CEO's mussings hint at new business model: the e-book library

While trawling the blogosphere for e-book insights, I came across an interesting post by Eric Hellman questioning the future market for e-book rentals. I’ll admit it’s something I haven’t given much thought, and it could hold substantial implications for e-books.

According to Hellman, John Sargent, CEO of Macmillan publishing, spoke briefly at a Publishing Point meeting in New York City. During audience questions, Hellman asked Sargent about the future relationship between libraries and e-book distribution.  Sargent’s comments suggest he’s given some though to the publisher-library relationship in an e-book-dominated future. The following is Sargent’s response, excerpted from Hellman’s blog.

“In the past, getting a book from libraries has had a tremendous amount of friction. You have to go to the library, maybe the book has been checked out and you have to come back another time. If it’s a popular book, maybe it gets lent ten times, there’s a lot of wear and tear, and the library will then put in a reorder. With e-books, you sit on your couch in your living room and go to the library website, see if the library has it, maybe you check libraries in three other states. You get the book, read it, return it and get another, all without paying a thing. ‘It’s like Netflix, but you don’t pay for it. How is that a good model for us?’

‘If there’s a model where the publisher gets a piece of the action every time the book is borrowed, that’s an interesting model.'”

I agree.

These could simply be off-hand remarks from Sargent, but in light of Macmillan’s recent agency-model victory over Amazon, we can be sure the company isn’t afraid of trying new things.

Is a rental model possible for e-books? It seems likely. Apple has already had success with movie rentals via its iTunes store, not to mention the video-rental behemoth that is Netflix.

Could a rental market pay off for publishers? That’s harder to get a beat on. It seems unlikely that e-book publishers and distributors will allow free borrowing on the same level as contemporary libraries. After all, the physical restrictions and limitations mentioned above have always provided a significant incentive for consumers to buy their own copy of a book. However, none of these restrictions apply to an e-book, which can be copied and distributed almost effortlessly — at least in comparison to physical print. Thus, no inherent incentive exists to pay for a copy — ignoring the opportunity for added content, ease of access, etc.  It seems reasonable to assume publishers will at least try to get a commission on e-book rentals. I would not be surprised if the big publishers start making quick inroads with distributors like Amazon or Apple on a rental model.