Markets and Economics

By the end of this section, you will understand:

1. How U.S. copyright law grants exclusive rights over works and how those rights can influence electronic resource prices and library budgets.
2. The limitations of the first sale doctrine and why it does not authorize the reproduction involved in many digital transfers.
3. How digital rights management (DRM), file formats, and licensing terms impose different constraints on access to ebooks and ejournals.
4. The effects of rising costs in academic journal subscriptions on library budgets and how citation-based metrics influence purchasing decisions for journal collections.
5. The financial challenges associated with APC-funded Gold Open Access (OA), and how this financing model differs from other ways of supporting open access.
6. The legal challenges facing digital lending models, as exemplified by the case against the Internet Archive, and how these challenges might shape the future of library collections.
7. The implications of the 2022 OSTP public access memorandum and agency policies for access to federally funded research, including repository-based access.
8. How technological and legal constraints on digital resources can limit libraries’ abilities to provide access, forcing them to make difficult choices regarding the scope of their collections and their budget allocations.

Introduction

I think it’s fair to state that copyright law helps shape the market for electronic resources, even if it does not determine prices by itself. In this section, we’ll examine how U.S. copyright law, licensing terms, and technical restrictions affect what libraries can acquire and provide. We’ll then consider the consequences for library budgets and the costs of scholarly publishing.

First, we’ll distinguish ownership of a copy from ownership of copyright. That distinction helps explain why lending a printed book and transmitting a digital copy raise different legal questions.

Copyright

U.S. copyright law grants copyright owners exclusive rights over certain uses of their works, subject to statutory limitations. The owner may be an individual or an organization. These rights are sometimes described as a limited legal monopoly over a work (not necessarily over an entire market). But case in point, for libraries, a particular journal or book may be difficult to replace when users need that specific content; this can strengthen the supplier’s bargaining position. Section 106 grants copyright owners the following rights, subject to Sections 107 through 122:

(1) to reproduce the copyrighted work in copies or phonorecords;

(2) to prepare derivative works based upon the copyrighted work;

(3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;

(4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly;

(5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and

(6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.

Source: Copyright Section 106

These rights provide incentives for creation, and limitations on them support activities such as criticism, education, and lending. To understand lending, we need to distinguish ownership of a copy from ownership of copyright, as Section 202 does. Buying a printed book transfers ownership of that particular object. It does not ordinarily transfer copyright. Without the limitation on the copyright owner’s distribution right, owning the object would not by itself authorize lending or reselling it.

The first sale doctrine provides that limitation (also see the Justice Department’s explanation). Recognized in Bobbs-Merrill Co. v. Straus in 1908, it was codified in 1909 and carried forward in the 1976 Act. Subject to statutory exceptions, the owner of a particular copy lawfully made under U.S. copyright law may sell or otherwise dispose of that copy without the copyright owner’s permission. This enables libraries to lend lawfully acquired physical books and allows us to give away or resell a books we own. It does not authorize making additional copies. Library reproduction and preservation involve separate legal provisions, including Section 108.

The digital medium makes things messier, as it tends to do. If I give you my printed book, I transfer the existing copy and no longer possess it. Sending you a file typically creates a new copy on another device, even if I later delete my own file. The first sale doctrine limits the distribution right, but it does not authorize that reproduction. This is different from transferring an existing physical medium containing a digital work, which is a distinction explained by the Copyright Office. The key question is what the transfer does and not simply whether the content is digital.

Digital access also depends on software, hardware, and agreements. It helps to separate three kinds of constraints:

• File compatibility: Can the reader’s software open and display the file? A format can be widely supported or tied to particular applications. Compatibility problems affect usability and preservation, but do not themselves determine whether lending is lawful.
• Digital rights management (DRM): What actions do technical controls permit? DRM may restrict copying, printing, access periods, or the devices on which a work can be read. File format and DRM are distinct: a file format does not inherently require DRM.
• Licensing terms: What uses does the agreement authorize? A license may specify authorized users, simultaneous access, lending limits, and whether access expires or continues indefinitely.

These constraints are not interchangeable but they can interact. For example, a library might have permission to retain a file but lack compatible software, or have compatible software but no permission to redistribute the file. Amazon’s Kindle ecosystem illustrates dependence on compatible applications. Readers do not have to buy a Kindle device to read their ebooks, but they at least need the Kindle app. For libraries, the practical questions concern the permitted uses, duration of access, and ability to preserve content or move it to another platform. So these contraints impact the libraries’s mission.

