From Gutenberg to Gouging: 55 Years of Digital Content in Libraries

Era 1: The Open Promise (1971–1999)

Project Gutenberg: The Original Vision

In 1971, Michael Hart, a student at the University of Illinois, typed the Declaration of Independence into a mainframe computer connected to the nascent ARPANET. He called it Project Gutenberg, and its premise was radical in its simplicity: digitize public domain texts and give them to anyone who wants them, for free, forever. No DRM. No licensing. No expiration. Just text.

Hart's vision was profoundly aligned with the library mission: universal access to knowledge. By the late 1990s, Project Gutenberg had digitized thousands of works and proven that digital distribution of books was not only possible but practically free at the margin. The question was never whether digital books would happen. The question was who would control them.

The Early Digital Landscape

Through the 1990s, digital reading was largely confined to academic and technical contexts. Adobe introduced PDF in 1993, and various ebook formats emerged. The commercial ebook market barely existed. But the infrastructure decisions being made during this period, particularly around Digital Rights Management (DRM) and the Digital Millennium Copyright Act (DMCA) of 1998, would shape everything that followed.

The DMCA made it illegal to circumvent digital copy protection, even for legitimate uses. This single piece of legislation effectively nullified the First Sale Doctrine for digital content and gave publishers a legal framework to treat ebooks as something fundamentally different from print books. Libraries could buy a physical book from any vendor, lend it as many times as they wanted, and resell or donate it when they were done. None of those rights would transfer to digital.

Era 2: The Platform Play (2000–2010)

OverDrive Enters the Library Market

OverDrive was founded in 1986 by Steve Potash, an attorney, originally as a company that converted analog media to digital formats. In 2000, the company launched Content Reserve, an online repository for ebooks and downloadable audiobooks.

The pivotal moment came in 2002–2003. Cleveland Public Library (Potash's hometown library) approached OverDrive about building a digital lending platform. Librarians Patricia Lowrey, Cindy Orr, Sari Feldman, and Tracy Strobel collaborated with OverDrive to create what would become the first popular ebook and audiobook lending service from a public library, launching in 2003.

This is the part of the story OverDrive loves to tell: local librarians and local tech company, working together, pioneering digital lending. And it's true. But what's also true is that from day one, the model was built on a fundamental asymmetry. Libraries didn't own the content. They didn't own the platform. They didn't own the patron data. They licensed everything through OverDrive, which licensed from publishers, creating a two-layer intermediary structure that gave libraries less control over their digital collections than they'd ever had over their physical ones.

Baker & Taylor's Digital Ambitions

Baker & Taylor, founded in 1828, was one of the oldest library distributors in the country. Roughly half of U.S. public libraries relied on Baker & Taylor for physical book distribution.

Seeing the digital shift, Baker & Taylor developed Axis 360, its own digital content platform for libraries, positioning it as a competitor to OverDrive. Axis 360 never achieved anything close to OverDrive's market share, but it mattered as the only real alternative. Having two vendors gave libraries at least minimal leverage in negotiations.

The Kindle Arrives (2007)

Amazon launched the Kindle in November 2007, and the consumer ebook market exploded. By 2010, ebook sales were growing by triple-digit percentages year over year. This was simultaneously the best and worst thing that could have happened to library digital lending. Demand surged. But publishers, suddenly seeing ebooks as a meaningful revenue stream rather than a novelty, began treating library lending as a direct threat to retail sales.

The irony is that libraries were driving ebook adoption. Multiple studies confirmed that patrons who discovered ebooks through library lending became ebook buyers. But publishers, operating from a scarcity mindset forged in decades of physical distribution, couldn't see lending as marketing. They could only see it as cannibalization.

Insight Venture Partners: The First PE Play

In October 2010, private equity firm Insight Venture Partners made a significant investment in OverDrive, placing two representatives on the company's board. This was the first time private equity capital entered the library digital lending space. From 2010 onward, OverDrive had financial investors expecting returns.

Era 3: The Publisher Wars (2011–2015)

HarperCollins and the 26-Checkout Bomb

In February 2011, HarperCollins dropped a bomb on the library world: all new ebook licenses distributed through OverDrive would expire after 26 checkouts. The rationale, per HarperCollins President of Sales Josh Marwell, was that 26 checkouts approximated "the average lifespan of a print book."

This was, to put it plainly, bullshit. Any librarian who has handled physical books knows that a decently bound hardcover can circulate 100+ times. The number 26 appears to have been calculated by assuming a two-week checkout period across one year (26 two-week periods). It was engineered to create an annual relicensing fee masquerading as a wear-and-tear analog.

