On January 1, 2022, a new law entered into force in the state of Maryland requiring that authors and publishers holding the rights to an e-book title must offer unlimited copies of that title to public libraries in the state at an undetermined “reasonable price” if and when the title is offered to individual consumers. This law puts Maryland’s heavy thumb on the scale of copyright, subjecting e-book rights-holders to a “compulsory licence” thus depriving them of the right to decide when, where and how to release works to which they hold the rights. The law is opposed by the American Association of Publishers (AAP), the Authors Guild and industry associations representing music publishers, newspaper publishers and the motion picture industry for fear that if compulsory licensing is accepted for e-books, their sectors could be next. It is supported by the Maryland Library Association among other groups advocating for the library community.
The AAP is seeking an injunction to stay implementation of the state legislation on the grounds that it usurps federal copyright law. Maryland claims jurisdiction on the grounds of contract law. A court hearing on the injunction was held earlier this week, on February 7. According to the judge hearing the case, the decision will come “soon” (likely one or two weeks). Maryland’s actions, which are being echoed by several other states including New York, Rhode Island, Illinois, Missouri and Massachusetts, have scrambled the complex (and mutually beneficial) relationship that has prevailed for many years between authors, publishers and libraries, this time with a particular focus on e-books. Let’s look briefly at the history of that relationship.
In the beginning there were manuscripts, those beautiful, hand-crafted documents laboriously produced by skilled craftsmen (yes, I think they were likely all men, probably with tonsures) in the Middle Ages. Then along came Mr. Gutenberg with his introduction to Europe of movable type. (Contrary to popular belief, Gutenberg did not invent type; that honour belongs to the Chinese who were printing, and even using movable type some 500 years before Gutenberg. What else did the Chinese invent? Why golf of course!). The Koreans and the Mongols also used movable type a couple of centuries before Gutenberg. However, it was Gutenberg who popularized the technology and his creation led to an explosion of printed works. This, in turn, led to various disputes over who had the right to print what. Various monopolies were awarded to various printers in various countries, but invariably someone who was not awarded a printing licence decided to do so anyway. Naturally this led to disputes, the passing of laws to regulate printing and finally, in 1710, what has become known as the first modern copyright law, the Statute of Anne in Britain which gave the reproduction right to authors rather than printers or publishers.
Since Gutenberg’s time there have been many advances in printing and publishing, but the principle of reproduction rights remained more or less the same, with the end product being a book in physical format. It may have been printed on vellum and bound in leather or printed on cheap paper with just a paper cover, but it was a work the purchaser could pick up and hold and put on their bookshelf. Or it could be purchased by a library and put on the shelf of a library for loan. And while the purchaser could not infringe copyright by reproducing the book, they owned it and were free to do with it what they wished-resell it, lend it to a friend, keep it, trash it—the choice was theirs, subject to parallel import regulations in some countries. (In the US, this is known as the ”first sale doctrine”.)
The connection between printed books and libraries is a long one. When the Statute of Anne was passed, one of the requirements for a work to enjoy copyright protection was that “nine copies of each book or books, upon the best paper” shall be delivered to the warehouse of the Company of Stationers for the use of the royal library and the libraries of the major universities in England and Scotland. This act of deposit is replicated today in the United States by the mandatory deposit requirements of the US Copyright Office. “This law requires that two copies of the best edition of every copyrightable work published in the United States be sent to the Copyright Office within three months of publication. Works deposited under this law are for the use of the Library of Congress.” Most countries where there is a significant publishing industry have similar requirements. In Canada, Canadian publishers are required to make two copies of books published in Canada available to the National Library under the Legal Deposit Program of the Library and Archives of Canada Act (2004).
If copyright, books, and libraries have a long and close connection, so too do authors, publishers, and librarians. Without authors and publishers, the raison d’être for libraries would disappear, even though today libraries have become much more than places for just the circulation of books. In addition to their collections of audio-visual materials, they are in many cases also quasi-community centres where clients access the internet (and through the internet reach government services and other sources of information), have their pre-schoolers entertained with story-time, as well as, in some cases, simply to gather to study, socialize or keep warm.
Most authors love libraries, understanding that they are essential tools in the promotion of literacy and love of books. There are exceptions, as I wrote about here (“Are Libraries the Enemy of Authors and Publishers?”). Canadian publisher Kenneth Whyte launched a diatribe against public libraries, accusing them of undercutting book sales by “pimping free entertainment to people who can afford it”. Whyte’s crusade fell flat and he was promptly disavowed by the mainstream publishing business. The Executive Director of the Association of Canadian Publishers wrote, “Canadian publishers recognize that libraries are an important part of the reading ecosystem and a primary channel for book discovery…Library sales are also an important part of the publishing business model”. It’s also worth noting that in Canada, Australia, New Zealand and the UK (but not in the US), in addition to earning royalties on sales of books to libraries, authors generate revenue when their books are loaned out by libraries through the “public lending right”.
