Over 95% of public libraries in the US and Canada contract OverDrive for digital lending and other services, making it “by far the leading commercial provider of e-books and other digital content,” according to director David Burleigh Libraries does brand marketing and communication for the company.
“However, that 95% relates to public libraries that are our customers,” he said. “We don’t get 95% of their digital budget.”
The growth in the North American library space therefore depends primarily on adding new digital lines to its collection. A good example of this was the KKR buyout. The New York investment firm transferred the library business of its portfolio company RBmedia to OverDrive in the summer and made a larger selection of audio books and magazine titles available to Libby users.
“We just went live with 3,000 magazines,” said Potash, “now you can flip through everything from tabloids to the Economist to the New Yorker.”
However, OverDrive’s greatest opportunity for growth is in education. Just look at the US, Potash said, where there are roughly 12,000 to 13,000 unique public library districts but more than 100,000 unique school systems or schools.
Currently, K-12 districts and colleges make up about 44,000 of OverDrive’s 65,000 customers around the world, he said.
“A lot of our income comes from selling content or e-books, and in schools that’s our only source of income. For schools, we don’t have hosting or service fees,” said Potash. “The vast majority of the entire corporate business is based on book publishers, and for almost all major publishers we are one of their top sales partners for growth and sales at home and abroad.”
Most of these sales go through the OverDrive Marketplace, an online platform not dissimilar to Amazon’s marketplace. On the site, institutional users – such as New York City public schools or Princeton University – can search, browse, and acquire rights to digital media, access critical reviews, and artificial intelligence-based and professionally curated recommendations and reading lists based on interests, academic Level or subjects.
“We deliver 50 books every second around the world 24 hours a day,” said Potash. “I cannot tell you how many authors come to us because we are an extremely powerful channel to the institutional buyers in libraries and school systems.”
Breeding said the KKR deal “set off alarm bells” among public institutions such as libraries that are skeptical of both private equity and industry consolidation in the publishing industry. But he does believe that an owner who works to strengthen OverDrive’s clout is actually good for institutional buyers.
According to Breeding, Potash and his team often negotiate better digital license and price conditions on behalf of their customers, “in this ecosystem that is dominated by a few very large publishers”.