn’t have an ebook they really want, will stop using the library
   1. Even if this is a very small figure like 0.3% or 0.5%, it still has an impact on Libraries

What Benefit does this give Macmillan?

An 8% to 20% increase in revenue from readers who are getting the books from libraries. If they are not able to get the book for 8 weeks, by Macmillan’s estimates, roughly 8% of such readers will buy the ebook instead

1. Macmillan says they expect 8% of readers to not wait the extra 8 weeks and instead to purchase the book. At ReadersFirst, they conclude that it is an 8.5% increase in earnings
   1. However, by our analysis it would be at 8% to 20% increase in revenue from those library readers

In either case, it is a very insignificant benefit. It is just an 8% to 20% increase. It only applies to readers who loan ebooks from libraries

There has to be something else going on behind the curtain. No rational company would upset so many of its partners (libraries) and clients (readers) just so that it can make an extra 8% to 20% from one specific set of readers (those who borrow ebooks from libraries)

Reasons why Macmillan is making a major mistake in its stance over eBooks

Some decisions are good in the short term and bad in the long term

Some decisions are bad in the short term and good in the long term

Macmillan has managed to make a decision that is bad in the short term, bad in the medium term, and bad in the long term

Let’s explore why Macmillan is making a major mistake

1. Being the first to try this gives Macmillan a bad name
   1. Sooner or later the Large Publishers will attempt to cut down the number of ebooks lent out by libraries
   2. Macmillan being the first one to do this, and doing it in such a convoluted manner, makes Macmillan take all the heat
2. Yet another attempt to slow down the inevitable rise of ebooks
   1. The large publishers continue to attack ebooks
   2. They must protect paper books, both paperbacks and hardcovers. To do so, they attack ebooks and this is one example
3. Prioritizes short term money and short term gratification over long term benefits
   1. The economic benefit is exceedingly small – It is just 8% to 20% more revenue from one particular set of readers (those readers who use libraries to borrows Macmillan ebooks)
   2. Macmillan is prioritizing this small short term benefit over the long term costs of Libraries moving away from Macmillan and readers developing a bad opinion of Macmillan
4. Bad even in the short term
   1. The boycott by Libraries, even at this early initial stage (with 8.45% of surveyed libraries boycotting Macmillan), means that even in the short term Macmillan is making less from libraries
5. Very bad in the long term
   1. In the long term, readers are not going to be exposed to Macmillan authors
   2. Library boycotts will continue
   3. Libraries will start thinking of Macmillan as an unwelcome partner, which does not look for win-win solutions
   4. Libraries will prioritize other large publishers’ books over Macmillan books

This is bad move for a lot of different reasons. It’s really poorly thought out and Macmillan really should consider if the small economic benefit is worth it

Part of the War on eBooks

Book stores and Large Publishers have been waging a war on ebooks. This includes

1. Large Publishers pricing ebook versions of newly launched books between $9.99 and $15.99
2. Bookstores hiding cheap and free ebooks
3. Bookstores turning the Bestseller list into a caricature. Instead of the actual bestselling books, the stores are showing high priced ebooks which they are hoping readers will buy
   1. Lower priced ebooks (which sell more and should be dominating the bestseller lists) are ‘disappeared’ from the bestseller lists very quickly
   2. Some of them are not even allowed to hit the bestseller lists

This new move by Macmillan is another, albeit indirect, attack on ebooks

Large Publishers and Large book stores make the majority of their book related income from paper books. If they let the natural market forces do their work, paper books between $10 and $25 will get replaced by ebooks between $0 and $5. To prevent this, they are hiding ebooks between $0 and $5, and instead showing readers ebooks between $10 to $18

The hope is that seeing ebooks at $10 to $18 scares readers away from eBooks, as the corresponding paperbacks are in the same range, or cheaper