The Swedish Model: Or How We Learned to Stop Worrying and Love Ebook Lending

Hannes Eder, CTO Publit

Hannes Eder, CTO of Publit, writes about the hopeful developments in ebook lending happening in Sweden. 

This article is one of three specially commissioned by the organisers of the Libraries in Digital Age symposium which is taking place at Media Evolution on Wednesday 21st August 2013.  You can follow the symposium on #lda2013.

In a world locked down by the near global “war over ebooks” Sweden is different. Where the dominant paradigm sees ebooks as a commodity, the Swedish model treats ebook lending as a service and this has proved central to dismantling the antagonism between publishers and libraries. 

The dominant model for ebook lending never really worked. It pitched libraries against publishers in what has often been described as a “war over ebooks” and it left readers unhappy too.

The Swedish model for ebook lending is different and it has set the stage for cooperation rather than antagonism. Now we want to tell the world all about it.

Publishers and libraries basically serve the same purpose. Even though they need to follow different rules – most publishing houses are commercial entities, libraries are funded by tax payers – their ultimate intention is to mediate the relationship between reader and writer. Even though their coexistence through the centuries has sometimes been uneasy, both institutions have played key roles in fostering a literate society. Thanks to ebooks, the truce between libraries and publishers is now put to the test.

It’s easy to see why. Handling physical books is conceptually clear; you buy one you get to treat it to your hearts content. The seller can’t keep you from lending it or from giving it away for free and because of the scarcity and friction inherent of all things physical, this poses no threat to the seller.

In most corners of the world this same conceptual paradigm has been allowed to influence the mechanics of ebook lending. A library typically buys licenses for ebook “copies” and the number of licenses it owns for a title determines the number of patrons it’s allowed to serve the ebook to concurrently. A model often referred to as one-book-one-license.

Since the model is meant to emulate how physical books work, publisher HarperCollins argued in 2011 that ebooks should also “wear out”. In a move that was wildly unpopular amongst librarians  it appended its own rule on top of the one-book-one-license framework, forcing libraries to renew its license of any given ebook after 26 circulations.

The controversy around the HarperCollins cap isn’t the only recent sign that the one-book-one-license model is starting to burst at the seams. Kansas state librarian Jo Budler ended up in a long drawn legal struggle when she decided to move her catalogue of ebook titles from OverDrive, which had just announced a 700 percent increase of their administrative fees, to another service provider. The library had signed up to buy ebooks, but OverDrive had gone on to change its user agreement to imply that rather than owning the ebook, the library were only being granted a license to lend ebooks for the duration of their contract.

Again and again ebooks just won’t behave like their print counterparts. And not only when it comes to libraries for that matter; when you click the “buy now” button on Amazon the fine print shows what’s really going on.  The following comes from the Kindle store’s Terms of Use:

“Kindle Content is licensed, not sold, to you by the Content Provider. The Content Provider may include additional terms for use within its Kindle Content. Those terms will also apply, but this Agreement will govern in the event of a conflict.”

If treating ebooks like physical books is beginning to feel a bit like trying to push a square peg through a round hole, that feeling is confirmed by the the letter of the law. In a legal sense ebooks aren’t goods. That’s why the right of first sale-doctrine doesn’t apply to them, which in plain English means that you can’t do what you want with an ebook just because you payed for it. Instead ebooks are considered services, and services are licensed on terms that need to be negotiated between the licensor and the licensee. That’s why libraries and publishers now need to sit down to negotiate, where before there was really no need to talk.

Some say the war over ebooks can’t be solved since libraries lack enough of a value proposition to make publishers even want to sit down at the table. New York-based business analyst Mike Shatzkin has made this point, and perhaps it holds true in America where the war is raging most ferociously and where none of the biggest publishers are now making their full ebook catalogues available to libraries.

But what’s true in America doesn’t have to be true in Europe, which the example of Sweden clearly shows.

Sweden has a long tradition of building community based cultural infrastructure that is controlled in full neither by the state nor by private interest. To mention just one of many examples: Ingmar Bergman probably wouldn’t have had such a tremendous reach if he hadn’t been backed by the Swedish Film Institute, in which the private film industry pools its resources together with state money.

The book industry is no different. Just over a decade ago publishers and librarians formed a joint task force that came up with a model for ebook lending which still to this day seems unique in the world: transaction fees for every loan; no cap on the number of concurrent loans; and access to full catalogues without entry fees. In short, ebooks are treated as services.

The model is self regulatory: ebook lending can’t “hurt sales” since the publisher is free to manipulate prices for library circulation on each individual title. On the other hand, libraries have the tools to select exactly which ebooks they carry. This explains why trade statistics from September last year show that six times as many ebooks were distributed through the library network than through all commercial outlets combined.

