SOB On Kindle Lending Library

Ever since Amazon began lending ebooks as part of the Kindle Prime program there's been a lot of talk on the web (much of it negative) as to how - and if - authors would be compensated for these new library loans. Never mind that a large percentage of Kindle titles were already available for free library lending through Overdrive (a choice that publishers make for themselves when uploading titles to the Kindle platform), the fact that Amazon charges $79 per year for its Prime membership meant that authors (rightly) felt deserving of a share of that pie by way of royalties for the use of their product in what amounts to promotion of Amazon's Kindle line and a major offensive in Amazon's conquest of the ebook market.



The publishing world's response to this shot across the bow has been essentially to withdraw from the fight. Penguin infamously pulled all of its titles from library lending altogether, only to capitulate in part after a mass reaction from both press and public: their older titles are once again available via libraries, but new titles are not, and they're having nothing to do with the Kindle at all for the time being. The reaction has been only slightly less dramatic from the remaining players among the majors, but none of this seems to have phased Amazon in the least, or slowed sales of the revamped Kindle line, including the new Kindle Fire, which various estimates place somewhere between three and five million units. With each of those tablets including a free month of Amazon Prime, that's quite a few million free ebook loans pending for the month of December alone.



This week Amazon rolled out the fledgling Kindle Owner's Lending Library to independent authors who publish through Kindle Direct Publishing (KDP). The new program is called KDP Select, and Amazon is setting aside half a million dollars every month to pay authors royalties for titles that are borrowed by Kindle owners through the Prime membership program, with the entire monthly sum of $500,000 being divided out among all titles borrowed during each month. Within a day of launch over 37,000 titles were enrolled in the program. So I guess that answers all those authors' questions as to how they'll be compensated for ebook loans.



The caveat to this deal is that in order to enroll a title in the program it must be exclusive to Amazon for a period of at least 90 days, meaning the ebook cannot be available for sale on any other site or any format but the Kindle (although the print edition can still be sold elsewhere). Like many authors, I can afford to do this because the vast majority of my sales come from Amazon. I also have the added benefit of having a two-volume edition of The Saga of Beowulf available on other sites that does not fall under the non-compete clause by virtue of being listed on Amazon as separate entries from the Complete Edition, which is the one I have enrolled in the program. I'm always up for trying out a new experiment, and it will be interesting to see how this plays out.



So let's do some math. Amazon offers this example:

...if total borrows of all participating KDP titles are 100,000 in December and your book was borrowed 1,500 times, you will earn $7,500 in additional royalties from KDP Select in December.

In other words, 100,000 loans is one fifth of the $500,000 pot, allotting $5 to each book loan, times 1500 loans equals $7500. Of course, with 3-5 million new Kindle Fire owners each being given a free month of Prime, the number of loans is likely to be something closer to 10-20 times that given in the example, dividing the allotment down to around .25 to .50 cents each, and potentially much much less. With five million ebooks loaned the per-loan royalty would be a mere .05 cents each. So even at the incredibly unlikely rate of 1500 loans per month, you're still only looking at a total revenue of $75. And most books will only be loaned out a handful of times, if even that. Of course, it could go the other way and only a handful of titles will be borrowed, making the individual allotment much more impressive: a total of 10,000 loans for December, for example, would net each author $50 per loan. But I highly doubt that will happen.



The question of numbers is, of course, entirely conjectural. At best these are wild guesses. Even Amazon can't know fully what to expect, although I'm pretty certain they know what they're doing. And I have to give them kudos for putting up the money in the first place, particularly since the only way they can possibly make any profit here is by converting borrowers to buyers, which they must believe is a fairly solid possibility. The number of initial Prime users who opt to continue their enrollment at $79/year is certainly bound to be greater with this added bonus of a "free" ebook to read each month than it would be otherwise. And as we're already seeing an influx of titles to the program, it's obviously paying off in terms of having a lot of exclusive content to offer.



It's unlikely the "Big Six" will go for this, which is making Amazon the leader of the new independent revolution. They're clearly not courting the major publishers here, and frankly it looks more like all out war to me, to see who can command the largest market share on the other side of the digital divide (that is, in the post-print era that is coming). With titles like Water For Elephants (Algonquin Press) and The Hunger Games trilogy (Scholastic) enrolled in the program it's clear their strategy is to divide and conquer, courting the smaller presses while the major trades fall further and further behind. It's a battle that is only bound to get more vicious and ugly as time goes on. But so far, Amazon is winning.