Chapter 4. Supplying and Collecting Books: An Uneasy Metamorphosis

Michael Zeoli

Author’s Note

This article was first published in eContent Quarterly (September 2013). The central discussion still stands although some of the numbers have changed. As of June 2015, YBP digital book sales have exceeded 25 percent of total sales—up from 15 percent two years ago. The rate of growth has slowed and changed character. More book content than ever is being distributed to academic libraries, but the size of the revenue pie has shrunk significantly. Over the past four years, YBP has distributed $1,000,000,000 in “free books”—a term some publishers have begun to use to describe demand-driven acquisitions (DDA) records owing to very low “trigger” or purchase rates. DDA “records” provide access to the entire text and are not simple MARC records as the name might suggest.

Jane Schmidt, manager of the Collection Services Team at Ryerson University, has written an excellent article defining the value of DDA in conjunction with (and in the face of) other means of making monograph content available. She notes, “If DDA is a disruptive technology for the collections librarian, it has the potential to be fundamentally altering for publishers.”1

As I wrote in the original paper, “More content is accessible to patrons, less is being purchased, and publisher and vendor margins are much thinner on eContent owing both to the costs of new digital infrastructure and more partnerships among which to share the diminishing margins. This poses critical challenges for publishers and book vendors.”

On average, publishers have seen declines in excess of 20 percent in unit sales and 10 percent in revenue since four years ago. Print sales have diminished by over 25 percent, while digital has increased by more than 100 percent. Though print losses far outweigh digital gains, the equation might be seen as sustainable if the pattern were moving ultimately toward replacement of print revenue with digital and if library budgets were believed to be stable. The transformation of content distribution, combined with trends in institutional change, strongly suggest that neither of these are likely. Over the past year, most publishers have seen slowing growth rates in most digital sales categories and, for the first time, declines in some types of digital sales. This has raised serious concerns among publishers and vendors regarding the sustainability of current models for DDA, and particularly for STL. Looking at the four-year growth of digital sales in isolation does not accurately render the developing trends.

Mergers and acquisitions have continued at an aggressive pace, shifting relationships and opportunities for partnership. Two notions have changed substantially from the original paper: (1) hope in partnership, and (2) the shape of “the library” going forward. Anxiety, acrimony, and partisanship have filled the space for dispassionate discussion and so for the best opportunities for partnership. Focus on short-term and parochial issues has obscured long-term perspective. And secondly, the mission and shape of libraries is undergoing an “uneasy metamorphosis” that places its relationships with publishers and vendors on shifting sands. Carl Straumsheim published an article in Inside Higher Ed last December that captured some of the unfolding drama. He quotes Patricia Tully, formerly the dean of libraries at Wesleyan University:

It becomes more of a necessity [for a library] to have people who are experts and who pay attention to how that environment is changing. . . . There will be some institutions that decide that they don’t need libraries . . . [or] librarians. . . . The IT department . . . is going to take those [functions, but] they’re going to be hiring people who have library expertise [and] backgrounds . . . to do those things. . . . It’s a matter of breaking free of the library being some irrelevant, old-fashioned thing that used to be important but isn’t anymore.2

Tempora mutantur, nos et mutamur in illis.

This is not a gripping tale of love and loss, or of courage, betrayal, and triumph. Nor is it a moral tale where events unfold according to a cosmic plan. We are companions of the road sharing trials and tales of the first miles. Too often over the past several years, I have woken feeling like Kafka’s Gregor Samsa, out of sorts with the world and with myself. People and places are familiar, but our relationships have become unfamiliar and can never return back again. Our world—the world of books, academic publishers, and academic libraries—has undergone a metamorphosis. This article is an attempt to come to grips with the state of this metamorphosis.

YBP Library Services occupies a privileged place in the distribution of scholarly books to academic libraries.3 We estimate that YBP is responsible for 85 percent of sales of English-language scholarly books to academic libraries in the United States and Canada, and has very significant sales in many other parts of the world as well, including Australia, New Zealand, Hong Kong, and the Middle East. This perch affords us a unique view of the book supply chain and the sweeping changes from print to e-book collecting in academic libraries. YBP observes and measures the effects of the transition from print to digital formats on publishers, e-book aggregators, and a number of other service providers, including the ILS vendors. We regularly share and discuss the data we collect with partners to help shape evolving business models and strategies in publishing, library, and consortia collection development, and other areas of the supply chain. This article is intended as part of our continuing effort to share information, observations, and perspectives.