In this dynamic climate some libraries are starting to dip their toe into publishing too, digitising and distributing their own books to patrons as well as to other libraries. An inspiring example of this happened in 2011 when the rights catalogue of the Gunnar and Alva Myrdal estate was bequeathed to the City of Stockholm. Both Gunnar and Alva were famously awarded one Nobel prize each (in 1974 and 1982) and produced a string of works that helped form the Swedish blend of market driven social democracy.

As historically important as these works are commercial publishers had failed to keep them available so the rights were released under creative commons license. This unlocked possibilities for a group of entrepreneurial librarians who decided to bring the literary legacy of the Myrdal’s back to life.

The ebooks were made freely available to library patrons, unencumbered by DRM and, as a further experiment, they were also put onto the Apple iBook store. The result was astounding.  Excluding the figures from iBook, the eleven titles were downloaded by library patrons in the region of Stockholm on more than 2 000 occasions in the first four months. That’s over 15 times higher than the average circulation per title.

As exotic as the examples of libraries-gone-publisher are, the really interesting aspect of the Swedish Model is the cooperation between libraries and publishers that it has made possible.

In a time where brick-and-mortar bookstores are sadly shrinking in numbers, libraries become ever more important as physical spaces where people can meet around books and find unexpected reading by serendipity. Nothing shows this better than the Myrdal project, where book-loving librarians managed to create unprecedented enthusiasm for an obscure catalogue of niche titles. This brings real value to a publishing community that is trying to reorient itself from focusing on frontlist, where sales are shrinking, to a backlist centred economy.

But in order to reap the fruits of the so called long tail economy, serious investment in digitisation is needed, and in a small language area there’s rarely enough demand to justify the slow and costly process of producing high quality, reflowable texts from facsimile originals. This is where libraries can play a role. The fact that they’re not market driven gives a freedom of action where the return of investment doesn’t necessarily have to be immediate, or even financial. In fact shrinking budgets aren’t primary concerns of libraries in Sweden for the moment, instead it’s the lack control. When it comes to ebooks many publishers still keep their hot titles from library circulation, making it ever more difficult for libraries to remain relevant to patrons who want access to access a full range of titles.

In an ongoing pilot project initiated by the Stockholm City Library, publishing house Ordfront and Publit, a partnership has been forged that allows libraries and publishers to scratch each others itches. Within this project, the library helps digitise a portion of the publishers back catalogue and, in return, is guaranteed access to all frontlist titles.

The cost for bringing titles back to life is shared between the publisher, who chips in the royalty, and the library, who covers the relatively hefty costs of scanning, digitising and proof reading. To reflect the fact that these titles are brought back to life in a joint effort this part of the project has been dubbed dual licensing. The term originates in the open source community where it’s used to describe products such as Linux or Arduino that can be shared freely while at the same time also circulate commercially.

What will happen to the publishers ability to sell its frontlist titles when they are made available without windowing? An important part of the project revolves around collecting and sharing data to answer that question, but also to cross reference how (anonymized) patrons and consumers interact with the same catalogue in different contexts.

The story told on these pages is really a collective one, the Swedish Model has been forged by a million tweaks and adjustments as its proponents – publishers and libraries as well as technology players – have made it work for them. The net result of this sprawling decentralised process is surprisingly cohesive and synergetic in a very real sense of that word – the sum being greater than its part.

We feel entitled to tell this story because Publit has been instrumental in developing both the concept of the Swedish Model, and the technical infrastructure that makes it possible. We fixed the critical bug that meant prices for library circulation were hard coded. In the past all titles from all publishing houses had the same mandatory price tag of 20 krona, now a publisher has full control over what titles to circulate at what price points. We also bridged a gap by building a service that allows libraries to actively curate their ebook catalogues. It used to be difficult for libraries to manage what titles to carry, they basically had an all or nothing proposition, but they can now use our platform to actively curate their ebook catalogues. Perhaps most importantly we came up with the idea of dual licensing, a concept that allows for partnerships which brings real value to publishers and libraries alike.

We want to tell the world about our hard earned success because we think the Swedish Model can and should be exported. Perhaps not to North America, where the rhetoric in the wake of the “war over ebooks” is at its loudest and where the global nature of the English speaking market affords the largest publishing houses to take a position of splendid isolation. In Europe however, nobody is big enough to make it on their own.

Hannes Eder is co-founder and CTO of Publit the e-book and print publishing and distribution company which has played a key role in developing the Swedish Model.