It's Not About Libraries, It's About Amazon

When Douglas County (Colorado) Libraries decided to put "Buy this book" buttons on their online catalog pages (example), the response was strong. In just 11 days, the buy buttons had garnered almost 700 clickthroughs. According to Library Director Jamie LaRue, the library is putting buy links direct to publisher-supplied urls when they are provided (often to Barnes and Noble).  Of the 700 clickthroughs, 389 went to Amazon and 262 to Tattered Cover, the independent bookstore with 3 locations in the Denver area. In isolation, this data seems to be strong support for the notion that a digital presence in libraries can support sales of books. The withdrawal this week by Penguin from library ebook lending platforms (such as Overdrive) would seem to be a profoundly shortsighted move.

Viewed from a big six publisher's point of view, the situation looks different. If Douglas County's book buying rates match the rest of the country, its residents would purchase 2.1 million books per year, almost 6,000 books per day. The 7.1 million items circulated by Douglas County Libraries in 2008 would present as an attractive market opportunity.

It's hard to know what the bookselling environment will look like 10 years from now, after a transition to digital reading platforms. While some publishers hold out hope that they could play a much larger role in servicing the demand that libraries meet in today's market, it's not libraries that worry them today, it's Amazon. Today's big six publisher sees the Douglas County clickthrough numbers and worries that those 389 library patrons are being captured by Amazon. Amazon is pushing $79 Kindles to those patrons and then effectively owns their book consumption.

The casual observer might not imagine how much of a threat Amazon presents to a big six publisher. After all, Amazon is sending them huge amounts of money. But think about how this might play out. If Amazon, with its proprietary e-reading ecosystem, grows to dominate book sales the way it currently dominates ebook sales, then it will be easy for Amazon to squeeze out the big publishers. Amazon can acquire exclusive content by dealing directly with authors, and is already doing so. They will be able to demand that publishers reduce their margins so that they really are marginal. Publishers would have no choice but to surrender and perhaps die.

The Penguin move should be seen not as corporate verdict on libraries, but as a reaction to Amazon's entry into the library market. When Overdrive was distributing content to libraries on their own platform, the publishers were able to view Overdrive, and libraries in general, as a counterweight to Amazon. But the extension of Overdrive lending to the Kindle flipped libraries into the Amazon column. That's the best way to understand the Penguin decision, though you won't see them saying that.

The recently announced Kindle Owner's Lending Library demonstrates that Amazon, blessed with its trove of marketing data, understands the power of libraries to promote sales. But it also demonstrates that Amazon is not content to leave libraries to libraries. Amazon wants in on the lending action, too.

Bookstore closings and bankruptcies are just the first set of casualties in the war for dominance in the ebook industry, which has only just begun. Institutions with footprints as large as libraries won't be able to avoid cross-fire, or even direct attack. Neutrality won't be an option. The advance of technology doesn't respect the innocence of bystanders.

What's clear to me, at least, is that libraries could do worse than to follow the lead of Douglas County, stepping into the marketplace for ebooks without fear, with eyes open and with server logs studied.

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