Category Archives: Libraries

Libraries, Scholarly Publishing

Libraries, pricing and piracy

I recently told the north Carolina Serials conference that the so-called “journals pricing crisis” had outlasted any meaningful definition of the word crisis and was no longer the driving force behind our discussions of scholarly communications, if, indeed, it ever was.  Nevertheless, it simply will not go away, as witnessed by another round of library uproar over publisher prices.

The fuss over Harper Collin’s new e-book pricing model just keeps growing, of course, and on Tuesday an article about it was on the front page of the dead-tree edition of the New York Times.  Of possibly greater significance are the reports that the librarian from Imperial College London has issued an ultimatum on behalf of Research Libraries UK to Elsevier over the price increase they are demanding for the journal “big deal” package.  She is demanding a price decrease in line with library budgetary realities and greater flexibility.

Each time these kerfuffles make the news I ask myself if this will be the one that bears fruit, that actually leads to large-scale cancellations and, just maybe, real change.  So often, frankly, libraries ultimately back down because our first concern is always our patrons, and we cannot overlook the need, or at least the desire, that our academic communities feel for these resources.  That tendency to give in has lead many in the content industries to believe, apparently, that libraries really are bottomless wells of money, down which they can drop a bucket whenever they feel the pinch.

I continue to hope that we librarians will realize, at some point, that reform of the severely broken scholarly communications system will ultimately benefit our academic communities more than continuous access to big deal journal packages will.  This is especially so as an increasing number of researchers tell us that they do not use those packages much anymore.  Faster and less formal means of getting access to research findings are becoming the norm in many disciplines, from physics to economics.  In some cases pre-print repositories are now the major source of the rapid awareness of new research that is needed, in others it is the more informal exchange of ideas prior to formal publication.  As more of these paths develop, our dedication to big-deal journal packages will seem increasingly like a relic of a previous age.

This is not to say that the transition will be easy.  The road to reform will certainly take us through more painful encounters, both with publishers and with our own faculty.  Like so many other librarians, I am anxious for change but hope that other libraries and other librarians (like Deborah Shorley from Imperial) will take the lead in these confrontations.

But it also seems likely that other forces will get publisher attention and force changes in standard business models before we librarians do it.  Is Ms. Shorley’s ultimatum more of a threat to Elsevier, I wonder, than a downgraded outlook by a major securities research firm?  I doubt it, but Elsevier is facing both those things, according to this story about a report prepared at Sanford Bernstein.  It their report the research firm expresses the opinion that Elsevier is “in denial” about the need to reform its business practices and about the unsustainable future of the “big deal.”  They predict that Elsevier will “underperform” in the market.  Perhaps direct pressure on shareholder value will get the attention that outcries from libraries, followed by capitulation, has failed to capture.

Finally, I want to note that pricing strategy is getting some interesting attention outside of the library environment as well.  The Social Science Research Council has just released a massive report, three years in the making, from their “Media Piracy Project” about intellectual property piracy in the developing world; there are stories about the report here and here.  Perhaps surprisingly, at least to the content industries, they do not blame moral failings for the rise in piracy and they do not recommend increased enforcement (which makes it ironic that the White House has just released legislative recommendations calling for greater IP enforcement precisely to address piracy).  Instead, the report suggests that poor pricing strategies by the content industries are a major factor behind piracy in the developing world and that new business models will be more effective at addressing the problem.  Certainly it is obvious that ratcheting up IP enforcement has not worked in the past and is unlikely to suddenly provide a miraculous answer.  As for the contention that content industries have followed disastrous pricing policies that undermine their own best interests, librarians have been trying to tell them that for years.

PS.  Through Friday, April 15th, all of the Duke Libraries’ blogs will be gathering responses to our first-ever reader feedback poll.  Click the survey link in the sidebar to participate.  Thank you for your feedback!

Digital Rights Management, Libraries

Did he really say that?

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Librarians have raised a pretty loud outcry (for librarians) about the new e-book pricing policy announced last week by Harper Collins, under which libraries would be able to loan an e-book only a set number of times before having to pay again to continue lending.  This model seems unfair to libraries, especially because they would not be able to plan their budgets, since the actual cost of each e-book purchased this way would be unknown and variable.  But now publishing consultant Martin Taylor has written a column praising Harper Collins and telling librarians to suck it up and fork over the money.  His core argument is that publishers have “serious concerns” about the impact of library lending on their e-book markets and that “librarians have not managed to address [these concerns].”  This, to my mind, is a remarkable statement.