The library community erupted. Boycotts were launched. Petitions circulated. But the boycotts largely failed, because libraries buy what their patrons want to read, and patrons wanted HarperCollins titles. The 26-checkout model wasn't just accepted; it became the template. Other publishers adopted similar or worse terms.

The Big Six Lockout

The 2011–2013 period was the nadir for library ebook access. Here's what the "Big Six" publishers were doing:

• Macmillan and Simon & Schuster: Refused to make ebooks available to libraries at all.
• Hachette: Stopped offering frontlist ebook titles to libraries in July 2010 (the embargo lasted until May 2013). Later raised prices by an average of 220%.
• HarperCollins: Implemented the 26-checkout limit.
• Penguin: Terminated its contract with OverDrive entirely in 2012, citing "security concerns."
• Random House: Continued working with libraries but tripled its ebook prices in March 2012.

By May 2013, the Urban Libraries Council documented that not a single one of the six largest publishers was selling ebooks to libraries on the same terms as print. The pattern was clear: publishers treated digital as an opportunity to extract more money from libraries while providing less value.

OverDrive's Repositioning: "Library Company" as Marketing

During this period, OverDrive executed a critical brand repositioning. It had started as a DRM infrastructure company. But as it became the dominant platform, Potash began framing OverDrive as a "library company" aligned with the library mission. In 2017, OverDrive would even become a Certified B Corporation.

The reality was more complex. OverDrive's business model depended on publishers being willing to license content through its platform. It could not and would not antagonize publishers on behalf of libraries, because publishers were the supply side of its marketplace. When publishers raised prices, OverDrive passed those prices through and took its margin. When publishers imposed restrictive licensing terms, OverDrive implemented them technically. The "library company" framing was marketing, not operational reality.

Rakuten Acquisition (2015)

In April 2015, Japanese e-commerce giant Rakuten acquired OverDrive for $410 million. Rakuten also owned Kobo, an ebook reader and retail platform. The acquisition gave OverDrive access to international markets and Rakuten's technology resources. Potash remained CEO. The library community largely shrugged, feeling a strategic corporate owner seemed preferable to a private equity one.

Era 4: Consolidation and the PE Playbook (2017–2023)

Libby Launches (2017)

In 2017, OverDrive launched Libby, a consumer-facing app that would become the primary way library patrons accessed digital content. Libby was well-designed, intuitive, and wildly popular. It earned thousands of five-star reviews and was named one of Popular Mechanics' Best Apps of the Decade.

A 2023 ALA report ("Digital Public Library Ecosystem 2023") found that Gen Z and millennial users of Libby were substantially less aware that the app was connected to their local library at all. They experienced it as a standalone service, not as their library's collection. OverDrive built a consumer brand that obscured the library's role. Patrons experienced Libby, not their library's digital collection. The relationship between patron and library was mediated, and to some degree replaced, by the relationship between patron and app. This is a textbook platform play: insert yourself between supply and demand, become indispensable to both sides, then extract value from the position.

KKR Acquires OverDrive (2020)

On Christmas Eve 2019, Rakuten announced it would sell OverDrive to KKR, one of the world's largest private equity firms. The inferred transaction value was approximately $775 million, nearly double what Rakuten had paid four years earlier. The acquisition closed in June 2020.

KKR is not a neutral name in American business history. The firm is famous for the RJR Nabisco leveraged buyout and was involved in the Toys R Us acquisition that ended in the company's destruction. KKR's standard playbook involves leveraged buyouts where the acquired company takes on significant debt, increasing profitability through price increases and cost cuts, and then selling the company at a higher valuation within five to seven years.

Here's what happened immediately after the acquisition closed:

• RBMedia rollup: KKR had acquired RBMedia, the largest audiobook publisher, in 2018. Two weeks after closing the OverDrive acquisition, KKR rolled RBMedia's digital library business (RBdigital) onto the OverDrive platform. One more competitor eliminated.
• Kanopy acquisition (2021): OverDrive acquired Kanopy, a leading streaming video platform for libraries (acquisition completed July 15, 2021). More consolidation under one roof.
• Price increases: Library ebook costs began climbing faster than inflation. DCPL's ebook spending went from $655,000 (11% of collections budget) in 2019 to $1.6 million (34% of budget) by 2025, and wait times barely improved.

KKR Acquires Simon & Schuster (2023)

In August 2023, KKR announced its acquisition of Simon & Schuster, one of the Big Five publishers, for $1.62 billion, completing the deal that October. This meant KKR now controlled both a major publisher (the supply of books) and the dominant library distribution platform (the channel through which libraries accessed digital books). Vertical integration at its most brazen.

