States Seek to Limit What Publishers Can Charge Libraries for eBooks

Are libraries being overcharged for e-books and audiobooks? Many libraries seem to think so, and legislatures in many states are considering legislation to bring these costs under control. The publishers, not surprisingly, are opposed.

Printed books have had something of a resurgence recently, many people preferring to read from physical books to reading from electronic devices. Nonetheless, e-books have experienced substantial growth in library usage in recent years. A trip to the library can be a major inconvenience compared to just dialing up online. Libraries have had to shift much of their budgets to electronic books to meet patron demand.

The problem is that publishers charge for e-books in a very different way, and this is not at all favorable to library budgets. With printed books, libraries buy them like everybody else. They pay the same price, and once they do, they own the books forever. If a book is very popular, the library may choose to buy multiple copies so that patrons don't have to face long waits, but they still get to buy at the market price and hold on to the books forever with no further charges.

With e-books, the libraries don't get to own them. They, in effect, lease them. The time period is likely to be a year or two, after which they can no longer lend the e-books without leasing them over again. Alternatively, or additionally, they may be limited in the number of times they can lend the book without paying over again. For example, they may not be able to loan it more than 26 times, after which, they have to lease it again. In some cases, they may have to lease the book for a maximum of one year or 26 loans, whichever comes first, after which they must lease the book again. As a book ages and demand slackens, it may no longer be worthwhile to keep leasing the book, whereas a physical book can be put off in the stacks somewhere so that it can be borrowed years later, even if the annual demand is only once or twice a year.

Then there is the issue of price. Publishers do not lease e-books for the same price they sell them to individual consumers. They charge substantially more, even though they don't get to keep them like an individual buyer. The result is that libraries must pay more, often far more, to provide their patrons with the books they want to read. Meanwhile, the reality is that many libraries are finding their funding decreasing. They need help.

A couple of years ago, the state of Maryland stepped in to assist. They passed a law that would have required publishers to sell e-books to libraries on “reasonable terms” if they sold them to others. The Association of American Publishers sued and won in court. The contention was that the state was interfering with copyright law by forcing publishers to sell their copyrighted works on terms set by the state. The court ruled the law unconstitutional as copyright law is the exclusive province of the federal government under the Constitution. New York's legislature passed a similar law, but the state's Governor vetoed it on Constitutional grounds.

One aspect of the publishers' terms the libraries have not challenged is the limitation that an eBook has to be electronically “returned” before it can be loaned again. If they have loaned the book to one patron, they cannot loan it to another until the first patron has returned it. This is in keeping with the practical reality of how physical books can be loaned.

Now, several states have taken up new legislation to protect their libraries from high costs. Among them are Massachusetts, Connecticut, Rhode Island, Vermont, New Hampshire, New York, Illinois, Iowa, Tennessee, and Hawaii. This time, the states are taking a different tack. Rather than telling the publishers what they have to do, they are telling their libraries what they can't do. Generally, the rules apply to libraries that are subsidized by the government, as most libraries are, so it is not an infringement on the rights of private enterprise. These laws would forbid libraries from buying eBooks not in compliance with their terms, which may include limiting how much they can pay or how often they can lend them. The idea is to avoid unconstitutional interference with the publishers' copyrights by making no demands upon them, while setting limits as to what they can require if they wish to sell eBooks and audiobooks to most libraries in their state.