A change in technology is always gut-wrenching for those who supply products that are affected. The record companies at first refused to allow electronic copying and distribution of their records. The result was widespread pirating of popular music which meant zero profits for the record companies. In recent years, however, the record companies have relented and most are now enjoying huge profits from songs sold on iTunes, Amazon.com, Rhapsody, and other paid online music services.
Throughout history, similar "problems" have occurred often. Buggy manufacturers suffered turmoil when the horseless carriage appeared. Many went out of business, although a few switched to manufacturing automobiles and made more profit than ever. Telephone companies used to have monopolies on telephone equipment and service, until Judge Green forced the breakup of Ma Bell. After a few years of turmoil, most of the phone companies are again enjoying reasonable profits while consumers have lower telecommunications costs than ever before in history.
The large online services had their own fiefdoms before the appearance of the World Wide Web. When faced with competition, America Online embraced the Web with open arms. In contrast, CompuServe refused to even acknowledge the existence of the World Wide Web for some time and pretended "we're better and customers will always prefer to do business with us." Many of us know what happened to CompuServe.
NOTE: I was a independent contractor to CompuServe in those days and saw what happened up close and in detail. I was in CompuServe headquarters in Columbus, Ohio the morning management made the announcement that CompuServe was being sold to its competitor, America Online. It was not a happy day in Columbus.
Now the book publishing industry is going through similar turmoil because of eBooks.
OverDrive is the company that has been driving (pun intended) the ebook revolution. OverDrive has negotiated agreements with most of the larger book publishers to provide ebooks through libraries. Library patrons can "check out" an eBook in much the same manner as checking out a physical book. In recent weeks, several major publishers have canceled their agreements with OverDrive.
Starting February 10, Penguin, which had recently instituted limitations on library lending for ebooks and audiobooks, will now no longer offer any ebooks or audiobooks through OverDrive. Penguin thus joins Simon & Schuster, Macmillan, and Hachette among the Big Six publishers in search of an ebook library lending model. The publishers are worried that eBook borrowers will eat into their sales.
Hello? Is the publishing world listening? This is 2012. I'd suggest not trying to do business with 1959 business methods.
In other industries, those who adapt to modern business methods survive and prosper. Those who do not adapt typically flounder and drop by the wayside.
Book authors are starting to discover they don't need book publishers. Authors can contract directly with retailers to sell ebooks. Amazon has had significant successes in directly signing up authors, cutting out (publisher) middlemen, and thereby earning more money for authors and Amazon alike.
My belief is that book publishers who refuse to allow ebook lending by libraries will soon find themselves with declining business and declining profits. The consumers will suffer for a while until new businesses with modern business methodologies catch up to marketplace demands. In the long term, consumers will benefit as lower prices will be the result of fewer middlemen, elimination of publishing costs, reduction in shipping, and other economies.
Companies such as Amazon.com, Lulu.com, and other companies that haven't yet been formed will take over the publishing industry to offer consumers the services they want.
You can read more about Penguin Books termination of ebook lending at http://goo.gl/1014k. You might also want to read Dennis Johnson's article in the Melville House blog at http://goo.gl/6ROVH.
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