The e-reader and consumer e-book industry has hit the proverbial glass ceiling in terms of sales. One of the segments that has been consistently on the upward trend has been libraries.

A recent report by the Library Journal has stated that 95% of all US libraries have an e-book collection. That’s up from 89% in both 2013, when researchers thought that adoption had plateaued for good. The average number of e-books a larger library or consortium has in their collection is around 20,244, while medium sized libraries statistically had around 10,434 titles.

Over 10 different libraries in the US and Canada had over one million digital loans in 2014, with two libraries lending out two million e-Books. This number is poised to double in 2015 as Overdrive, 3M and Baker & Taylor gain more market share and expand internationally.

One of the greatest success stories of 2015 has been the rise of Hoopla and they are a serious contender in the library space. They started out the year with only 13,000 titles and only a few hundred libraries were doing business with them. Hoopla now has an extensive catalog of over 350,000 titles from companies like Disney, DC Comics, Universal Music, and Starz. Over 800 library are offering with Hoopla content, which services over 1,000,000 registered users! Hoopla is signing up 15 – 30 library systems every month thousands of patrons are now enjoying e-books and comics.

The Hoopla business model is quite different from most other companies in the digital library space. They make their entire collection available on a libraries website and libraries only pay money when a user checkouts an e-books. They have safeguards in place where collection managers define a payment threshold, so they won’t suddenly go over their allotted budget.

Hoopla reported just today that they have forged a new partnership with California State University, giving students exclusive online and mobile access to more than 380,000 movies, music, eBooks and more. This is the first non-library that has bought into their ecosystem and Hoopla has big plans to expand into the educational segment in 2016.

2015 has been very kind to Overdrive, the undisputed king of the digital library space. Back in March they were acquired by Rakuten, the owners of Kobo. They got a huge cash injection and will be expanding the empire into new markets. Overdrive has the largest footprint out of any company that is involved in selling e-books, magazines, newspapers, video and audio. They have a presence in almost all of Europe, Australia, New Zealand, Canada and the United States.

Hadie Bartholomew, Communications Manager at Overdrive said “Every month we add thousands and thousands of titles to our catalog and recently added hundreds of thousands of Smashwords titles.”

She went on to say “currently, we offer in our Marketplace (online catalog) 2.8 million digital titles – up from 2.6 million at end of 2014 – from 5,000 publishers. As you know, we serve the vast majority of libraries in the U.S. (91% according to LJ), Canada, UK and Australia via the OverDrive platform and we have recently added library partners to our network in Germany, Denmark and South Korea, to name a few. We currently serve over 34,000 libraries and schools worldwide (up from 33,000 at end of 2014) and are serving public libraries in 23 countries, and schools and colleges in 43 countries. ”

One of the keys to Overdrives success is that they are the only company to offer Kindle books. They have an exclusive agreement with Amazon to provide libraries with the ability to deliver checked out material directly to a patrons Kindle e-reader or Fire tablet. The agreement that Overdrive and Amazon have only covers the US market and likely will not expand into Canada or other major markets.

Baker and Taylor has also been experiencing tremendous growth over the course of 2015. Michael Bills, the Sales Director, Digital Products said “We have well over 2,000 libraries that do business with us now and this is up from about 1,200 in 2014. Our growth, and our expansion into Canada in partnership with Whitehots, is gaining traction as more libraries begin to realize the advantages of ordering print and digital formats at the same time from a single vendor.”

He went on to say “We continue to sign new supplier agreements, and broke the 1 million mark for e-Books available for library sale this year, along with an additional 50,000 digital audiobook titles. The number of users and circulation are growing year-over-year at existing accounts, and we also are seeing a surge of new patron activation since the release of the all-in-one Axis 360 app earlier this month.”

One of the most recent players to really make it big in the library industry has to be 3M. The company launched with services just in the US and has since expanded into international markets. They also design their own terminals, which makes self-checkouts extremely viable and intuitive.