E-books represent a tsunami in the broad academic library ecosystem. Significant new organizations, platforms, and mergers and acquisitions (many under duress) have appeared in the academic library e-book landscape in little more than a decade. Figure 4.1 shows a brief timeline that may be helpful to get a sense of the acceleration of the wave sweeping our world.

Many other significant developments could be included, such as the appearance of numerous publisher platforms and the emergence of e-book platform providers like iFactory (recently acquired by SAFARI), MetaPress, and Atypon, but the Sisyphean task would lead us away from our discussion, and in truth, even our brief list is likely to be overtaken by new highlights before this article goes to press!

Academic publishing and the academic library market have seen a unique set of events unfold over the past decade and there is a widening disequilibrium infecting our shared ecosystem. Each segment of our ecosystem is affected differently, but one is as clearly connected to the next as day is to night. E-book sales have risen to more than 15 percent of overall YBP book sales and are increasing monthly. Print sales have fallen by the same percentage. It is important to bear in mind that print still represents 85 percent of YBP business and that this holds true for most publishers as well.

In terms of business revenue, the decline in print sales far outweighs sales in digital format. While generally libraries are purchasing less book content these days thanks to leaps forward in technology and economic necessity-as-the-mother-of-cooperation, libraries are making more books available to patrons than ever before through Demand-Driven Acquisitions (DDA), Short-Term Loans (STL), large package deals, and consortial purchasing. In sum, more content is accessible to patrons, less is being purchased, and publisher and vendor margins are much thinner on e-content owing both to the costs of new digital infrastructure and more partnerships among which to share the diminishing margins. This poses critical challenges for publishers and book vendors. Innovation and investment in new technology, while necessarily continuing to support the old, presents challenges that are frequently unsustainable, as some of the mergers and acquisitions we’ve seen should amply demonstrate.

How are relationships between publishers, vendors/aggregators, and academic libraries shifting? To address the issues and overcome the challenges we are confronting, albeit from different positions, we first need to identify them. I’d like to discuss these in three broad categories: isolationism, content availability, and partnership.

These relationships have been important. Decisions we make in response to our challenges affect our partners. To what degree do these decisions reverberate in the ecosystem and how may they influence our future? While we don’t purport to have all the answers (in fact, we admit to having few), we can point to signs posted along the way in these first few flood years.

Isolationism

At the annual Acquisitions Institute at Timberline Lodge this year, one session began with a librarian admitting how surprised she was at the difficulty of winning publisher agreement to participate in a consortial Demand-Drive Acquisitions pilot. Her observation was important and worth sharing as it serves as a good example of the challenge we face. The difficulty in winning publisher participation in consortial DDA projects is common knowledge to vendors and e-book aggregators, and yet we encounter the demand for publisher lists, along with anticipated title counts and pricing, in virtually every consortial RFP or RFI, as though this were an established off-the-shelf product which simply required negotiation on price and service. With much more engagement across segments of the supply chain, what is common knowledge in one part would be better known in other parts; removing some of the surprises would lead to more realistic expectations and better outcomes.

We are all guilty of viewing the circumstances of our sectors in isolation, as though they existed separately from the others, so not always appreciating the fact that we share in the same travails and importantly, in potential rewards. To the extent that downward economic pressure affects libraries, that pressure reverberates all the way back through the supply chain. We each possess unique expertise designed ultimately to enhance the delivery of content. None of us have the luxury of operating in an economic bubble. The same materials and labor costs of maintaining and developing the businesses in one sector apply in other sectors. With few exceptions, none of us are earning “millions upon millions” in this industry. We need to show greater curiosity toward each other and create more opportunity to communicate often and fully with fellow travelers in related sectors of our information supply chain.

