So why did OverDrive do it? At first glance it looks like a poor business decision, but they did replace the single account with 10 smaller accounts (from individual library systems in Kansas). I don't know the fees involved but there's a good chance OverDrive came out ahead on this move.
But we should also consider external factors. They could have gotten a 10% increase, or even a 20% increase. What pressured them into going for an extortionate increase? This is just my guess, but I suspect that the capital investors aren't happy.
In October of 2010 OD picked up another chunk of capital from several investors. At that time they were probably also told that they needed to be more profitable, and that means raising the fees they charge libraries. This is just speculation on my part, but it does fit.
It also fits with the rumor I heard a month back. I had heard at a conference that one of OverDrive's investors had been asking detailed questions about the library ebook market. A couple people remarked that it looks like a shake-up might be in the works at OverDrive.
I'm not sure that anyone knows just yet what's going to happen, but whatever it is will shake up the library ebook market.
image by Jettpakk1