While authors and publishers profess to love libraries, the reverse does not always seem to be true. Some librarians are in the forefront of attempts to weaken copyright laws, the framework that authors depend on to earn a living. I recently reported on the situation in New Zealand, (“Why is New Zealand’s National Library Declaring War on Authors”) where the National Library unilaterally decided to “donate” hundreds of thousands of books, including many under copyright, to the controversial Internet Archive (IA) in the US. (After a major hue and cry from New Zealand authors, the National Library finally backed down and cancelled the “donation”). The IA is the sponsor of the very contentious “Controlled Digital Lending” (CDL) concept. The way CDL works is the following. A library buys a book (or several copies of a book). Rather than lending the book, it scans it (digitally copies it). It then places the physical book, or books, in storage, and instead lends out the digital copy or copies. In this way, it is argued that CDL respects the established rules around library lending, i.e. a book cannot be loaned to a different client until it has been returned by the first borrower. In the case of digital copies, no further lending occurs until the original loan is over. In the case of a physical book, it would be returned to the library; with a digital work, the copy expires on the reading device.
There are two major problems with the CDL concept from the perspective of authors and publishers. The first is that in 2020 the Archive unilaterally decided to abrogate its own self-declared CDL rules and instead suspended the limitation on lending. It decided to loan out unlimited copies regardless of the number of original works in the library’s holdings. Using COVID-19 as the excuse, the Archive declared that it was establishing a “National Emergency Library”. After a brief moment when the media jumped in and applauded the initiative, suddenly most people realized that the organization was making fast and loose with other peoples’ property. Even if they had the right to lend digital copies under the CDL theory, which is far from a sure thing, suspending CDL to lend unlimited copies was a step too far. Even though the IA quickly backed down, its actions provoked a lawsuit from the publishing industry challenging not only the National Emergency Library but CDL itself. That case is still unresolved.
The second problem is that making a digital copy of a work conflicts with the exploitation of digital rights held by authors and publishers. A scanned copy of a physical work is different from a licensed digital edition of a work (an e-book), yet it can directly interfere with the market for the latter. The purchaser of a hard copy book does not acquire the digital rights by virtue of that purchase. E-books come with their own rights and licensing conditions, just as audio-books do. Even though the content may be the same, they are different products. Watching a film of an opera performed at La Scala and attending a performance at La Scala are two very different things, even though the two productions have the same music, same costumes and same libretto.
E-books have been developed and made available to the public—and to libraries—under specific licensing conditions. E-books are popular with library clients because downloading a book is so much easier than making a trip to the library to get the book, and then another to return it, especially during the pandemic, and then maybe paying a fine because the book is late. As a result, libraries have got into the e-book business in a big way, often licensing multiple copies of a work (under terms where they pay more per copy than an individual user would), and then lending out these e-copies to borrowers.
The terms for licensing to libraries usually differ from the terms offered to individuals. As I mentioned, the cost per copy is usually several times higher than an individual licence, and the licence may sunset and need to be renewed after a set period of time (e.g two years), or after the work has gone out on loan a specified number of times. In addition, some publishers of e-books have exercised their rights to limit the number of copies sold to a library, or to hold back licensing the book for a short period of time in order not to cannibalize the market for sales (licensing) to individual readers. This is similar in concept to the “windowing” strategy used by major film studios whereby the DVD or streaming release of a film is held back for several weeks while the film plays in cinemas.
Many libraries and librarians don’t like these licensing terms, and some are pushing to have e-books treated identically with hard copy books. In other words, from their perspective, you should be able to purchase an e-book rather than licence it, and once you have purchased it, the buyer—a library or anyone else—should be able to do anything they want with it other than copy it, just as with a hard-copy book.
This position fails to understand the difference between books and e-books, especially in the library context. E-books have eliminated all the “friction” that accompanies the act of borrowing a book from a library for the consumer such as physically visiting the library at least twice, and maybe paying a fine if overdue. Because a library cannot hold infinite numbers of copies, popular titles are often out on loan and readers need to reserve them. These “friction factors” offset the free cost of borrowing for readers and persuade many consumers that it would be better to buy the book and avoid the hassle. This was a trade-off that generally worked well for libraries, publishers, booksellers and the public. Moreover, a popular edition of a hardcopy book at a library will need to be replaced after a certain number of loans, usually around 50, because of wear and tear. However, with an e-edition all friction disappears, and the digital copy can be loaned indefinitely with no need for replacement, ever. That is why publishers have had to move to a licensing model for e-books. They are dealing with a different product requiring different management and marketing.
