Lending is the right model

Book publishers are struggling with eBook lending. The latest to have a problem is Penguin who announced last week they would opt out of library lending programs citing security concerns. (They subsequently softened their exit to something temporary). The Penguin move specifically highlighted the Kindle lending program. Of course, this is just the latest following Harper Collins’ approach to limit lending to 26 times per year. And as many have pointed out, the problem publishers have with eBook lending is the same problem they have with book lending: it undermines their business model of relying on ownership to sell books.

Here is the central fact about book publishing: lending is the natural state. Authors produce a book that is improved by others (including editors etc). Then people read the book and that is where it has primary value. Notice that there is no ‘then people buy the book’ stage in the middle or ‘then people place the book on their shelves forever more’ after these. Those are things people did because (a) they had to buy a physical copy and (b) they got used to keeping the physical copy. But for libraries, none of that was relevant.

The issue book publishers face — and so many have said it I really shouldn’t bother, but I will — is that they are wedded to a strategy whereby they sell owned copies rather than reading. That model did translate over to eBooks and, in many respects, eBooks are actually harder to share as owned copies than physical books. Amazon and others have tried to break those constraints but it is safe to say that sharing is hard. Although, when you have a family account things become simpler. But institutionalised lending of eBooks may be very attractive to readers.

If lending is the appropriate mode for books, then how would the business of publishing look if it is built around lending rather than ownership? So here is my conjecture. All books are read on devices. Imagine that each device has built in a means of tracking what people read and how much. Imagine that it can also do this in a manner that respects privacy. Then the model I have in mind would allow publishers to receive money based on how much of a book people read and to price that at will.

How would this occur? I imagine that there is a vast exchange available — maybe we could call it a library — where all books ever written are available. Publishers nominate reading prices for their books and consumers read books. One model has the consumers may the publishers the fees the publishers quote but that isn’t the only one. I could imagine that the exchange might sell access at a subscription fee that didn’t require consumers to feel the marginal cost of reading another chapter or trying a book. The subscription fees would then comprise revenue and the publishers would then get paid from that according to their nominated fees and information gathered on actual reading from consumers.

Would this change the industry? Absolutely. For starters, it would tie the rewards publishers/authors get to actual reading rather than selling. And there is a difference — especially at this time of year. But one could imagine that pricing for traditional ‘owned’ books could still exist and so a book might be given as a gift. But for the rest, actually getting books read — just like radio forces music to be listened to — would be the main driver of revenues. That is the opportunity that comes from a ‘sharing’ model rather than an ‘ownership’ model. Both can be commercially viable but because ownership is different from use, only one really incentivises use.