OverDrive announced today that their contract to provide ebooks to the Kansas Digital Library Consortium had come to an end so the servers were about to be shut off. The KDLC decided to leave OverDrive some time back and they are currently beta testing the 3M Cloud Library, a recently announced alternative.
To be honest, we all knew this was going to happen. Back in June the Kansas state librarian announced that Kansas had signed a deal with 3M and were planning to take their ebooks with them. They left for the obvious reason: cost. OverDrive had jacked up their fees far more than the state was willing to pay and possibly more than they could have afforded to pay. The total fees would have jumped by almost 700% by 2014.
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.
InOD 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