Rakuten buys library ebook supplier OverDrive to boost Kobo

Giant internet conglomerate Rakuten is buying OverDrive, the leading supplier of ebooks to libraries, for $410 million and will use the company to expand its Kobo ebook business.

Japan-based Rakuten bought ebook retailer Kobo in 2012 for over $300 million and says the OverDrive buy will help it to move into new areas of the market.

The details of the OverDrive deal include — Rakuten is committed to the long-term continued growth of OverDrive, and to explore synergies we can provide to Rakuten Kobo’s eBook business and their other offerings for digital content.

Perhaps one of those new areas will be the ebook subscription market. Amazon launched Kindle Unlimited last year in response to Scribd and Oyster which are both running ebook subscription businesses.

Kindle Unlimited is so far largely restricted to self-publishers as most of the major traditional publishers have not joined the service, but both Scribd and Oyster have succeeded in signing up some of the Big Five who seem keen to push their back lists.

It would be a relatively simple matter for Rakuten to use the OverDrive technology to set up a Kobo subscription service, although this could raise tensions with publishers who use OverDrive to distribute to libraries.

The OverDrive digital distribution platform features than 2.5 million titles, plus relationships with 5,000 publishers and 30,000 libraries.

Kobo, which is based in Toronto, claims to offer around four million ebooks and magazines to millions of customers in 190 countries and has a range of highly regarded e-readers, including the recently launched waterproof Aura H2O.

In 2013, Kobo ‘quarantined’ self-published ebooks on its website after newspaper reports of pornographic content, although the ‘quarantine’ also took thousands of books off sale which had no questionable content.

In another of those strange entanglements you often find in the publishing world, Rakuten’s LinkShare business actually runs the affiliate promotion service for Barnes & Noble, including ebook retailer Nook, a rival of Kobo.

Takahito Aiki, head of Rakuten’s global ebook business, says, “Long before even Kobo emerged on to the global stage, OverDrive was working with publishers to digitize their content to share with the world, building one of the most comprehensive online digital marketplaces in the process.

“OverDrive’s deep content library and relationships with publishers, libraries, schools and retailers will allow Rakuten to extend our mission of empowerment to new market segments and accelerate the growth of our digital content businesses.”

OverDrive founder and CEO, Steve Potash, says, “Since 1986, our vision has been to advance digital publishing and content to connect readers with books and information. We’re passionate about working with publishers, libraries, schools and retailers to make that happen and we are excited to join an innovative company that shares and supports our vision.

“From OverDrive’s world headquarters in north-east Ohio to the 50 countries in which our library and school partners reside, we will continue to connect readers with books and institutions by supporting all users and all popular devices, while promoting open industry standard formats and best practices.”

Digital content is one of Rakuten’s three key strategic pillars, together with e-commerce and finance. Since taking over Kobo, Rakuten has bought video streaming service Wuaki.tv and global TV and video site Viki.