KKR insisted the businesses would remain "separate and independently managed." But the structural incentive was obvious: KKR profits when publisher prices go up AND when OverDrive takes its margin on those higher prices.

The math: KKR now owns the platform with ~90% market share in library ebook lending; a Big Five publisher with roughly 12% of the U.S. book market; and previously owned the largest audiobook publisher. This is what monopoly position looks like when you're polite about it.

Era 5: The Collapse and the Reckoning (2024–2026)

Baker & Taylor Dies

Baker & Taylor had been showing stress fractures for years. In 2022, its book ordering platform went down in a server outage that rattled libraries. The company had been financially strained since at least 2024.

In 2025, things deteriorated rapidly. Baker & Taylor's lender, CIT, declared a default and moved to liquidate assets. On October 6, 2025, Baker & Taylor announced it would cease operations, effective January 2026. Over 500 employees were laid off immediately.

The digital platform, Axis 360 (which had been rebranded to Boundless), went offline on December 8, 2025. Libraries that had used Boundless as their ebook platform scrambled to migrate content. Some moved to Hoopla. Some moved to the Palace Project, a newer open-source alternative backed by Lyrasis. But many libraries lost access to digital content with minimal warning.

As of February 2026, Connecticut libraries are still waiting for refund responses from Baker & Taylor, and aren't sure anyone is even monitoring the email.

Bradley Bullis, Connecticut State Library's digital content coordinator, summarized it: "This is probably one of the biggest shocks, to have a whole vendor that everybody trusted just go away. It wasn't like they faded. They just went away."

Then it went formal. On March 16, 2026, Baker & Taylor filed Chapter 11 in the U.S. Bankruptcy Court for New Jersey (Case 26-12863): $100 million to $500 million in liabilities against $1 million to $10 million in remaining assets. The company half of America's public libraries once relied on had already been parted out. Between October 2025 and January 2026 it sold off the bulk of its inventory for roughly $8.7 million and collected about $11 million in receivables, and on February 13, 2026 it fully repaid CIT, the secured lender that had held its revenue in a lockbox since the April 2025 default. The lender got made whole. The libraries got an email nobody was reading.

There's one detail in the liquidation worth sitting with. Two of the biggest buyers of B&T's inventory weren't retailers or libraries. Meta paid $691,192 for books on November 10, 2025. Anthropic paid $563,388 on December 2. Both are listed, under oath, as "liquidation sale customers" in B&T's own bankruptcy filing. The oldest library distributor in the country got liquidated, and the AI companies showed up for the physical stock.

Who Filled the Void

A distribution business that half the country's libraries depended on doesn't just vanish. Its accounts, its warehouses, its shelf-ready processing: all of it becomes territory. The scramble to take that territory is the real story of 2026, and it splits cleanly into two kinds of buyers. The family-owned survivors, and the financial owners moving in.

Start with the survivor that mattered most. Ingram is now the sole major book wholesaler left in the United States. Ingram Library Services absorbed the largest single share of B&T's stranded public-library business: roughly 2,000 accounts and about 100 of B&T's own workers. Here's the part that should stop you. This is the exact consolidation the FTC looked at in 2018, when Ingram tried to buy B&T's book-wholesale business outright. A preliminary antitrust review flagged that the deal would leave "one national wholesaler," the parties self-reported, and they abandoned it under scrutiny in December 2018. What the antitrust process stopped as a merger just happened anyway, through bankruptcy, with no review triggered at all. Same outcome. No gate. Ingram is family-owned (Ingram Industries, Nashville), not PE, which is the one mercy in the sentence.

Then there's Follett Content Solutions, and this one is a clinic in operator-cycling. Follett (owned by the private-equity firm Francisco Partners since 2021) surveyed public libraries about entering the market on September 30, 2025, six days before B&T announced it was dying. On February 19, 2026 it announced it had hired 10-plus public-library veterans with 300-plus collective years in the field, several of them straight from Baker & Taylor. Ten weeks after that, on April 30, 2026, it shipped a Street Date preorder program and a 600,000-title adult print catalog. Read those three dates together: Follett reconstituted B&T's public-library stack, piece by piece, out of B&T's own people. The talent didn't leave the industry. It got re-shelved under a PE owner.

The financial owners didn't stop there. Barnes & Noble (owned by Elliott Management, Paul Singer's activist fund, which also owns Waterstones) upgraded its &Classwork platform to 3.5 million library-orderable titles in March 2026. Amazon launched "Books for Libraries" in June 2025: 30 to 40% off list, free MARC records with purchase, sales reps working the Pacific Northwest first. Count the owners now sitting in library supply. KKR in digital lending, Francisco Partners in school-and-now-public distribution, Elliott in wholesale, Amazon in whatever Amazon decides it is. The B&T collapse didn't decentralize the supply chain. It re-concentrated it, this time with more financial owners than before.

