Tag Archives: competition

Libraries as Consumers: Potential for Protection?

Earlier this year, we published a blog looking at the degree to which competition law and policy could provide a useful lens for analysing the current state of markets for electronic content for libraries.

As highlighted in the blog, the prices and terms that libraries face for electronic content raise serious concerns about the sustainability of current levels of service to library users.

The blog suggested that further analysis from a competition perspective could be helpful, not so much at the level of individual companies, but rather to address wider practices that can see libraries limited in their ability to provide services.

This is the task of broader market investigations or studies, such as those carried out by the UK’s Competition and Markets Authority. Indeed, the American Library Association has made a submission to an ongoing review on digital content markets, highlighting concerns about the behaviour of platforms and publishers alike

A parallel approach can be to look at libraries as consumers, and what consumer law can offer us in terms of arguments or angles to explore.


Normally, we think about consumer law as referring to the protections in place to ensure that individuals are not mistreated by companies that sell products or services to them, benefitting from a situation of grater market power or information.

It covers issues such as rights when such products are defective, or when a consumer has been misled about what they are buying. We benefit from consumer law when we have the possibility to change our minds, or when we receive compensation when something goes wrong. This is particularly powerful when contacts for services are effectively non-negotiable.

Yet, to the extent that consumer law tries to respond to situations where the seller has the upper hand in terms of information or power, there are ideas in consumer law which can certainly seem applicable to the situation of libraries.

This imbalance, combined with the extensive copyright protections offered to rightholders, mean that libraries often face a hard choice between unfavourable terms and no access at all.

For example, a number of common law countries introduce the concept of ‘unconscionable’ contract terms (for example, Australia), referring to provisions which are not just unfair, but against the norms of society.

It could be argued, here, that if norms of society are set out in limitations and exceptions to copyright (for example, the importance of educational uses, of preservation and of criticism or quotation), then contract terms that override these, building on an imbalance in negotiating power between rightholders and consumers, are indeed questionable.

Outside of the common law world, in the European Union, there have also been efforts to address the question of unfair terms, with a 1993 Directive already setting out that a contract cannot be considered fair when the supplier is allowed unilaterally to change the content of the product or service offered.

In this case, we can perhaps point to the evidence of eBooks and other materials disappearing from bundles to which libraries subscribe. This was studied in depth in 2015, but stories continue to circulate underlining that it may continue to be a problem.


Clearly, as mentioned above, consumer law is primarily focused on individuals. As such, it can appear to be a bit of a jump to consider a library – as an institution – as a consumer.

Libraries themselves are in an odd position – they are not reselling anything, although clearly are giving users access, placing them somewhere between the situation of a business and that of an individual consumer.

The law in some countries does make clear that only individual people can count as consumers, given that anyone operating in a professional capacity can be seen as better able to defend their rights.

However, not all countries operate such an approach, with some extending consumer protections to cover small businesses, for example the Netherlands and Belgium. The same has also happened in Australia and New Zealand (for businesses with a turnover of up to $250 000).

These countries have recognised that an imbalance in negotiating power or information can affect an organisation just as much as individuals. The specific nature of libraries as neither businesses nor individuals makes this approach particularly interesting.

For example, the Belgian law makes it clear that small businesses can also raise doubts about contracts which allow sellers to change the characteristics of what they are selling unilaterally (recalling the situation of missing eBooks and journals).

The Australian law, also, allows for such unilateral changes to be counted as unfair, at least when the buyer is locked into the contract (a situation which may, de facto, be the case for a library acquiring content in order to serve students and faculty).


This blog, in looking at themes that emerge in consumer law, complements previous posts exploring the insights that competition law offers into the way markets for libraires do – or do not – function.

The previous post highlighted the issue that refusals to sell or licence (in particular where these seem designed to encourage the buying of big deal packages) create. It also noted concerns that libraries’ limited margin for manoeuvre faced with expectations from users and faculty put them in a weaker position, and left them susceptible to needing to pay more.

This post adds to this the risks around contract terms which prevent the fulfilment of recognised public interest goals (especially in the case of non-negotiable contracts), and around unilateral changes in packages offered.

