Swedes Think Different: A New Model for E-lending

Hannes Eder, CTO, Publit

Swedes have always gone about their business in their own particular way. To quote a phrase: ‘Swedes think different’. Take e-books: Swedes are usually early adopters of new technologies and formats, but, despite a small bump in the figures when Apple launched their iBookstore in Scandinavia in 2011, the market for e-books has remained small by comparison to the global market.

This seems odd given that Swedes are heavy consumers of books and geared up to the eyeballs with smartphones and tablets. The fact is that Swedes do in fact read e-books, it’s just that they don’t buy them. Numbers from Svenskbokhandel (the Swedish national book trade magazine) show that six times as many e-books were distributed through the library system than through all commercial outlets combined in September this year.

So why is this? Pundits speculate that it’s a consequence of the vertical integration of the Swedish book market: three big houses, each part of a group that also controls its own retail outlets. Margins from selling physical books are good, so why not postpone the migration to e-books for as long as possible? It has also been suggested that if nobody is buying e-books, Sweden is more likely to remain out of Amazon’s sights, and its disruptive effect. Maybe there’s some truth in this, or maybe it’s just the kind of conspiratorial thinking that pundits thrive on.

An alternative explanation takes as its starting point the spirit of cross-sector co-operation that is so fundamental to the Swedish attitude towards business that it has its own moniker: Saltsjöbadsandan – “anda” means spirit, “Saltsjöbaden” is the location where the truce between the Swedish Trade Union Confederation and the Swedish Employers Association was struck in the 1930s.

In the case of e-book lending, the model that prevails in Sweden was drafted over a decade ago by representatives from the library sector and the Association of Swedish Publishers. Whilst the dominant model internationally is based on the idea of licensing ‘copies’ of e-books, in Sweden the library treats e-books as a ‘service’ with titles available concurrently to any number of patrons, for free. In Sweden you never have to wait for an e-book to become ‘available’ which of course means you can borrow as many as you want, simultaneously.

So, does the Swedish model point the way to an e-lending solution? That would be quite an achievement given the struggle between the sectors witnessed in 2012: four of six of the world’s biggest general trade publishers withdrawing large swathes of their e-book catalogues from library distribution, a fifth publisher altered their terms for library usage – resulting in a high profile boycott – and the sixth  tripled their prices.

The short answer is ‘not really’ – the Swedish model has its own set of challenges:

Whilst e-book lending is lucrative for publishers (even if e-books are free to library patrons, the library pays for every transaction) there is a growing nervousness that a commercial market may never develop on account of readers having come to expect that e-books are free. In an effort to counteract this many publishers are now windowing their e-book releases, releasing them to libraries only once they have gone cold commercially.

This practice of windowing has attracted strong criticism from librarians culminating in the national lobby group taking out a full page advert in Sweden’s biggest national newspaper slamming the practice, and criticising publishers for mercantile behaviour and failing to see libraries as strategic partners in reader and audience development for their books.

There is hope however. Whilst the big guys fight it out in public, some smaller players are doing interesting groundwork which has the potential to revolutionise not only how libraries handle e-books, but the way in which publishers and libraries work together.

Last week the Swedish media reported on a pilot project which sees Stockholm City library, Ordfront (one of the few mid-sized, independent publishing houses) and Publit (a technology company specialising in e-book and PoD publishing and distribution) join forces to trial a dual licensing model for e-books.

‘Dual licensing’ is a term borrowed from the Open Source movement and describes how a product can both be sold for profit and shared freely under different sets of terms. The pilot applies the concept to e-books in the following way: libraries help digitise publishers’ backlist and get decent lending terms in return.

In the pilot the library will pay for the digitisation of 25 e-books which are then made available to the library at a fixed price subscription for a period of eleven years. Furthermore the publisher agrees to make all their new e-book titles available to the library on release.

We believe this model has legs because it serves the interests of all the parties involved. Publishers in a language area as small as Sweden face the challenge that their audience simply isn’t big enough to finance serious backlist digitisation – that is why there are no more than ten thousand titles available as e-books on the Swedish market today. With most new publications just about breaking even, exploiting the long-tail by making their back catalogue available in all formats – PoD and e – becomes essential to their survival.

Libraries can help make that happen: the sector isn’t swimming in money, but their biggest problem is not lack of funds, but lack of control. The e-book budget of the average Swedish library has been spiraling out of control for years, the dual licensing model helps stabilise the situation.

And let’s not forget the raison d’etre shared by both parties: to bring great books to the public. That if anything should provide fertile grounds for partnership. Not least in an era where brick and mortar book stores are closing down by the minute and tax funded libraries might imminently be the one remaining public space to meet around literature.

Hannes Eder is the CTO at Publit, a technology company that specialises in e-book and PoD production and distribution.