The counter-story is the family shops that expanded on their own catalogs instead of absorbing B&T's corpse. Mackin launched MackinPublic on October 13, 2025, its first public-library line in 43 years. Bookazine (family-owned, Bayonne NJ, founded 1929) picked up 100-plus new library accounts in days. And Brodart survived for the most on-the-nose reason in the whole file: its CEO since 2020 is George Coe, the executive who ran B&T's Library & Education group from 2000 to 2017, who is credited with launching Axis 360 in 2011, and who hired Amandeep Kochar (the CEO who would preside over B&T's collapse) in 2014. Coe left, went back to a family-owned supplier that never took on the leverage that killed B&T, and now runs a deliberately AI-absent shop. The man who built the platform got out before it took the company down.

Two kinds of buyers. The financialized owners absorb the talent and the accounts. The family businesses expand on what they already had. Extraction vs. stewardship, playing out one warehouse at a time.

The DC Council Takes On OverDrive

With Baker & Taylor gone and OverDrive's market dominance now essentially unchallenged, the pricing problem became impossible to ignore. In Washington, D.C., Ward 3 Councilmember Matthew Frumin introduced B26-0490: The Library E-book Pricing Fairness Amendment Act of 2025.

The bill would prohibit libraries from paying more to license an ebook than a consumer would pay at retail, and prevent publishers from limiting the number of licenses and loans a library can engage in. To avoid D.C. acting alone, the bill includes a trigger clause: it only takes effect if 10 other jurisdictions with a combined population of 50 million people pass similar measures. Connecticut has already passed such a bill. New Jersey and Massachusetts have introduced variants.

DCPL Executive Director Richard Reyes-Gavilan testified plainly: the current model is unsustainable. For a bestseller like David Szalay's "Flesh," DCPL pays $28.99 for a physical copy it owns forever. The ebook costs $59.99 and expires after two years. The audiobook is $69.99. For perennially popular titles like Michelle Obama's memoir, DCPL has had to relicense the same book over and over, spending hundreds of dollars for what is, at the end of the day, a file on a server.

Potash's Testimony: The Mask Slips

Steve Potash submitted extensive testimony against the DC bill. The key passage:

"To argue that libraries are entitled to "Magical Library Books" at the same price of a Kindle ebook from Amazon, ignores the fact that print and digital library books are not the same product. Yet the bill's proponents want to strongarm their CDL contracts on every public librarian."

ReadersFirst, a library ebook advocacy group, called the testimony "vituperative" and "a poor argumentative showing that seems not to understand this bill at all."

Potash's core argument, that digital library books deliver "500% more value" because they're never lost, never late, and never wear out, is technically true and strategically disingenuous. It's the argument of a middleman protecting his margin, not a "library company" advocating for its customers. ReadersFirst noted the irony of Potash's testimony directly contradicting that of DCPL's own executive director. As they put it: "It's a business. It makes money, and lots of it, from us. It's not our friend."

The Dam Breaks

Potash lost. On May 5, 2026, the DC Council passed B26-0490 unanimously, 13 to 0. The bill still carries its trigger clause, so DCPL's contracting rules don't switch on until ten other states, holding a combined 50 million people, pass substantially similar laws. But the vote itself was the signal, and the states were already moving:

• Illinois passed the Digital Library Protection Act (HB5236) through the House with no recorded no vote; it sits in the Senate.
• New Jersey has S4520, introduced by Sen. Andrew Zwicker, making it a consumer-fraud violation to charge libraries more than the public or to ban interlibrary loan and storytime read-alouds.
• Rhode Island filed H7606 in February 2026, its latest run at a fight it's been having since 2022. It won: the bill passed both chambers on June 11 and became law without the governor's signature on June 18, 2026, the third jurisdiction to enact one.
• Minnesota got HF3698 to committee, where it stalled on a 10-8 vote in April 2026 over a procedural deadline dispute, not the merits.
• Massachusetts has a substantive bill stuck in committee and a separate study commission that passed the Senate 37-0.

Then, on May 26, 2026, five of the biggest public-library associations in North America (the Urban Libraries Council, the Public Library Association, the Canadian Urban Libraries Council, the Chief Officers of State Library Agencies, and the Association for Rural & Small Libraries) issued a joint statement calling on the Big Five publishers and the platforms to negotiate sustainable terms. Their number: $13 for the consumer ebook, $55-plus for the two-year library license of the same file. Many libraries now spend half or more of their entire collections budget on content they will never own.