Licensing gives suppliers ways to charge for different levels and durations of access. It can generate recurring revenue and restrict redistribution, but not all licenses require recurring payments or impose the same restrictions. We therefore need to examine the actual agreement before drawing conclusions about cost or control.

The case of Hachette v. Internet Archive illustrates the legal stakes. The Internet Archive (IA) began the digital lending project at issue in 2011, before the pandemic. Its controlled digital lending (CDL) model generally limited concurrent digital loans to the number of corresponding physical copies held out of circulation by IA and participating libraries. During the National Emergency Library, from March to June 2020, IA suspended that one-to-one restriction. Four publishers sued, and the district court ruled against IA in 2023. On September 4, 2024, the Second Circuit upheld the rejection of IA’s fair-use defense for the lending practice at issue, not merely the temporary suspension of lending controls. The decision shows why owning a print copy does not by itself authorize scanning and lending a digital copy. It does not establish that all ebooks must be licensed rather than sold, or resolve every possible digital lending arrangement.

Impact on Ebook Collections

What does this mean for libraries in the digital age? Libraries must evaluate access terms as carefully as purchase prices. A subscription may require payment for each renewal period. For example, a metered license may expire after a specified number of loans or a specified time. Or a perpetual license may provide continuing access, although then we need to attend to platform fees and preservation arrangements. As Sanchez (2015) puts it when describing recurring costs,

At its simplest, this takes the form of paying x dollars per year per title during the length of the contract (Forecasting sect, para 4).

The conundrum is this: Maintaining existing access can consume funds that a library might otherwise use to add titles. Growth in the number of published works does not oblige a library to acquire them all, but it can increase pressure to expand coverage. When renewal prices rise faster than the budget, the library may have to reduce coverage, limit access, seek additional funding, or reduce spending elsewhere. The outcome depends on the mix of licenses, collection priorities, and available alternatives. Again, messy.

If that alone were the issue, maybe librarians could discern other sustainable ways to proceed, but Sanchez (2015) raises additional issues and questions: what if publishers raise the prices for digital content at an annual rate faster than what they already raise for print content? You can treat this as a forecasting scenario rather than an established rate of increase across all digital content. The point is, if digital prices rise faster than the budget, what tradeoffs would the library face between renewing access and adding or removing titles? How might those decisions, together with print weeding, affect the use of library space? See figure 2.3, specifically, from Sanchez’s article. When examining the plot, identify its assumptions about prices, budgets, and collection growth before judging whether its forecast fits a particular library.

Here it helps to distinguish the number of titles available from the number of users who can access a title at once. Physical copies have production costs, and a library’s copy can ordinarily be lent to only one borrower at a time. A digital file can be copied without producing another physical volume, but contracts and technical controls can still restrict access. For example, a license may allow only one simultaneous borrower, cap the total number of loans, or require renewal after a set period. Comparing these terms helps librarians estimate both costs and the likelihood that users will face waiting lists. Thus, purchasing decisions affect access and usability as well as the number of titles listed in the catalog.

There have been legislative efforts to address these issues. Paganelli (2022) describes some state by state efforts to lessen the financial burdens on libraries that e-content entails. These are ongoing and new ones crop up from time to time, but Paganelli describes a number of unsuccessful efforts as of 2022. And Brewster Kahle, the founder of the Internet Archive, has highlighted the financial pressures that digital licensing places on libraries. Kahle writes as an advocate for library ownership and digital lending, a perspective to consider alongside the publisher arguments below. From a publisher’s perspective, Sisto (2022) argues that the general narrative about the tension between libraries and publishers is misleading. Instead, the author argues, the landscape is much more complex, and the publishers have made a number of attempts to “make their e-lending policies better for librarians” (2018-2019: Policy Updates and Different Opinions sect, para 6). As you compare these arguments, ask whether a policy change improves affordability, duration of access, or the number of users served. A change can benefit one of those goals yet making others harder to achieve.