It is not the job of librarians to address the concerns publishers have for their bottom line; to say that we should implies a view that libraries are nothing more than a market, the existence of which is justified only insofar as they serve publisher’s interests.  But libraries serve the interests of an altogether different clientele.  Public libraries serve the readers of their geographic areas and are responsible to local boards or town councils.  Academic libraries serve students, faculty and, often, the local populace, while being responsible for their fiscal management to deans and provosts.  Publishers are entitled, if they want, to make a business decision about how they price e-books, but libraries are equally entitled to make a business decision about how to spend their money in ways that best serve their patrons and their institutions.  If buying e-books under this new model is not good for our patrons, publishers have no cause to complain or berated us for being out-of-touch.

Taylor suggests that the price for each loan of an e-book under the Harper Collins model is reasonable.  But this claim confuses price with value.  No matter what the price of each loan is, if the book represents a drain on a library’s resources that cannot be known in advance, it is a bad value.  There is almost no scenario in which a library’s money would not be more responsibly spent elsewhere.

Some publishers have always disliked the deference to libraries that is built in to US policy and, under the “first sale” doctrine that is found in section 109 of the Copyright Act, US law.  First sale was first formally recognized in US law in 1903, when Bobbs-Merrill publishing tried to control the down-stream pricing of one of their books by placing a statement on the title page claiming that the book could never be sold for less than $1.  When Macy’s department stories offered the book at a discount, Bobbs-Merrill sued and lost in the U.S. Supreme Court.  The Court made clear what US lending libraries were already assuming, that once a first sale of a work had occurred, the exclusive right of distribution was “exhausted” and the purchaser could resell, or lend, the book without permission or control from the publisher.  It was discontent with this well-established public policy that led Pat Schroeder, when she was president of the Association of American Publishers, to call all librarians pirates.

Since public policy has always been on the side of library lending as a fundamental building block of democracy, publishers now find that the only way they can attack it, and try to develop an income stream they have never had before, is through DRM – technological controls that prevent lending e-books more than a set number of times.  Like Pat Schroeder’s rhetoric of piracy, this approach has been tried before, by the music industry.  Record companies finally figured out that consumers would prefer not to spend their money for products that have their own obsolescence built in (unless the consumer pays again and again), and they abandoned the use of DRM.  The publishing industry is entitled to try the same failed experiment if they like, but, again, they should not complain if consumers, in this case libraries, choose not to support the model.

Taylor recognizes that the Harper Collins’ model would cost libraries money they have never had to spend before – repeated fees to keep loaning content they have already purchased – and he helpfully provides suggestions about where that money should come from.  He mentions and rejects the possibility that the publishers might forgo this new income stream.  He would be happy to take tax money, but he realizes that this is unlikely.  So instead he suggests that library branches be closed and librarians be laid off in order to free up the extra money.  That’s right; the core of his argument is that we should close libraries so that publishers can make more money. Of course, the libraries that would get closed or under-staffed are always those in places where libraries are most needed, in disadvantaged neighbors or at less wealthy colleges and universities.

These libraries are, apparently, expendable if they cease to serve the narrow (and probably misconceived) interests of publishers at this particular moment in history.  This kind of support, I expect, will not do Harper Collins much good; I can only hope that this naked self-interest and disregard for public policy and the general welfare will make Taylor’s column what it should be, a rallying cry to libraries and those who support them in city halls, state legislatures and academic administrations to stand up against business practices that threaten their core missions.

Fair Use, Libraries

How balanced is the balancing test?

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Fair use, we know, is a balancing test.  What that means, fundamentally, is that whereas all of the other exceptions to copyright’s exclusive rights have a set of requirements or circumstances that must be fulfilled for the exception to apply, the four fair use factors work differently.  They are not a list of requirements, such that every fair use must fulfill some standard in regard to each factor.  Rather, the four factors describe “an equitable rule of reason” where these factors, and others, are balanced to help a court determine if the specific use in question is, given all of its particular circumstances, fair.

The question of how the factors relate to each other is persistent.  If we view them, as I think we should, as inquiries that direct courts to examine pertinent circumstances, they will obviously overlap and interrelate.  But courts often apply the factors quite mechanically, with the result that there are quite a few 2 to 2 “ties.”  In those situations, and at other times, courts will sometimes suggest that one factor or another has more weight or importance than the others.  Thus the balancing test can become unbalanced.

