How to Fund a Public eBook Library with Tax Deductions

In California, newly (re)elected governor Jerry Brown has proposed to zero out state funding for libraries. In Britain, government cuts could lead to as much as a quarter of librarians lose their jobs over the next year. In New York, the Queens library has responded to budget cuts by zeroing out its acquisition budget, instead of cutting opening hours. In my home town of Montclair, New Jersey, a historic branch building is being closed and the reference department is being eliminated.

Given the worldwide climate of cutting libraries, the recent proposal for the establishment of a "Digital Public Library of America" (DPLA) would seem to be either the product of a castles-in-the-sky delusions, or the result of watching too many Star Trek reruns. But it's worth thinking through the DPLA for a few moments before dismissing it as unrealistic.

Despite the complexities, the fundamental idea of a National Digital Library (or NDL) is, at its core, straightforward. The NDL would make the cultural patrimony of this country freely available to all of its citizens. It would be the digital equivalent of the Library of Congress, but instead of being confined to Capitol Hill, it would exist everywhere, bringing millions of books and other digitized material within clicking distance of public libraries, high schools, junior colleges, universities, retirement communities, and any person with access to the Internet.

I don't quite understand whether or how a National Digital Library could be restricted to its citizens; it would effectively be a world library, but that's a quibble, or perhaps a warning about territorially restricted rights, but there you get the idea. It should be an international effort. The Sloan funded planning initiative should go a long way towards fleshing out the idea.

The most difficult part of building such a library will be finding stuff to put on its virtual shelves. There's public-domain material to start. Cooperative scanning and digitization of such material would create an important resource for scholars, and much of this work has already been done. Almost two million volumes worth of digitized scans of public domain works  are already available (with varying availability) through the HathiTrust cooperative. Some of these scans were made as part of the Google Books project.

Another source of books for DPLA would be material that is out of print but not out of copyright. The Internet Archive suggests that many of these works can be made available to the public as if they were physical books, as long as a physical book is held as in reserve as the basis for doing so. It not clear whether doing so would be consistent with copyright law, except perhaps for books without economic value. Manyrightsholders might be willing to donate their rights to DPLA, just as many rightsholders appeared to be willing to allow use by Google for modest compensation.

Unfortunately, many rightsholders are absent and can't be found. Many rightsholders lack good documentation of rights or may be uncertain whether rights have been properly reverted. The Google Books Settlement Agreement attempted to settle or circumvent litigation surrounding these issues; the agreement has thus far not been acted on by the court. It's quite possible that legislative action would be required to allow a digital public library to freely provide this sort of content. Good luck with that.

What's missing from the proposed DPLA is any way to stock it with content that people actually want to read. Publishers that I've talked to are loathe to give up their backlists because they believe the backlists may become valuable through digitization and enhancement. Often the rights surrounding their backlists are so murky that it would be a significant expenditure just to clear rights. The only backlist acquisitions an NDLA would be likely to afford are those that are truly worthless.

There IS, however, a way, in the existing tax code, to direct tax money toward acquiring eBooks for a DPLA, or for any library, for that matter. It's called the deduction for charitable donations. As long as doing so is consistent with their charitable purpose, any recognized charity could collect donations toward the acquisition of rights to an ebook. If the ebook was then made available under a public license, such as one of the creative commons licenses, it would further that public charitable purpose.

For example, a charity focused on finding a cure for a disease (e.g. Huntington's) could ask supporters, acting together, to buy out the digital rights to books and journal articles relating to research, treatment and patient care for that disease. Similarly, a museum devoted to the history of New York City tenements could ask supporters to acquire works of fiction that bring to life the period and lifestyle of immigrant living in lower Manhattan in the early 20th century. Libraries could join together to support all sorts of books that promote their public purposes of promoting literacy, economic development, and cultural enrichment.

Donations made in this way would be fully tax deductible, at least in the US. I don't know the situation in other countries, but I note that many European countries have unfavorable treatment for eBooks under their value added tax (VAT) systems. I learned at Digital Book World that Italy has a 4% VAT for print books, but a 20% VAT for eBooks, which are considered to be a service. The VAT for charitable donations is, of course, 0%.

Readers of this blog will recognize that this is another way to present "ungluing ebooks". I've been working on ways for libraries and consumers to join together in a market to acquire the right to put ebooks into the public commons. This could happen through a collective of libraries or through a web site like Kickstarter, or both. Once acquired for the public commons, the ebooks could be made available through DPLA or any other library or ebook distribution service.

Apart from the tax advantages, the benefit of working with charitable institutions to crowd-fund the acquisition and liberation of ebooks is that early validation of the concept will be easier. No one really knows whether people will put real money towards the movement of ebooks into the public commons. Working on a project catalog much smaller than "all the world's books" with a target audience more focused than "people who love books" will allow us to more accurately gauge the willingness of the public to support public ebooks.

I've spent a lot of time this month explaining my ideas for ungluing ebooks. The questionthat keeps recurring is whether I plan to act on these ideas by forming a non-profit. The most persuasive argument for this is that the idea of acquiring the rights to an ebook for the public commons is much easier to understand when put in the context of a public charity, such as public television or public radio. The whole idea of free books is so foreign to people that people assume that free ebooks means pirated ebooks.

For now, though, I'll be pursuing this via my for-profit company, Gluejar, Inc. That's because I talked to my lawyer. He pointed out that it's much easier to deduct the costs of a speculative business venture from my taxes than it would be to convince the IRS that this weirdo crowd-funded public ebook idea is really a charitable endeavor.

I'd like to acknowledge Juliet Sutherland, Director of Distributed Proofreaders, and Richard Cave, I.T. Director of the Public Library of Science for very helpful contributions to the ideas in this post. I'm not an accountant or lawyer; this article is not any sort of tax advice.