Read more about copyright: https://www.copyright.gov/title17/92chap1.html

Impact on eJournal Collections

Ebook licensing is an important issue for public libraries, while scholarly journal subscriptions are a major concern for academic libraries. Like Sanchez (2015), Bosch, Albee, & Henderson (2018) describe pressure from journal prices rising while academic library budgets decline or remain flat. Their 2018 survey provides a historical example of this budget problem. Researchers both produce the literature and depend on access to it. Growth in publication volume can increase the content libraries are asked to support, but volume alone does not explain prices or establish that researchers publish too much. Pricing decisions, purchasing arrangements, and demand for particular journals also matter.

The authors also note that part of the drive to publish includes a drive to publish in so-called prestigious journal titles, where citation performance is one indicator of prestige, alongside disciplinary reputation and other considerations. The authors refer to a few citation-based metrics that the research community uses to determine prestige. These include the long-established Impact Factor (Web of Science), which can be examined in the Journal Citation Reports (JCR) provided by Clarivate, as well as the SCImago Journal Rank (SJR), available through SCImago and based on Scopus data.

One reason to consider citation metrics when evaluating journal titles is that citations indicate some forms of scholarly use. That is, a citation to an article in a journal title means, hopefully, that the authors citing that article have read the article and used the knowledge to produce new knowledge. This makes such citation tools useful for librarians when deciding to purchase a journal.

However, journal-level citation metrics should not substitute for evaluating individual research, and collection decisions require evidence beyond citations. While they may provide good information, there are caveats. First, there are different fields of research, and some fields cite at different rates and at different volumes than other fields, and also for different reasons. When comparing the subject categories in Table 5 of Bosch, Albee, and Henderson (2018), consider how both journal prices and disciplinary citation patterns affect cost per citation. A higher cost per citation is not a sufficient demonstration that a journal provides less value to its community or that a library should not subscribe to it.

Second, citations do not capture all uses of a journal. For example, there are journal titles that I might use in my courses but may not use in my research, and this is true for other faculty. Yet citation metrics won’t reflect that kind of use. The authors thus discuss altmetrics, which helps track forms of attention beyond conventional scholarly citations. Their usefulness depends on what the data sources capture because online attention does not necessarily demonstrate research quality or classroom use. (See Open Syllabus for measuring citations from syllabi.) Third, the Journal Impact Factor summarizes citations at the journal level, where a small number of highly cited articles can disproportionately affect the average, because it’s an average. Its limitations include disciplinary differences and the risk of treating a journal average as a measure of an individual article’s quality. The San Francisco Declaration on Research Assessment (DORA) explains these problems and recommends against using journal-based metrics as substitutes for assessing individual research contributions. Other metrics offer different perspectives, but their assumptions and intended uses also need scrutiny. Fourth, indicators can influence behavior: a high journal score may attract submissions and attention, potentially reinforcing that journal’s position. This resembles the cumulative advantage described by Robert Merton’s Matthew effect. For collection decisions, consider citation evidence alongside local usage, teaching needs, disciplinary coverage, price, and access alternatives.

One of the points I’m making in this section is that electronic resource librarians oftentimes have to be aware of publishing trends, source materials, and so forth. For those who work with ebooks primarily, this means knowing the ebook industry. For those who work with academic and scholarly sources, this means knowing something about scholarly communication and funding models.

The authors also discuss whether Gold Open Access (OA) can compound the cost problem. Gold OA makes the published article openly available through the publisher. It does not specify a single funding model: some journals charge article processing charges (APCs), while others rely on institutional support, subsidies, or other arrangements. No-fee open-access publishing is often called Diamond OA. See Cambridge’s open-access policy for distinctions among these routes.

We can use PLOS ONE to illustrate the potential expense of APC-funded publishing. As of October 15, 2026, its fee page lists $2,477 for the category covering most articles (some article types have different fees). Using the historical figures recorded in Table 1, the 2024 increase was $359, followed by $92 in 2025 and $95 in 2026. The increase from the listed 2020 fee to the 2026 fee is $882, or 55.30%.

Despite our hopes, costs continue to rise. Using PLOS as an example, but likely true throughout the publishing ecosystem, PLOS charged $1500 in its early years and stated that:

We expect these costs to decline over time, as automated systems for document handling and production become more efficient, and we will regularly reevaluate our charges to keep them in line with expenses Publication Charges (2005).

