In the UK libraries pay a royalty fee to authors for each loan, it's like 10% of the value of a sale royalty, but it adds up and then they cut a check to the author every year or so.
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As in several other countries, here in the UK we have a thing called the Public Lending Right. PLR is a small pot of cash distributed annually to authors who have registered books that are loaned out via British libraries. This is compensation for sales lost to library loans. It's not a huge pot, and the disbursement is relatively small: it was 6.29 pence (£0.0629) per loan prior to February 2010, and there was a ceiling on payouts — both Terry Pratchett and J. J. Rowling stood to take home no more than £6600 each. To put it in perspective, the royalty an author receives for the sale of a £7.99 paperback is on the order of 60p, or the equivalent of ten loans under the scheme.
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