The 3M Cloud Library has been focusing on getting more content into their online catalog. In 2015 the company now offers 587,562 e-books and other media content, which is up from 419,358 in 2014.

Heather McCormack is the Collection Development and Publisher Relations Manager at 3M. She told me “The most obvious signs of change for us in 2015 are overseas, in the UK and Australia, where we’re signing publishers left and right, both Big Five subsidiaries and powerful indies (HarperCollins UK/AU, S. & S. UK/AU, Faber & Faber, Faber Factory, Canongate, Allen & Unwin). In the United States, W.W. Norton joined in August.”

Jake Klem told me that “in the US and CA we currently have 293 cloud library systems active today compared to 217 in 2014. ”

The High Cost of e-books

The companies that market digital content to libraries are doing very brisk business, but libraries budgets are being stretched thin. This is primarily because all of the major publishers have different revenue models and it creates a lot of headaches. Some e-books expire after a certain number of loans, whereas others cost dramatically more than the hardcover or paperback.

The new Michael Connelly novel Burning Room costs $14.99 on Amazon, but libraries are paying $106.00 per copy. John Grisham’s Grey Mountain costs $15.99 but costs libraries $85.00.

James Larue of the Douglas County Library system recently said “libraries and taxpayers who support libraries are being ripped off in ways that not only outrageously inflate the payment to publishers (surely their costs are not three times greater to provide the book to us than to the consumer), they also greatly reward distributors. The result? At a time when about half of our patrons use e-readers, we barely offer 10% of our collections to them in their preferred format. When does a vicious price become complicity between publisher and distributor, to the detriment of the public?”

The Digital Content Working Group co-chair Carolyn Anthony recently gave a talk at the American Library Association annual event in San Francisco. He said that his organization was “continuing to dialogue with representatives from the Big Five publishers,” and that e-book pricing remained a major issue. “We generally believe that the current pricing models are not sustainable, and that libraries cannot develop collections of critical size if they’re paying $90 per title or re-buying titles every year,” Anthony said. However, she added, a number of independent and smaller publishers are proving “much more flexible on terms,” and “much more eager” to work with libraries. “That’s a very good sign,” Anthony said. “Maybe this is an avenue that will help us develop richer and deeper digital collections.”

A Possible X-Factor for 2016?

Bestselling author Joe Konrath is in the process of fully developing a new system for libraries that will allow them to have 100% ownership of the e-books buy. There are 1,000 e-Books in the collection, from authors such as Hugh Howey, H.M. Ward, Barry Eisler, Michael Prescott, Bella Andre, and CJ Lyons.

Konrath noted that “Right now, we’re working with a select group of partner libraries. We’ve been dealing exclusively with that initial group, but now we’re adding another selection of libraries who will be joining in the next two weeks. They’ve weighed in and have helped us build the platform they actually want. Our full launch date is tentatively set for 2016. When that happens, we’ll begin distribution to ALL public libraries, be it individually, whole library systems, and consortium groups, through both our web platform, as well as patron reader apps.”

I think Konrath is pissed that he only earns around $60 per month from Overdrive, 3M and other e-book players. He is building a robust system that makes financial sense to authors and something he would personally use. This might be a huge x-factor for 2016 and something libraries should pay attention to.

Wrap Up

Libraries have been undergoing a radical transformation in recent years. Some are building Maker Studios so kids can learn about 3D printing. Servicing the needs of young entrepreneur communities is also a focus with many and the Vancouver Public Library recently unveiled full on recording studios. You can say that physically libraries are transforming, but this is very evident with so many buying into the e-book revolution.

“Demand for e-books continues to grow – in fact, it’s our fastest growing area of circulation at Toronto Public Library with 3.5 million checkouts last year alone and this figure will double at the end of 2015” said Vickery Bowles , City Librarian at Toronto Public Library.

– This story is still developing. More Companies and data will be added soon.