Imagine twenty separate articles from one institution, each charged the full $2,477 APC to that institution, without discounts or waivers. The total would be $49,540. Even though this is not a direct comparison to the cost of subscribing to one journal, it does illustrate a possible institutional publishing expense. Publication charges fund dissemination of the institution’s articles, while subscriptions purchase access to other published content. Thus, to compare the models, we would need to specify the institution’s publishing output, access needs, agreements, and costs over the same period.

Table 1: PLOS ONE APC figures recorded in successive versions of this chapter (U.S. dollars). Annual percentage increases are calculated from the listed dollar amounts and rounded to two decimal places. Not all price increases capture. Prices captured annually.

An APC may be paid by a research grant, an institution, a library publishing agreement, or an author, or it may be reduced or waived. Who pays varies with the journal, discipline, and funding available. Free access for readers does not mean that publication has no costs.

The 2022 public access memorandum from the White House Office of Science and Technology Policy (OSTP) directed federal agencies to update their public access policies. It called for access to covered federally funded research publications without an embargo, with implementation through agency policies. This does not require every author to pay for Gold OA.

Green OA provides access through a repository. Depending on the applicable rights and policy, the deposited version may be a preprint, an accepted manuscript, or the final published article. A preprint is the manuscript that precedes peer review. A postprint represents an accepted manuscript that incorporates revisions accepted after peer review but generally lacks the publisher’s final production formatting. A repository deposit is not automatically sufficient for a funder mandate: the version, timing, and repository must meet that policy’s requirements. Gold and Green OA can also coexist when a publisher’s open article is deposited in a repository.

For example, the 2024 NIH Public Access Policy applies to covered manuscripts accepted for publication on or after July 1, 2025. It requires submission of accepted manuscripts to PubMed Central upon acceptance and public availability without embargo on the official publication date. NIH also provides for compliance through deposit of the final published article, as described in its research guidance. The implementation date was accelerated in April 2025, so a change in administration or removal of a webpage should not be treated as evidence that the policy ended. The OSTP memorandum remains available through a federal repository. For collection planning and author support, librarians should consult the relevant agency’s current policy rather than assume that every agency has identical requirements.

Conclusion

Copyright law, licensing terms, and technical controls each affect what libraries can provide. Owning a physical copy is distinct from owning copyright, and first sale permits redistribution of that copy without authorizing additional reproduction. The Internet Archive case illustrates the legal difficulties of relying on ownership of print copies and fair use to support digital lending, but it does not make all digital access arrangements equivalent.

For collection management, the important questions extend beyond the initial price: How long does access last? How many users can access the work? What happens when the agreement ends? Recurring and metered charges can create pressure to choose between retaining existing access and adding resources. Citation metrics can inform journal selection, but they need to be considered alongside local needs, usage, and other evidence.

Open access changes how readers obtain research, while its funding models determine who pays for publication and infrastructure. APC-funded publishing can place substantial costs on institutions, funders, and authors, but APCs do not define all Gold OA, and repository access offers another route. Public funding supports some of these costs; other support comes from private funders, institutions, and individuals. Agency public access policies add further responsibilities for authors and libraries. Evaluating these arrangements requires asking whose costs are counted, what access is provided, and whether that access can be sustained.

Readings / References

Bosch, S., Albee, B., & Henderson, K. (2018). Death by 1,000 cuts. Library Journal, 143(7), 28–33. https://www.libraryjournal.com/story/death-1000-cuts-periodicals-price-survey-2018

Garfield, E. (1999). Journal impact factor: A brief review. CMAJ : Canadian Medical Association Journal, 161(8), 979–980. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1230709/

Paganelli, A. (2022). Legally Speaking—States Unsuccessful in Providing Financial Relief of eBook Terms for Libraries. Against the Grain, 34(3). https://www.charleston-hub.com/2022/07/legally-speaking-states-unsuccessful-in-providing-financial-relief-of-ebook-terms-for-libraries/

Sanchez, J. (2015). Chapter 2. Forecasting public library e-content costs. Library Technology Reports, 51(8), 9–15. Retrieved from https://journals.ala.org/index.php/ltr/article/view/5833

Sisto, M. C. (2022). Publishing and Library E-Lending: An Analysis of the Decade Before Covid-19. Publishing Research Quarterly, 38(2), 405–422. https://doi.org/10.1007/s12109-022-09880-7