There is certainly scope for looking further, from both the competition and consumer policy angles, in order to understand better the challenge facing libraries in a digital marketplace. Comments and links to further materials on the subject are welcome in the comments box below.

Is the Library eBook Market Working? Identifying Areas for Further Investigation

With the obligation to close their doors for the safety of users and staff alike, the ability of libraries to offer services digitally has never been so important.

Libraries have responded, diverting available resources and energies into providing online storytimes and consultations, and developing their presence on social media.

Some have sought to reassign budgets from physical to digital collections, sometimes with supplementary funding offered by public authorities. This experience is, for many, making clear the differences in what libraries’ money can buy in the offline and online worlds, especially as concerns eBooks.

This is not a new concern of course. Libraries have been highlighting concerns about the way the library eLending market has been working for years, with high prices, restrictive terms, and simple non-availability of works all regularly featuring.

While much of the attention has been on ‘trade’ eBooks – those lent out by public libraries – this is an issue that also affects academic libraries (as our interview with Johanna Anderson underlined).

In terms of solutions, the focus has tended to be on copyright, and how to update rules in order to ensure that the provisions that allow for libraries to work with physical books should apply also to electronic ones.

However, copyright – as well as exceptions to it – are a response to problems in a market, either because a public good is not being supplied, or because the structure and operation of the market is working to the disadvantage of one party or another. This, of course, is the job of competition and consumer policy.

Following on from an earlier blog on this site about how competition – or anti-trust – policy applies in the world of libraries, this one looks to explore what evidence we have – and what evidence we might need – in order to encourage competition and markets authorities to look into the way that library eBook lending operates.

To do so, it will look at a number of the steps usually taken in competition investigations in order to assess the need for an intervention.


Are there excessive profits?

A first potential indicator of problems with the market is when producers are making profits that can be considered higher than usual.

The theory at least suggests that if a market is competitive, then high profits will tend to attract more companies. This will generate more competition, which will drive profits down, for the benefit of consumers.

Looking at eBook markets, it does not seem to be the case that ‘trade’ publishers are enjoying huge profits, although the big players have seen rises in recent years, often however on the back of audiobooks.

On the academic side, major publishers do make high profit levels, although again not necessarily just on the back of their eBook operations.

However, profit levels alone are not a sure sign of a competition issue.


Is the market concentrated?

In many investigations, the next place to look in trying to work out whether a market is not working is whether there is a limited number of competitors. A large share of the market held by just one or a few companies could indicate a problem.

When it comes to eBooks, the picture is different for ‘trade’ and academic books. In the case of the former, there are plenty of publishers putting out novels and other materials.

With academic journals, there is a well-documented concentration of much of the market in the hands of a number of publishing companies, and concern every time that there is talk of a merger or take-over.

However, even were one of the big publishing companies to disappear, the market would remain to compare favourably with that for internet providers or airlines in many countries.

Of course, this is to assume that the market is for eBooks in general. Alternatively, we can look at the market for a single book. In this case, the rightholder has a monopoly thanks to copyright.

Clearly this is a violation of perfect competition, but one that – at least theoretically – can be justified in terms of giving the rightholder the time they need to recoup their investments. Whether the current length of copyright terms in international law has anything to do with economic logic is another question.

Crucially, the monopoly awarded to the rightholder of a particular eBook is easier to justify when these are substitutable – i.e. when eBook A by publisher X could broadly be replaced by eBook B by publisher Y.

When, however, this is not the case – i.e. because a student or researcher needs a very specific work, or a library card-holder wants to read the latest bestseller, not something a bit like it – there is more of a challenge.

Another solution would be to allow physical books to compete – for example by allowing a library to digitise a physical copy in their collection, and give access on a one-copy-one-user basis. However, this idea is deeply contested.

Even initiatives focusing on out-of-commerce works, such as Controlled Digital Lending, have led to threats of legal action, while the Hathi Trust’s work to provide digitised copies of books now is largely justified by the fact that access to physical copies is impossible.

Were a competition investigation to be launched, a key question would therefore be how the market is defined, and whether allowing physical books to compete with eBooks could bring a degree more competitiveness to markets for individual works without undermining the possibilities for rightholders to recoup investments.


Are there barriers to entry?

