This article first appeared in the Febuary/March edition of Government News.

Handheld e-readers have digital content flying off the shelves, but there are big management challenges when it comes to virtualised lending, writes Sue McKerracher, Executive Director of the Australian Library and Information Association.

There’s the kind of change managers deal with all the time. You can see it coming from a distance, it’s evolutionary rather than revolutionary, and you have time to plan your response. Then there’s disruptive change, where you wake up one morning, and the world has switched into a different gear. That’s the kind of change that public library managers are facing right now with e-books.

E-readers had been available for a while before, but 2010 was the year they really took off, because that was when the content kicked in. Suddenly people had a choice of the Amazon Kindle, Sony, Kobo, the Apple iPad and the online book stores to back them up. January 2011 saw a flood of bemused new e-reader owners bringing their prized Christmas gift into public libraries and asking the staff ‘how do I use this?’ and ‘can I download books from the library?’

Overnight, library managers had to gear up their teams to support library users with these devices, and to factor this new dynamic into their future planning. E-books are one of the most exciting developments to hit libraries, but they come with some serious challenges – library users still want to borrow books, but how libraries acquire and manage the collection is completely different. Libraries buy print books from one of a number of library suppliers. Prices are negotiated, the books are delivered, added to the library catalogue, put on the shelf, borrowed, and when they are past their use-by date they are removed from the system and, if they are popular, a replacement copy is purchased. In the e-book world, there are far fewer library suppliers.

Overdrive, based in the US, is by far the dominant player and, until recently, it has been the only viable option for Australian public libraries as an e-lending platform that bolts onto the library’s own website. Other companies, notably Wheelers from New Zealand, and Bolinda, an Australian company, are now coming in, and healthy competition should free up the marketplace – but these suppliers rely on publishers providing them with the product to sell on to libraries, and that’s another problem area. E-books have hit traditional publishing companies hard.

People expect e-books to cost less – after all, you don’t have to print and physically distribute them. In truth, most of the cost of producing a book is further back up in the supply chain in the payments to authors, agents, editors; in the marketing; in the margin that is paid to the retailer, whether that is a physical shop or an online store. Even the big six publishers worldwide – Allen and Unwin, Hachette, Harper Collins, Penguin, Random House and Simon and Schuster – are struggling to develop an economic model and pricing structure that works in the online environment.

Libraries add another layer of complexity for publishers. Libraries are good customers for print books. They buy bestsellers in relatively large quantities; they buy mid-list and back list titles that high street retailers are less interested in, and they are repeat customers, coming back for replacement copies when the originals wear out – but e-books don’t wear out. Every time a library user downloads a copy, it’s as good as new.

Publishers have responded with pricing plans that can be three to four times the retail price of an e-book. One of the more curious terms was that libraries serving large populations were required by one publisher to buy multiple copies of an e-book, even if only one print copy would have sufficed. Libraries use digital rights management (DRM) through their e-lending platform to limit the borrowing period.

So, a library user downloads an e-book from the collection and when the loan period ends, unless they renew, the book disappears from their device. Publishers have responded with different approaches to DRM – some have limited the number of times their e-book can be borrowed (26 loans and it disappears from the library catalogue or it has to be repurchased), others have limited the time a library can hold an item in its collection to one year.

All have applied the one-e-book-one- user principle, so even with e-books, there are still waiting lists for popular titles. DRM highlights another fundamental difference between e-books and print books. Whereas libraries have owned printed books, they only license e-books. Print books are a physical asset, the e-book collection is only available as long as the library pays the subscription for its e-lending platform.

There is a further issue in that contract law overrides copyright law, so by signing a contract for the supply of e-books, library managers can find they are signing away the special rights for library users to copy materials for research and study purposes. E-books have grown exponentially in retail over the last three years. According to Bowker Market Research in the US (the most developed market), e-books in the first half of 2013 accounted for 14 per cent of consumer spending on books and 30 per cent of unit sales.

However, the phenomenal growth in e-books has slowed over the last 12 months and publishers are talking about e-books as another format, like paperback, hardcover, audio, rather than as something that will remove print books from the landscape altogether. Even in the bigger Australian public libraries, e-book loans represent less than five per cent of all books borrowed and there are significant differences between genre.

Adult fiction, for example, lends itself to the current e-book format, whereas children’s picture books are still predominantly print. The Australian Library and Information Association has put out a paper 50:50 by 2020 to promote discussion about the implications for e-books in libraries, including:

•             Shelf space will be freed up, which will allow more space for study, relaxation, events, meetings and creative uses.

•             Collection budgets will need to increase, as library users will want titles in both print and e-book formats.

•             The workload in terms of making books shelf-ready will diminish but new skills will be required for purchasing and contract management of e-book licences.

•             Radio-frequency identification will continue to be a worthwhile investment and the print infrastructure (return chutes, carts, etc) will continue to feature in libraries.

We are only just beginning to tap the potential for e-books and how they can improve the lives of some of the most vulnerable residents in our communities, including the growing senior population.

For example, some libraries have begun to offer e-readers in their home library service. This means that people who are housebound can choose the books they would like to read from the library catalogue. These can be pre-loaded onto the devices, and instead of volunteers arriving with a stack of books, they deliver a small tablet. Readers can control the size of the type and there are read-to-me options. Instead of being limited to the range of large print and audio titles in the collection, this opens up a world of choice for people with poor vision and other print disabilities. Although the situation with publishers and suppliers is complex and needs to be untangled, we are hopeful that in a couple of years’ time the e-lending model will have been resolved, and that all library users across Australia will enjoy the benefits of content in a variety of formats – print, audio and electronic.

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