Analysis: The Extraction Pattern

The Playbook, Decoded

The 55-year history of digital content in libraries follows a predictable pattern:

• Phase 1, Value Creation: Build something genuinely useful (OverDrive's 2003 lending platform). Align with institutional mission. Get libraries dependent on the platform.
• Phase 2, Lock-in: Become the infrastructure layer. Control the patron experience (Libby). Make switching costs prohibitive. Eliminate competitors (RBdigital rollup, Baker & Taylor's collapse).
• Phase 3, Extraction: Raise prices. Accept increasingly restrictive publisher terms without pushback. Use the monopoly position to capture an ever-larger share of library budgets.
• Phase 4, Exit Preparation: KKR's typical hold period is 5–7 years. They acquired OverDrive in 2020. We're in the window. Every price increase, every competitor eliminated, every patron locked into the Libby ecosystem increases the eventual sale price.

The First Sale Doctrine Gap

The fundamental structural problem remains the one identified at the very beginning: the First Sale Doctrine doesn't apply to digital content. When a library buys a physical book, it owns that book. It can lend it, display it, donate it, or destroy it. No permission needed from the publisher. This right, established by the Supreme Court in 1908, is the legal foundation of the public library as we know it.

Digital content exists in a legal framework where libraries own nothing. They license access through intermediaries, under terms set by publishers, on platforms controlled by vendors. Every link in that chain has a profit motive. No link in that chain has a legal obligation to serve the public interest. The result is entirely predictable: costs go up, access goes down, and libraries (funded by taxpayers) absorb the squeeze.

The Monopoly Math

As of mid-2026, here is the competitive landscape for library ebook lending in North America:

Platform	Owner	Market Share	Status
OverDrive/Libby	KKR	~90%	Dominant
Boundless (Axis 360)	Baker & Taylor (Chapter 11)	N/A	Shut down 12/8/25
cloudLibrary	OCLC (nonprofit; acquired from bibliotheca 2024)	Small	Active, limited
Palace Project	Lyrasis (nonprofit)	Emerging	Growing post-B&T
Hoopla	Midwest Tape	Niche	CPC model

This is not a competitive market. This is a monopoly with decorative alternatives.

What Comes Next

The Legislative Path

The trigger clause is the whole game now. DC has passed its bill but frozen it behind a condition: ten more states, 50 million people, substantially similar laws. Connecticut and Rhode Island are on the board. Illinois passed the House unanimously but is parked in a Senate committee, with a fall carryover expected. New Jersey and others are in motion, and the five-association statement gave the whole effort cover it didn't have a year ago. The open question is the one it's always been: whether the field can hold political momentum across a dozen statehouses while the publishers and OverDrive lobby every one of them. Monopolies don't negotiate until the law makes them.

The Data Sovereignty Question

Beyond pricing, the fundamental issue is ownership. Libraries need to own their data, their patron relationships, and their digital infrastructure. The current model, where a PE-backed vendor controls the platform, the app, and the patron experience, is architecturally incompatible with the library mission. Open-source alternatives like the Palace Project point toward a different model, but they need investment, adoption, and publisher cooperation to scale.

The Exit Clock

KKR acquired OverDrive in June 2020. The typical PE hold period is five to seven years. We are now in year six, and the tells are showing up right on schedule. In March 2026, OverDrive named Marc DeBevoise (former CEO of Brightcove, former ViacomCBS) as President and put him on the board, while Potash kept the CEO title and the "long-term vision." Splitting an operating chief off from the founder for the first time since 1986 is what a company does when it's grooming for a sale, not building for the next decade. Two months later, in May 2026, OverDrive spun its German-speaking Europe business into a standalone GmbH in Munich, invoicing in Euros through a German bank account: a clean, separable revenue unit, exactly the kind of tidy carve-out a buyer likes to see on the org chart.

Evaluate every OverDrive move through one lens: does it raise the valuation for a sale? Price increases do. Competitor elimination does. B&T's collapse did. A new "Inspire Me" AI layer in Libby that steers patrons toward titles the library already licensed does. Testifying against library-friendly legislation does. The pattern is consistent, and the clock is past the halfway mark.

Conclusion

Michael Hart typed the Declaration of Independence into a computer in 1971 because he believed knowledge should be free. Fifty-five years later, a private equity firm charges libraries $60 for a two-year rental of a file, controls 90% of the lending market, owns one of the publishers it distributes, and testifies before a city council that libraries wanting fair prices are asking for "Magical Library Books."

That's the word Potash chose. Magical. For libraries wanting to pay what consumers pay for the same file.