One case — Harper & Row v. Nation Enterprises, 471 U.S. 539 (1985) — has been particularly pernicious in its impact.  In regard to two factors, readings of this case have contributed to a misconception of the fair use factors.

First, the case was often cited for the proposition that one could not make a fair use of an unpublished work (although it does not quite say this).  Such a rule would give the second fair use factor determinative weight when unpublished works were being analyzed.  Congress address this problem shortly after the case was decided by amending the fair use provision to specifically say that fair use could apply to unpublished works if the equities favored that use.

The second way in which the Harper & Row case impacted fair use was through its assertion that the fourth fair use factor — the impact of the use on the potential market for and value of the work — was “the single most important element of fair use.”  In its recent report on “Fair Use Challenges in Academic and research Libraries” a research team associated with the Association of Research Libraries reported on interviews regarding fair use with 65 librarians and identified as one of the common “misconceptions” the belief that the fourth factor was dominant, especially in regard to video.  Since the language quoted above from Harper & Row is still out there as part of a Supreme Court precedent, it is worth asking why this belief is, at least sometimes, misleading.

One reason is that even the Supreme Court changes its mind.  In its more recent fair use reasoning, the Court focused on the transformative nature of a new use, and emphasized that when a use is transformative, the market analysis is less important.  In the well-known “Pretty Woman” case, the court reasoned that transformative uses like parody simply do not occupy the same market space as the original work, so consideration of  impact on the market is not as important.

If we generalize this reasoning a bit, it has two important results.  First, it reminds us that the factors interrelate in such a way that the importance of one factor may be influenced by facts uncovered as part of the analysis of another factor.  That is how fair use ought to work, IMO.  Also, the Pretty Woman case, and the transformative analysis in general, is an example of how fair use prevents a plaintiff from using copyright to stifle free speech about the original work.  If parody or criticism were subject to an absolute rule about market impact, a critical book review could be enjoined because its quotations from the original, combined with a negative judgment on that original, would inhibit sales and should not, therefore, be judged fair use.  We should never allow copyright to work that way, and the flexibility of fair use is a safety valve against should restraints on speech.

Another factor that sometimes gets out of hand is the third one — the amount and substantiality of the portion used.  The ARL Report identifies as another misconception the idea that fair use can only apply to a small portion of a work.  In fact, many cases that find in favor of fair use, especially cases involving transformations, allow the use of quite large portions of an original.  As this blog post reports, a law professor has recently filed an amicus brief in a copyright case making exactly this point, that even using an entire article does nor preclude fair use if the other factors support it.  As the brief points out, if there were an absolute rule against using an entire work, fair use would become “an inflexible, one-factor test.”

The lesson from all this, that a fair use analysis must plod through all the factors in light of the specific circumstances and is never subject to “short cuts,” may not be welcome news for all.  But it is, nevertheless, good news, since it reminds us that fair use exists to permit uses that are socially valuable but which cannot be anticipated or encompassed within definitive rules laid down in advance.

Copyright Issues and Legislation, Libraries, Licensing

Is the sky falling on library lending?

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“The sky is falling,” Chicken Little cried.  I don’t want to emulate that panicky poultry too closely, but recent events have raised some concern in my mind over the continued viability of copyright’s “first sale” doctrine, upon which so much library practice depends.

First sale is the rule that once a lawful copy of a work is sold, the exclusive right to control distribution of that copy is “exhausted.”  Therefore libraries can lend books, consumers can resell CDs and NetFlix can rent DVDs through the mail.  First sale is not a necessary or automatic part of a copyright law; many countries have different provisions on what is sometimes called “exhaustion,” such as a statutory fee for each library loan of an item.  Most importantly, first sale does not apply when a work is licensed rather than sold.  Many of the current threats to first sale are controversies over where the boundary between a sale and a licensing transaction really is.

Here is a catalog, quite long I’m afraid, of some of these controversies and, I think, threats to library lending.

