Why Penguin Terminated Their Contract With OverDrive

Why did Penguin terminate their contract with OverDrive? Here’s what we’ve learned from an INFOdocket source.
We are told that publisher contracts with OverDrive allow them to store and serve library end users ebooks. That’s it.
OverDrive does NOT have permission to first authorize the lending of an ebook to a library end user and then forward the request for actual distribution and tracking of the title to Amazon.com or ANY other retailer. Similarly, in most situations*, publishers do not permit retailers to lend ebooks directly to end users.
Finally, in November and again yesterday we noted an LJ article (November 23, 2011) that included the following comment from Penguin:

Penguin has subsequently been informed by Amazon that it had not been consulted by Overdrive about the terms of Penguin’s agreement with Overdrive.

You have to wonder what did OverDrive tell publishing partners about how Kindle lending would work?  What didn’t they tell them?
We will update this post if/when more details emerge.
See Also: Notice to publishers: curse your sudden but inevitable betrayal (via Librarian in Black)
UPDATE: ALA’s Repsonse to Penguin Terminating Contract with OverDrive Posted

“Yesterday, Penguin Group USA called to alert us that they will no longer offer any ebooks or audiobooks to libraries through OverDrive. While libraries are expected to have continued access to Penguin ebooks already included in their catalogs, the effect today is that readers will have less access to Penguin titles through their local libraries.
“Despite this discouraging development, we are hopeful Penguin will continue to seek a solution to make its titles available to libraries.  As Penguin stated, ‘…it is vital that we forge relationships with libraries and build a future together.’  We are committed to helping build this future.
“This is a radically dynamic time of change, and we look forward to crafting stable and sustainable business models that enable libraries and publishers to connect readers and authors in the digital age as successfully as we have done since Gutenberg. We all need to work together—and quickly—to bring about full access to ebooks in libraries for everyone, and especially for those readers who depend on libraries as their only source of reading material.”

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