A further step in an assessment of competition is to look at whether there are issues that may be preventing competitors from entering a market, and competing with existing companies by offering cheaper alternatives.

Clearly if we are considering each individual eBook as a separate market, then there is a huge barrier to entry – copyright. But as suggested before, just like other forms of intellectual property, copyright at least originally had a form of economic logic.

But even if we look at academic eBooks as a whole, there can also be challenges. As set out in our interview with Johanna Anderson, publishers can tend to want users to access their eBooks through their platforms.

However, if libraries don’t want to – or can’t – buy access to every platform available, the only alternative  is to buy individual eBooks from vendors, but often at prices which have been set many times higher than those of print equivalents. This serves to push libraries towards publisher platforms, despite the fact that the library may only want a small share of the eBooks available there.

The effect of this is, effectively, to push libraries towards buying access to bigger platforms, potentially at the expense of spending on smaller, newer publishers.

This risks creating a barrier to entry by smaller players (or forcing them out of the market) by making it more difficult for libraries to allocate money more freely between publishers on the basis of what users actually want.

This situation is similar to that already seen with the ‘big deals’ offered for bundles of journals, which a number of countries are beginning to seek to abandon, even at the risk of losing access to content that researchers and students want.

In the trade eBook sector, there can also be issues with barriers to entry, for example when libraries or library systems are obliged to buy a fixed number of books.

The same goes when it is possible to sell bestsellers under terms that mean that they ‘capture’ large share of library budgets, leaving less space for new or emerging voices. In each case, established players gain an advantage that risks creating barriers for others.

A competition investigation here could shed more light on the subject of whether specific practices of bundling, or minimum purchases, have a negative effect on new entrants or customers.


Is there market power?

A final issue to explore, linked to the question of barriers to entry, is whether a particular player enjoys market power.

This implies that one side of the equation (a producer or buyer) has a freedom to change conditions – for example by raising or lowering prices, or imposing tougher or looser terms – and the other has little option but to accept, for example because there is no alternative.

This can be a real concern for libraries faced with demand from users – from readers coming to a public library, to students or researchers at an academic one.

As already underlined in the previous section, the way that the academic eBook market works can make it possible to increase prices steeply while libraries have little option other than to accept, or face frustration from users.

Similarly, the work carried out by the library eLending project in Australia has underlined to what extent libraries’ choice is limited given their need to meet patron demand. As a result, rightholders have a broadly free hand to set higher prices, although of course may themselves lack the information to do so effectively.

The particular situation of libraries – in particular their mission, often set out in law, to meet the information needs of users – can make them particularly vulnerable to exercise of market power.

A competition investigation could take the information already gathered in Australia, and look to understand more broadly the degree to which libraries are constrained in decision-making, and to what extent this is allowing prices and terms for eBooks that would otherwise be impossible.


Clearly, this blog has drawn only on a limited number of examples, and can only point at possibilities, rather than draw any conclusions. Nonetheless, competition investigations into the library market are not a new idea.

In 2018, the European Universities Association proposed one looking at broader scholarly publishing, and a group of individual researchers have sought to launch a case on a specific company, as did UK researchers on the subject of non-disclosure agreements in particular.

So far, eBooks have tended not to attract quite the same attention as other fields, but with it uncertain for how long libraries are going to need to be primarily digital institutions, there may be value in a deeper look.

With public and institutional funding likely to become scarcer in the coming years, ensuring it is well spent is going to be a priority.


[Corrected on 26 May 2020 to underline that the reference to concentration in the academic market should have emphasised journals, rather than books]

Competition and Creativity: A Draft Good Practice Checklist for Collecting Society Governance

A strong sign of a flourishing creative society is when there are lots of active authors, artists, musicians, performers and others. New ideas and expressions appear, giving people an ever-greater range of works that can inform and inspire them.

However, this can pose a challenge in terms of how to help users of works, when carrying out activities not covered by exceptions and limitations to copyright, find the right person to pay.

For institutions like libraries, the necessity to find every single author or publisher whose books or articles, for example, may be copied to create course-packs (at least where the portion copied is long enough to justify payment) would impose major administrative costs, over and above the remumeration to rightholders.

In these situations, collective management organisations (CMOs) can provide a valuable role, acting as an intermediary between the users of works and their creators. When they work correctly, they provide an efficient means of making copyright function.