First there is the new lawsuit against UCLA over streamed digital video.  Part of that suit argues that what seemed like purchases of DVD by UCLA were really licensing situations because terms of use were printed on the purchase orders.  The plaintiffs use this claim to argue that UCLA cannot make a fair use argument in defense of their practice, but it is easy to see how such a claim could also restrict practices under first sale.  There have been many attempts to use one-sided terms of use to prevent or control resale; the Supreme Court rejected an early attempt to prevent second-hand resale at a lower price in Bobbs-Merrill v Straus back in 1908.  If a claim based on terms of use in a purchase order is successful in limiting fair use rights under copyright, it is easy to see how such terms will multiply to restrict library lending under first sale.

By the way, it will be interesting to see if these terms can survive analysis under the Uniform Commercial Code.  Article 2 of the UCC governs sales of goods, and its provision about conflicting terms of sale (the “battle of the forms”) might seem to support these terms of use.  But two questions occur.  First, if the PO terms turn a sale into a licensing transaction, does Article 2 even still apply, since it governs sales?  Second, do the terms so materially alter the transaction that they cannot simply be presented on a purchase order and enforced against the purchaser based solely on payment of that invoice?

My second concern comes from the news that a law firm has been sending cease and desist letters to academic libraries demanding that they stop filling ILL requests for scholars and institutions outside of the US.  I have not seen a copy of this letter, but the reports suggest that its legal arguments are quite confused.  For lending of articles these days, most ILL is governed by the contractual terms under which a database of journals is licensed.  If the license permits ILL without territorial restriction, there is no reason to stop following those terms.  If the license does not permit such lending, the demand is superfluous.  For the lending of physical items, first sale would seem to permit the purchasing library to lend to whomever it wants. But since the lawyer is representing a large group of STM publishers, this letter does remind us that there is a strong desire in the content community to place new and radical limits on long-accepted library practice.

Other threats to first sale do not directly involve libraries, but clearly have potential impact on them.  In Vernor v. Autodesk the Ninth Circuit Court of Appeals upheld the claim that a piece of software was not really sold but only licensed, such that the purchaser could not resell the physical discs he had bought in reliance on first sale.  Here again, there are obvious implications for library practice if much of what we think we are buying turns out to have only been licensed.

Finally, there is the non-decision reached this week by the Supreme Court in the case of Costco v. Omega.  That case involved not libraries, by a discount retailer and the claim by Omega Watches that first sale did not apply to copyrighted items (the symbol embossed on the back of watches) that are neither manufactured nor sold in the US.  The 9th Circuit (again) held that first sale did not apply and the watches could not be resold in the US without authorization.  The Supreme Court agreed to hear the case, and the Library Copyright Alliance filed a superb brief encouraging reversal.  But the Court split evenly, with Justice Kagan recusing herself.  That result leaves the troubling decision from the 9th Circuit in place, at least in Western quarter of the US.

The problem with the status quo in Costco is that it poses a threat both to some library lending and to the secondary market for used textbooks that is so important for students.  The LCA brief makes clear that affirming the lower court in Costco would leave academic libraries especially in great uncertainty, since they obtain quite a bit of material from overseas.  The case involves a technical issue about the so-called manufacturing clauses in the Copyright Act (sections 601-603) because that clause influences what is considered a copy “lawfully made under this title” for purposes of first sale (section 109).  Section 602 contains an exception to its restrictions on imports that allows libraries to purchase both books and videos from abroad for their collections, but the language about audiovisual works, which is different from that regarding books, seems to deliberately exclude lending of foreign-made videos.  So at the very least, academic libraries in the 9th Circuit must have doubts about whether they can lend foreign films purchased overseas.

Another potential problem created by Costco is for the used textbook market.  As this news story indicates, textbook publishers urged the Supreme Court to affirm the 9th Circuit decision in Costco precisely because it opens the possibility of moving textbook publishing offshore and then relying on the decision to close down resale of used books.

Perhaps the sky is not falling, at least not yet, on the first sale doctrine.  Kenneth Crews of Columbia suggests in this blog post that the Costco case, at least, does not give us cause to panic yet.  But I think it is pretty clear that the doctrine is besieged from several different angles.  Uncertainty about its scope and contours may translate, unfortunately, into less robust library services.  The unfortunate scenario is that, just as libraries are being really creative in rethinking our traditional role as “book warehouses,” content providers, sometimes intentionally and sometimes not, seem to be pushing us back into that limited space.  The reason, of course, is that the more first sale is restricted, for libraries and for consumers in general, the easier it will be to define the digital realm as a “pay-per-use” environment.