In some libraries and consortia, it is standing policy to negotiate directly with publishers for e-content packages (now expanding to include Evidence-Based collecting, an attempt to compete with aggregator Demand-Driven Acquisitions). Price is often the primary criterion. The problems—and additional costs—appear when the content must be managed by the libraries, often leading to requests to the vendor and/or aggregator, who have been bypassed in the business negotiation, to provide part of the solution to the problem (we will discuss these services below in Content Availability).

While the tendency for libraries to go direct to publishers is still strong, it seems to be declining as vendors and e-book aggregators develop the capacity to integrate and manage print and e-content. These services have provided significant value to libraries in the print world and a change in format should not necessarily nullify that value. Still, old habits die hard and opportunities can be persuasive, and publishers also have a justifiable interest in making sales directly whenever possible.

Publishers, in launching proprietary platforms, usually try to market directly to academic libraries initially. After experimenting to find the limits of doing business directly, partnerships are typically established. Publishers make significant and ongoing investments in their digital platforms and have great pressure to recoup their investment. Like libraries, vendors, and aggregators, publishers fall along a spectrum of openness to partnerships. Their perspectives vary as to the best way to protect their investments and to serve their markets. Investment in content delivery platforms leads publishers away from their area of expertise, which is the curation of content for distribution. Publishers cannot provide many of the services that pertain to vendors and other service providers, yet there is often an expectation that at least some of these services will be provided when a deal is struck directly with a library. Some examples include duplication control (especially against print, but increasingly with other digital sources as well), DDA and STL support, MARC records, and other value-added services.

Often, larger publishers lack a comprehensive view of their own content universe, owing to corporate structure and technology, and depend on the vendor to provide complete print and e-book title lists as well as purchase data for a library or consortium. The high costs of developing infrastructure and expertise make many of the services offered by vendors and aggregators prohibitive for a publisher to build. Publishers also need to maintain their print infrastructure despite all their investment in digital. Virtually every large publisher in the academic landscape, with possibly a single exception, has moved increasingly to a strategy of partnership and collaboration.

E-book aggregators have greater platform costs than the publishers and many of the service costs of traditional book vendors, which create incentives to work directly with libraries whenever possible. E-book aggregators are expected to provide enhanced tools to integrate and use e-content. They compete aggressively with each other—like the print vendors in decades past—as well as with publishers who tout DRM-free access to their content.4 Competition in the e-book aggregator environment is intense as evidenced by the several major acquisitions in the past few years. E-book aggregators currently lack a comprehensive view of and ability to manage a publisher’s entire content universe and are also blind in regard to a library’s print purchasing. These are the primary reasons for partnership with book vendors in meeting library need for comprehensive content coverage and duplication control. Some efforts underway today are aimed at closing that lacunae and may suggest future mergers and acquisitions as well as services.

Partnership is requisite to aggregators and vendors as middlemen. Still, even here there is temptation for organizations to attempt to manage entirely on their own—to their own detriment and disservice to their potential users downstream.

Every organization is afflicted to a greater or lesser degree by tendencies to go it alone, but by overcoming bad inclinations inflamed by bad economics, tradition, ignorance, and fear we can build beneficial partnerships to coordinate resources inside and especially between our organizations.

Content Availability

Understanding content availability (by each sector, and not just to libraries) and related issues plays a critical role in managing content effectively and efficiently across the supply chain. This understanding can be developed only through much greater communication and indeed through real partnerships. What questions should be asked? Which need to be answered? Which are misguided?

Content availability is where the rubber hits the road. In just over two years, we have seen the simultaneous availability of print and e-books move from 6 percent to nearly 40 percent.5 During the same period, we have seen sales move from fewer than 500 e-books per week to nearly 10,000. An accurate picture of availability, however, is far more nuanced and complex than simply knowing general availability.

Availability is not uniform by publisher, or by vendor, or by e-book aggregator, or by acquisition model, or by the type of library organization (e.g., small liberal arts colleges vs. large state institutions with many branches vs. consortia). Table 4.1 shows two examples. The identities of the publishers presented in table 4.1 have been masked, but they fall within the norm and are representative of the current state of content availability across digital and print formats. Availability shrinks further in titles available for DDA, for Short-Term Loans (STL), and for library consortia.