In many countries, there is only one such collecting society per sector (such as books, films, or visual arts), often enjoying the exclusive possibility to licence rights. While this may bring simplicity, it also effectively creates a monopoly.

Just as with major internet platforms, it is therefore important to ensure that this situation really does work best both for creators and users of works. There have indeed been a number of competition (anti-trust) cases where collecting societies have been found at fault.

In these cases, there is a risk that uses of works are curtailed by excessively high pricing. Meanwhile, internal structures that allow more power for bigger actors (better established creators, bigger publishers) may risk leaving less resources for others than might otherwise be the case.

There are tools available to promote good practice, not least the Code of Conduct prepared by the International Federation of Reprographic Rights Organisations and the Good Practice Toolkit for the Management of CMOs created by the World Intellectual Property Organization (WIPO).

The below list, based primarily on the WIPO document, provides a draft framework for thinking through whether the collecting societies with which libraries are working are complying with good practices. It has benefitted from input from Ben White (University of Bournemouth) and Teresa Hackett (EIFL).

We welcome views, and of course invite libraries and library associations around the world to use it to judge whether the CMOs with which they are working are displaying good practice.

A. Transparent Rules

  1. Does the CMO regularly publish and keep up to date information on its membership rules and governance (including the possibilities for all members and representatives of the sectors they operate in to be represented on governing structures, and to influence decision-making)?
  2. Does the CMO regularly publish and keep up to date information on its tariff structure, the markets they offer licences in / collect monies from and policies on distribution (or non-distribution) of royalties, deductions and investments?
  3. Does the CMO regularly publish and keep up to date information on its complaint and dispute resolution procedures?
  4. Does the CMO regularly publish and keep up to date information on the members of its management and board, which categories of rightholder they represent, the sectors which they operate in (including the legal basis), their remuneration, and statements of potential conflicts of interest?
  5. Does the CMO have a policy on conflict of interest / require statements of potential conflict of interest from members?

B. Fair Membership

  1. Are the criteria for membership clear, transparent and non-discriminatory?
  2. Can a member terminate or change the mandates they give within a reasonable time-period?
  3. Can a member participate in the General Meeting?
  4. Can a member be eligible for positions in the decision-making or oversight bodies of the CMO, subject to fulfilling fair and proportionate requirements.
  5. Can representatives of the sectors from which the CMO collect monies be members?

C. Fair Operation

  1. Does the CMO guarantee a fair balance – including equal voting rights – between the interests of different types of rightholder (i.e. authors, publishers), including on the Board?
  2. Does the CMO have explicit authorisation from its General Meeting for all spending of revenues on things other than redistribution?
  3. Does the CMO produce and publish an annual report and audited accounts including information on incomes, collections at a general and sectoral level, operating expenses, and deductions, and inform its members of this?
  4. Does the CMO produce a summary, for each individual member or category of member earning royalties, of the amounts received for their works, the operating expenses and deductions applied, outstanding payments, and a breakdown by category of rights, types of use, and whether money comes domestically or through a reciprocal agreement?
  5. Does the CMO provide users with information about rights and categories of rightholders administered, a list of works managed (and relevant rights), a summary of tariffs, a description of licence terms / the legal basis under which they operate, the sectors and purposes for which they collect payment in line with statutory requirements, and details of how a licensee can cancel licences where appropriate?
  6. Does the CMO use objective, fair and non-discriminatory criteria in licensing works to users, taking account of statutory limitations and exceptions, and using tariffs based on cross-sectoral analysis, economic evidence, the commercial value of rights, and benefits to licensees?
  7. Does the CMO make available on the website a complete list of all the standard licences they offer, including the terms and conditions of those licences?
  8. Does the CMO assume liability for all uses carried out under the licences offered?

D. Strong Governance

  1. Is the CMO independent of government, i.e. protecting CMOs from potential abuse, but also avoiding the interests of CMOs steering those of governments?
  2. If the CMO regulates itself, does it have an oversight board with representatives of users and government?
  3. If the CMO is not self-regulated, is there a rigorous mechanism for ensuring its correct operation?
  4. Is there a means of ensuring that the interests of licensees and users are represented or at least protected?