The Hidden Cost of Digital Lending
- Library digital lending (OverDrive, Hoopla, etc.) costs more per circulation than physical book acquisition when vendor fees, licensing restrictions, and limited simultaneous user licenses are included.
- Hidden cost structure: publisher licensing restricts availability windows, multiple patrons can't borrow same title simultaneously (unlike physical copies), and pricing designed to capture library budget growth rather than improve access.
- Equity impact: wealthy libraries afford unlimited simultaneous licenses; poor libraries ration digital lending, creating wait lists and limiting access for patrons without physical book alternatives.
- Real solution: support Internet Archive CDL (which allows library-owned digital lending), advocate for publisher direct licensing, or accept that digital lending margins are designed to stay high and budget accordingly.
Digital borrowing feels instant. Behind the scenes, libraries are paying for access through expensive, expiring licenses, often with fewer rights than a paperback.
Want more plain-English library tech realities?
Get the Unhinged Librarian newsletter (short, useful, and skimmable).
The Core Problem (In One Sentence)
Libraries often don’t buy an ebook, they buy a license to lend it, frequently at a 3–4× price multiplier, and that license may expire.
Translation: Print wears out slowly and predictably. Digital “wears out” on a timer.
Why It Matters (Beyond the Budget)
- The digital divide: Higher costs = fewer copies = longer waitlists for everyone.
- Privacy: Paper books don’t track you; platforms can log reading behavior.
- Collection fragility: Expiration means a library’s collection can shrink even when demand rises.
What the “Licensing Cliff” Looks Like
During COVID, digital demand spiked and many libraries shifted budgets into short-term licenses. When large batches of those licenses expire around the same time, budgets get hit with a renewal bill just to keep collections from shrinking.
Digital checkout growth (illustrative timeline)
| Year | Checkouts (Index) | What changed | Market / vendor context |
|---|---|---|---|
| 2020 | 430 | Pandemic closures push patrons to digital. | OverDrive dominates market (90%+). |
| 2021 | 506 | Digital borrowing becomes a default habit. | , |
| 2022 | 555 | Digital demand continues growing. | KKR (private equity) fully acquires OverDrive. |
| 2023 | 662 | Record-breaking digital circulation. | , |
| 2024 | 739 | Projected growth continues. | , |
| 2025 | 820 | Forecasted demand strains budgets. | “Licensing cliff” hits as renewals stack up. |
Vendor Consolidation (Why It Gets Hard to Say No)
When one platform becomes the default for ebooks, audiobooks, and even streaming, libraries lose leverage. Switching costs rise, alternatives disappear, and pricing power concentrates.
A simplified corporate timeline
- 1986: OverDrive starts as digitization for law firms.
- 2002: Launches library download service; gains early dominance.
- 2015: Acquired by Rakuten (global tech platform logic enters).
- 2020: Sold to KKR (private equity); incentives shift toward returns.
- 2020–2021: Acquires rivals/assets (RBdigital library business, Kanopy), reducing alternatives.
- 2023+: Expiring pandemic-era licenses accelerate the “renewal wall.”
FAQ (Quick Answers)
Why don’t libraries just “own” ebooks like regular books?
Consumer ebooks are personal licenses. Libraries buy a different, more expensive license to lend, often treated as a rental service instead of a sale.
Why can’t I find certain popular audiobooks at my library?
Some companies refuse to sell library licenses for certain formats/titles, pushing patrons to personal subscriptions.
Why is it so much more expensive for libraries?
Publishers often charge libraries 3–4× retail and may add expiration dates to mimic “wear and tear” in a digital file.
Who is OverDrive?
OverDrive operates the Libby app and acts as a major middleman hosting files and distribution. It is owned by KKR.
How did COVID change everything?
Digital went from “nice-to-have” to essential, shifting budgets into licenses. Patron habits stayed digital even after reopening, leaving libraries stuck with expensive contracts.
Sources / Further Reading
- Steve Potash (OverDrive) testimony on ebook pricing fairness (Jan 6, 2026)
- American Library Association: Digital Content Working Group
- The New Yorker: “The Hidden Cost of E-Books at the Library”
- TechCrunch: KKR to buy ebook distributor OverDrive (2019)
- Library Journal: OverDrive completes acquisition of RBmedia’s library business (2020)
- ReadersFirst reports on collection sustainability and the “licensing cliff”
Need help making sense of a vendor contract?
I do quick, practical reviews (especially for small teams).