A picture of content availability is still not equivalent to a full understanding of content availability. The meaning of content availability is different to publishers than it is to libraries, and it is different still for vendors, e-book aggregators, and other parts of the information supply chain. What a library or vendor may view as 30 percent simultaneous print and e-book availability may be viewed as 100 percent by the publisher or by an e-book aggregator. From a publisher perspective, 100 percent of the content from its division of its company may indeed be on its platform, or it may have made available 100 percent of the titles that could possibly be released in digital format.

Of the approximately 1,400 publishers participating in the YBP approval plan service, just a quarter make any significant part of their content available in digital format (i.e., greater than 10 percent). Of these, just a third have a significant number of titles available simultaneously in print and digital formats—but again, usually not distributed equally across all hosting platforms or under all acquisition models. As in all things, the Pareto principle is in effect. When building a comprehensive collection development strategy, how is a library to acquire, weigh, and weave together all this information?

And for a publisher, what does this information say about its sales and strategies? Paths for publishers, vendors, and aggregators are further clouded by unaligned sales goals and strategies. All parts of the information ecosystem are poorly served by lack of information, misguided goals, and fossilized views of success.

Publishers need to evaluate the costs of maintaining various channel partnerships. Not infrequently, a publisher will begin a digital strategy by making backlist content available via just one e-book aggregator. The reason for this cautious approach is often concern over undermining print sales (still 80–90 percent of sales for most publishers) and the effort of signing license agreements. Participation in DDA is often postponed, and STL availability may be yet another step—all owing to the same concern. Participation in consortial pilots is the furthest step in opening content availability—one rejected by many publishers currently. Being overly cautious is, at least in part, a misguided strategy for most academic publishers, even if driven by legitimate concern.

The primary concerns for publishers and libraries should, in theory, find a natural alignment: library desire is to maximize appropriate content availability for their patrons, while the publishers desire to maximize content sold. By enforcing scarcity, publishers in effect (supported by the evidence) reduce their sales. The issue for publishers is not one of making content available or not, but of doing so sustainably. In evaluating the relative success of publisher digital strategies and the effect on overall sales, let’s look at this recent comparison between two presses of similar content focus and quality.

Table 4.2 shows the number of new titles published in 2012 and the greatest percentage available simultaneously via any one of the e-book aggregators. The sales figures are for all available digital content sold in 2012, not just those titles published in 2012. Publisher Y was dramatically more successful in earning a portion of library budgets for digital content. I have not included print sales, but the digital availability appears to have had a positive effect on print sales as well. But if simply making more content available in digital format were all that was required for a successful strategy, the problem would be solved and we could all go home and eat chocolates.

For most libraries, responsible collection development is still required and is not entirely outsourced to patron demand. DDA is, however, a wildly popular tool among libraries for obvious reasons. DDA and STL models provide a fantastic service to their patrons by vastly increasing content availability. YBP delivered over 40,000,000 bibliographic notification slips to libraries worldwide last year. Traditionally, library selectors and faculty review these slips and order a very small percentage. Though many more of the titles “fit” the library profile, to acquire them is simply unaffordable. DDA and STL allow a large percentage of the unselected titles to be made available for potential patron access.

While e-books sold in integrated e-book approval plans and on DDA continue to increase, there is noticeable erosion appearing for the first time in the number of e-book orders placed by libraries. This is raising serious concerns among publishers and vendors alike with regard to the sustainability of current pricing models for DDA and particularly for STL. In recent meetings with some not-for-profit publishers, the average gross revenue on an STL was determined to be just over $2, a sum feasted upon in felicitous convivium with other members in the supply chain. It isn’t hard to imagine the fears that these figures arouse when set next to declining print and e-book orders on a spreadsheet. Reference publishers generally do not participate in DDA because they do not expect that a purchase will ever be triggered owing to how the content is used (i.e., quick reference). Some will participate in DDA but withhold their titles from STL for the same reasons. Publishers participating in DDA will frequently exclude reference works or sell them under a separate model.