This reality has not deterred some in the library community from pushing to have e-books treated exactly the same as physical works. In the US a spate of legislative initiatives has been launched at the state level to, in effect, hijack the rights of e-book publishers and subject e-books to compulsory licensing for library use. As mentioned at the beginning of this blog post, draft legislation has come forward in New York, Maryland, Rhode Island, Massachusetts and elsewhere to require publishers to license e-books to libraries at “reasonable rates”, with rate-setting ultimately being determined by the courts if there is no agreement. New York’s legislation was vetoed by Governor Kathy Hochul on the grounds that it intruded into the domain of federal copyright law, but Maryland’s statute has been enacted. We will have to wait to see if the AAP’s legal challenge is upheld.
What has prompted this legislation now? Most publishers license digital editions to libraries at the same time that a work is released to the public, but there are exceptions. Amazon (not a member of the AAP, by the way) is one, but they are not the only publisher to express concern over the impact of widespread library e-lending on sales of e-books. Back in 2019, MacMillan’s CEO John Sargent expressed concern that “the very rapid increase in the reading of borrowed e-books decreases the perceived economic value of a book…causing book-buying customers to change habits“. According to Sargent, this was creating a problem across the publishing ecosystem. MacMillan’s proposed solution was to limit each library to one copy of an e-title for the first eight weeks of release before licensing additional copies to a library. This would not prevent borrowers from accessing the work, but most of them would likely have to wait in line for their turn, one of the prices to be paid for getting a newly-released work through a library. Of course, they had an alternative; they could go and directly “buy” their own digital copy right away. This strikes me as a not unreasonable compromise, but there was still a strong pushback from the library community. Then, in the early days of the COVID pandemic in March 2020, MacMillan suddenly reversed its policy. The plight of libraries that had to close their doors to the public and go online may have been a factor in MacMillan’s reconsideration.
This underlines the symbiotic relationship between authors, publishers, and libraries. For authors to be able to continue to create new works, they need a healthy publishing sector to get their works to the public, through booksellers and libraries. Libraries need a viable publishing sector to be able to provide their clients with new works. If publishers of e-books need to tweak or experiment with various market models in order to stay in business, that is their right and is subject to negotiation with their customers, including libraries. But what is happening in Maryland, and in other states where legislation is being developed to impose compulsory licences on publishers, is a concerted attempt to modify copyright law and strip rights-holders of their distribution rights through a back door mechanism. State legislation that impinges on US federal copyright legislation will undoubtedly be struck down by the courts. However, the protagonists are clearly hoping to build political momentum leading to eventual changes in copyright legislation at the federal level in the US Congress.
This is not just a US issue. International publishers are watching closely to see what happens, as there is potential for impact on titles published outside the United States. Moreover, the Berne Convention, to which the US has belonged since 1989, imposes certain minimum standards designed to protect rights-holders (the “Three Step Test”). Maryland’s legislation would nullify treaty commitments made by the United States Government.
The best solution, and hopefully one that will eventually be arrived at, is for publishers and libraries to work out their differences through licensing negotiations, instead of having libraries trying to tilt the playing field with legislation that abrogates elements of established copyright law. Throughout history copyright law has adapted to changing technology while managing to respect the rights of authors. The advent of the public library in the second half of the 19th century proved to a boon in the promotion of literacy, and the consumption of books. That is still the case, but all parts of the ecosystem need to survive. Licensing is a model that allows authors and publishers to survive in an increasingly digital world. Maintaining the role of libraries while ensuring that booksellers and publishers stay financially healthy is in everyone’s interest. Upsetting the apple cart to unfairly favour libraries over rights-holders is not. That is the current challenge presented by the Maryland legislation.
The complex relationship between authors, publishers, and libraries has worked well over the years, to the benefit of all. There is no reason why the advent of the e-book should undermine this working relationship so long as all parties approach the issue keeping the big picture in mind. All parts of the reading ecosystem need to survive. If authors, publishers and libraries work together, everyone will thrive. And the reading public will be the ultimate beneficiary.
© Hugh Stephens, 2022. All Rights Reserved.
Update: On February 17, the US District Court for Maryland granted a preliminary injunction suspending the Maryland’s e-book licensing law. The AAP statement on the court’s decision is here.