The problem facing Macmillan is financial.

Libraries are a core market for publishers. Sales to libraries are in many respects promotion: libraries are a place readers discover books they might like to purchase. Libraries get a 40% discount on MSRP.

When a library buys paper volumes, really popular ones wear out and the library must buy new copies. eBooks don't wear out, so a new copy is not ordinarily needed.

What Macmillan is doing is imposing artificial wear on the electronic copy. (And note more than Macmillan is affected. Macmillan is the US umbrella imprint for German publisher Holtzbrinck Publishing Group, and imprints like Tor/Forge, St. Martins Press, Farrar, Strauss, and Giroux and others are under their umbrella.) Macmillan is equating checkouts of the eBook to checkouts of the paper volume. Frequently checked out paper volumes experience wear and must eventually be discarded and replaced, and Macmillan is applying that model to eBooks.

Librarians are deeply unhappy because they are watching their budgets decline. They already can't buy as many books as they might wish, and it's only getting worse. Having to replace eBooks after X number of checkouts is simply another burden.

The larger issue for libraries is where their funding comes from. The answer is taxes levied by the municipalities in which they are located. Taxes are a hot button. Nobody likes them, and many do everything they can to avoid paying them. (I corresponded with a chap in upper New York State who lived in driving distance of three different tax jurisdictions, and planned his shopping based on which jurisdiction imposed the lowest taxes on what items. When I pointed out that the additional gas needed for the drive, and the wear and tear on the car, not to mention his time spent doing it meant that simply getting everything in one place might be cheaper all told and would be faster, he agreed, but he just didn't like taxes.)

I live in NYC, and I've watched the branch around the corner from me have to cut staff and open hours as funding ebbs and flows depending upon which administration is in office.

I tell folks that instead of venting about Macmillan's practices, which is unlikely to change them, they push their local politicians to properly fund the local library system so librarians can afford to buy the needed books. Of course, that might mean them paying higher taxes, and many might be all in favor of higher taxes to support libraries as long as somebody else paid them...

But meanwhile, the major trade publishers are struggling. What used to be the Big 6 is now the Big 5, and further consolidation is likely. Demand is flat, and they face competition from self-published and indie-published work.

They are also struggling to make money on eBooks. 80% of the costs of publishing a book occur before it ever reaches the state of being published, in electronic or print form. Readers expect the eBook to be a lot cheaper because there is no print version, but the print/bind/warehouse/distribute portion of the costs is about 10%-15% of the average book budget. Dropping a print edition entirely won't save anywhere near as much as readers want to believe. The big trade houses can't sell eBooks as cheaply as many readers want. If they were foolish enough to try, it would be the old joke about "losing money on every sale but making it up on volume."

And Amazon is the 800lb gorilla in the room. Retailers get discounts on MSRP varying with the volume they order. The last I knew, Amazon was getting something like a 55% discount off MSRP and pushing for a higher one. You get a variant of the Walmart Effect, where Walmart suppliers can't make money at the prices Walmart is willing to pay, but can't not sell through Walmart and stay in business.

I think I'm happy I don't work for a major trade publisher. They are living in interesting times.