Table 4.3 shows an example of the typical shift in sales (and so corresponding library purchasing) of print and digital content that academic publishers are experiencing. The more recent trend of declining e-book orders is also visible as they are deferred to DDA and STL (note too that the average STL sale for this publisher was just $6.50 in 2012).

As a librarian recently explained to colleagues in collection development forum, a better way to evaluate the value of DDA is to measure the number of e-book discovery records delivered to the library (and the value of that content) vs. the dollars actually spent on content via DDA and STL. The per title figure drops much further, even for content from large publishers, when measured in this way. The point is not lost on publishers. Print and e-book orders deferred to DDA and STL, pose the most significant immediate threat to sustainability for publishers and vendors. Based on these trends in library collecting, driven both by the need to provide more content more quickly as well as by downward pressure on library budgets, publishers must now reexamine their strategies and expectations. All the digital apparatus that publishers are required to support today are in addition to, not instead of, print production costs. Still, most publishers have not raised prices significantly from year to year.

We briefly touched on the value of services provided by vendors. Vendors play a central role in the content delivery system and are not immune from the benefits of technology or the economy either. In the print world libraries have always been able to go direct to publishers to garner the highest possible discount. Decades ago, the value of vendors and aggregators was affirmed as libraries far and wide implemented approval book and slip plans, and contracted for technical services support. None of that changes now that digital content is in the mix. In fact, it isn’t hard to make the case that vendors are more useful now than ever before when the global costs of making content available in the library are considered.

Content and content metadata are collected up from their various sources including publishers, bibliographic utilities, and libraries and are enriched, managed, and redistributed according to the needs of the various partners mentioned. Managing duplication and library preferences for titles that now regularly appear on four, five, or more digital platforms, in addition to paper and cloth bindings, and from US and UK sources is far from an insignificant job—and now add to this a growing array of collecting models such as print and e-book approval plans, firm and standing orders (with various pricing options including Single-User, Three-User, Unlimited-User with the possibility of upgrading from one level to the next), DDA, STL, collections, subscriptions, and most recently, publisher Evidence-Based Collecting (essentially an effort to compete with e-book aggregator DDA without having to build expensive title-by-title tracking and triggering mechanisms). Supporting these services is extremely complex and the costs are not met by current library sales models.

Unfortunately, the word just is often trotted out when publishers and libraries try to negotiate directly but still want to employ the services built and maintained by a vendor, at high cost, to manage duplication: “Can’t you just block the titles we have acquired directly from the publisher or reseller X?” “Just” blocking titles is the essence of the vendor business model. “Just” means identifying the appropriate titles as well as those that are not part of the “deal”: library by library, publisher by publisher, platform by platform, approval plan by approval plan, and ordering account by ordering account and sometimes standing order by standing order—usually on an ongoing basis, since even the publishers find it near impossible to say in advance what titles may be on a platform in what timeframe.

In sum, each segment of the supply chain is facing significant challenges that are intimately intertwined but often go unseen or unrecognized between our partners. Current perspectives and solutions are fragmentary and yet many of the solutions are within sight and even reach if we could “just” build more cooperative structures.

Partnership

Developing trust and a true spirit of partnership will be the only way forward in an industry beset by the costs of metamorphosis with no cash cow in sight in any pasture near or far.

Outstanding solutions are beginning to emerge to support increased content availability and efficient delivery. Uniformly and by necessity, they are the result of partnerships. Library consortia with long and successful records of cooperation are flourishing anew. Publishers have followed similar paths to fulfill their missions. Project MUSE, Oxford University Press’s UPSO, and Cambridge University Press’s UPO are just a few examples of university presses working together to support each other and to provide greater value to libraries.

Vendors and e-book aggregators have found partnership to be a natural, if occasionally uncomfortable, fit, as have most publishers with proprietary platforms, who have discovered these relationships to be essential to success with academic libraries.

These partnerships have often existed primarily within their own market sectors or in very specific cases. Commitment and dedication to working together across sectors is still rare. Much of the partnering we see today can be characterized as frenemy partners drawn together by a specific opportunity. The best of these cross-sector relationships have yielded models that can be widely replicated. The Colby-Bates-Bowdoin Consortium, the Colorado Alliance, MaRLI, Orbis-Cascade, OhioLINK, OCUL, and the TRLN are just a few examples of highly successful partnerships in building innovative cross-sector processes for the comprehensive management of new digital and print content. More importantly, they have replaced suspicion and parochial interests with trust and synergy, the sine qua non of creativity and productivity.

