A Quarter-Billion Dollar Bag of Beans: Responding to Ken Whyte’s Attack on Library Book Loans

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Michael Geist

Guest
Ken Whyte’s Globe and Mail op-ed on “throwing the book at libraries” over their effect on booksellers and authors is an outlier that is typically best left ignored. Days after the Globe devoted three pages to the op-ed decrying library book loans, there have been some notable responses from people such as Meera Nair and Brewster Kahle, but not even a tweet from groups such as the Association of Canadian Publishers, Access Copyright, or the Writers’ Union of Canada that the piece purports to support. I suspect that this because there is no there there: libraries are widely regarded as essential community resources that play a critical role in learning, access to knowledge, community integration, and discovery of books. If anything, there is concern that libraries are facing significant budget cuts, which may adversely affect smaller and rural communities.

Public policy in Canada has long recognized that there is a public interest in supporting the publication of Canadian books, their distribution, and public access. That is why the Canada Book Fund has provided hundreds of millions of dollars in grants in recent years to support book publishing and promotion and why the provinces have spent millions more with their own book publishing programs. It is why the government has maintained support for Canadian ownership in the sector including retail sales, sought to strike a copyright balance between creators and users, funded libraries as integral to community access, and (as further discussed below) contributed hundreds of millions of dollars to support authors through the public lending right.

The net effect of these policies? As Whyte acknowledges, “there are more authors and more books than ever.” Indeed, many studies have found that libraries and bookstores have a symbiotic relationship with discovery of books and encouragement of book reading that leads to a better educated public and more robust marketplace. As Meera Nair notes in her excellent post responding to the op-ed, a study on independent booksellers in Canada released just this month which featured input from ten Canadian publishers states:

consumer research shows that most book readers frequent both libraries and bookstores. Library browsing and reading can substitute for book buying, but research data show that it also generates book purchases. Together, a public library branch and an independent bookstore will support and sustain higher levels of discovery and reading than either would generate on their own. Both have a common goal of encouraging book reading. Both share a commitment to the cultural goal of Canadians reading Canadian.

Further, a 2019 Booknet study found that books tend to stay popular longer in libraries, meaning that the majority of books that are being borrowed have limited overlap with those being sold in bookstores. The study found that 75% of book loans involved backlist titles of books that were published more than one year earlier. Meanwhile, the majority of book sales – between 55-60% – were for frontlist titles published within the prior 12 months. This distinction is important because it points to the fact that book loans from libraries actually become an important source of income for authors as their books move from the frontlist to the backlist.

How do authors garner income from library loans? The public lending right, which has paid out nearly $275 million to Canadian authors since it was established in 1986. As Rob Tiessen notes in his review of the history of Canada’s public lending right, the PLR is not a matter of copyright (indeed, if it were included in the Copyright Act there would be a need to provide equal treatment to all authors and Canadian authors would receive far less). Rather, it is a government funding program that provides support exclusively to Canadian authors.

Whyte largely dismisses the PLR as throwing “a few beans at guileless authors in compensation for the use of their works in libraries,” though one of his proposed solutions is to “vastly expand” the system. Yet Whyte neglects to mention that the PLR has been significantly expanded in recent years. According to the most recent PLR Commission Annual Report released earlier this month, in the past two years, the annual funding envelope has grown by just over 50 percent from $9,765,635 to $14,781,301. The annual payment is now more than five times larger than it was when the program was first established with more than four times as many Canadian authors receiving payment. The most recent payment data indicates that the average payment increased significantly from $712 to $822, the maximum per title payment was $467.88, and the maximum payment to an individual was set at $4,500. The maximum per title payment reflects a “hit rate” of $66.84 per title. The PLR conducts a survey of book holdings with seven representative public libraries and if the book is found in all seven surveyed libraries, the maximum is paid (the formula includes hit rate X library sampling results of seven libraries).

Whyte effectively argues that this simply isn’t enough to fairly compensate authors for perceived lost sales owing to library loans. But the math suggests that the PLR is actually compensating authors well given that compensation runs for up to 25 years per title. The Writers’ Union of Canada conducted a benchmarking study of remuneration for writers in 2017. It found that writers typically receive a 10% royalty on each book sold. In the TWUC Royalty math document, it pegs actual income for an author as between $3.50 and $5.25 for hardcover books and $2.00 and $3.00 on trade paperbacks. For convenience sake, say the average royalty per book is $4.00.

With an average PLR payment of $822, the average Canadian author is compensated for 220 “lost sales” due to book loans in public libraries across Canada each year. Whyte reports that the average book is only borrowed 8 times per year. Even if one in four loans represents a lost sale (a figure Whyte raises in his piece), the offset for the two lost sales by the PLR compensation for borrowing activity is non-trivial.

Further, this actually understates the value of the PLR given that the majority of borrowing activity involves backlist titles that have quickly outlived much of their sales potential in bookstores. The Booknet study noted above is consistent with research that indicates the vast majority of book sales for an individual title sell in the first year. Indeed, a study of best selling books showed only 4% of fiction sales and 6% of non-fiction sales occur more than one year after publication.

Yet while sales decline for books a year or two after publication, the PLR keeps on giving. The Canadian PLR pays based on titles in libraries, not actual loans. In other words, so long as the book remains on the library shelf, the author receives a PLR payment. The PLR formula does account for the age of the book, but the reductions occur at a far slower rate than what is occurring in the market. Authors receive 100% of the “hit rate” in the first five years, 80% in the next five years, 70% from years 11 – 15, and 60% from years 16-25. After 25 years, the book is no longer eligible for PLR payment.

If Whyte wants to argue that book loans unfairly mean lost revenues for authors, he must account for the fact that those books generate PLR compensation annually for 25 years, paying authors long after the majority of books have lost most of their commercial value and can be found on bookstore shelves. Given that the PLR already compensates for hundreds of book loans per year, the compensation (if the books remain usable) for authors can run into the tens of thousands of dollars covering thousands of loans. Further, these numbers have grown significantly in recent years given the 50% increase in the PLR allocation budget.

The value of libraries obviously extends far beyond the PLR, but if the claims are focused on the compensation for authors, authors groups successfully addressed that issue in the 1980s. They have been the beneficiary of hundreds of millions of dollars for library loaning activity as a result, which, needless to say, is enough for those so-called “guileless authors” to buy a lot of beans.

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