Figure 4.2 depicts a model developed by MaRLI to collect content comprehensively from Oxford University Press and its partners. The model has since been extended to include content from several other major academic publishers. The model considers all Oxford University Press content, print and digital, as well as partner press content. Content is collected in various ways including digital collections, integrated e-book and print approval plans, standing orders, and aggregator e-book platforms. Depending on the type of content and provider, some titles have unlimited user access while others are limited to single or three simultaneous users.

In models such as this, each member of the supply chain contributes its expertise and resources to help the libraries fulfill their mission to their patrons. The degree of cooperation is repaid by each organization’s degree of success. In this model, the library has ensured that every title from Oxford and its partner presses has been considered by the consortium and the greatest number of titles possible made available in the appropriate formats. The libraries have also maximized the use of various vendor services for efficiency. Oxford has ensured that every one of its titles, regardless of format, has been considered by the libraries and collected as appropriate—a position many publishers envy. The vendors and aggregators have supplied their expertise and services and thereby demonstrated their value, which is essential to their long-term success and viability.

The model for pricing is evolving from print-based (how much was spent on print) to a mixed model, which includes usage data. Publishers are quick to point out that print purchasing is not an equal measure for what digital access will be. And management of these models adds another layer of complexity and cost to the old pick-pack-and-ship model of the print world. There is still much to be learned about sustainable pricing from all perspectives.

From the outset, the libraries stated their values, which included all of the points just mentioned and not simply the top-line price of the content. This was a position derived from careful deliberation and experience. The model has been launched with other publishers and in other consortia and large libraries. MaRLI has renewed the agreement for a second year.

Changes are persistent and exempt none of us. They also don’t happen by accident but are the result of our decisions. Tradition has tended to keep many of us apart as we strive to remain relevant, but a globalization of sorts has come to our corner of the universe and we cannot afford to maintain parochial views. Benefits and challenges are not equally distributed as digital development spins on. Equilibrium across market sectors has been lost. It is important—and admittedly difficult in current financial circumstances—that decisions take into account effects on other services and organizations vital to our shared environment.

If the sustainability of our ecosystem is important to us, we should work far more cooperatively across the entire supply chain to establish partnerships, processes, and channels of communication. We should work together on new digital distribution and pricing models, currently still based largely on print, that support the full potential of new technology and the value that each of us contribute. The choice is to simply allow a Darwinian survival of the fittest process take its course and deal with the flotsam left in its wake, or to engage proactively in intelligent shared strategies to develop value for all parts of our chain. Perhaps we can rise from our Kafkaesque bed onto our too-skinny legs and find a better future than Gregor Samsa.

Notes

1. Jane Schmidt, “Demand-Driven Acquisitions: The Hegemony of the Canon Interrupted,” in Creating Sustainable Community: The Proceedings of the ACRL 2015 Conference, edited by Dawn M. Mueller (Chicago: Association of College and Research Libraries, 2015), 172, www.ala.org/acrl/sites/ala.org.acrl/files/content/conferences/confsandpreconfs/2015/Schmidt.pdf.
2. Patricia A Tully, quoted in Carl Straumsheim, “Clash in the Stacks,” Inside Higher Ed, December 10, 2014, https://www.insidehighered.com/news/2014/12/10/rethinking-library-proves-divisive-topic-many-liberal-arts-institutions.
3. The focus of this paper is books. Discussions of sales, acquisitions, or publishing output do not include journals, databases, or other materials.
4. Publishers are adding DRM to their platforms in order to make available more content, especially textbooks and course-adoption titles.
5. What has changed over the past two years is the rate of simultaneous availability. For the top one hundred scholarly publishers, if a title is going to be available in digital format it is likely to be available simultaneous with print.

About the Author

Michael Zeoli is vice president for Content Development and Partner Relations at YBP Library Services.