Self-Published Authors Debate Amazon's KDP Select

Kindle Owners' Lending Library

When Amazon (NSDQ: AMZN) launched the Kindle Owners’ Lending Library last month, it contained around 5,000 traditionally published titles. Just four days ago, Amazon gave self-published authors the ability to include their e-books in the library if they agree to sell the books exclusively through Kindle. They’ll be paid out of a monthly fund–$500,000 for December.

Self-published authors have signed up by the thousands: Today the library contains 46,662 titles. But many are wary about getting on board.

To those who are signing up for KDP Select, the benefits seem obvious: Increased visibility and publicity for their titles and the option to make their book free for five days out of every 90-day period (many self-published authors have seen higher paid sales after making their books free for a limited time, and Amazon hasn’t previously allowed it). Also, as David Gaughran of Let’s Get Digital notes, “Rentals positively affect your sales ranking in the same manner that a normal sale does.”

Here are some of the concerns self-published authors have about joining KDP Select:

Exclusivity is required. Self-published authors who want to include their e-books in the Kindle Owners’ Lending Library have to make those titles exclusive to Amazon in digital format. The exclusivity period starts at 90 days and automatically renews for additional 90-day periods unless authors opt out before renewal. For self-published authors who are already selling the bulk of their e-books through Amazon, exclusivity isn’t much of a problem. Those who sell their e-books through other vendors like Barnes & Noble (NYSE: BKS) and Smashwords have to make a more difficult decision.

Mark Coker, the CEO of Smashwords, writes, “The new Amazon KDP Select program strikes me as a startling example of a predatory business practice. Amazon has the opportunity to leverage their dominance as the world’s largest ebook retailer (and world’s largest payer to indie authors) to attain monopolistic advantage by effectively denying its competing retailers (Apple (NSDQ: AAPL), B&N, Kobo, Sony (NYSE: SNE), etc) access to the books from indie authors.”

There are severe consequences for authors who don’t adhere to the exclusivity agreement. From Amazon’s KDP Select Terms and Conditions:

If you don’t comply with these KDP Select terms and conditions, we will not owe you Royalties for that Digital Book earned through the Kindle Owners’ Lending Library Program, and we may offset any of those Royalties that were previously paid against future Royalties, or require you to remit them to us. We may also withhold your Royalty payments on all your Digital Books for a period of up to 90 days while we investigate. This doesn’t limit other remedies we have, such as prohibiting your future participation in KDP Select or KDP generally.

It’s unclear how much money authors will make or how large the fund will be each month. The fund is $500,000 for December. Authors are paid based on their book’s “share of the total number of borrows of all participating KDP books in the Kindle Owners’ Lending Library.” In its FAQ, Amazon says it “expect[s] the total KDP Kindle Owners’ Lending Library fund will be at least $6 million for all of 2012,” and “The size of the fund is determined to make participation in KDP Select a compelling option for authors and publishers. We will review the size of the fund each month to consider adjustments.” But as Gaughran writes,

I think that agreeing to Amazon’s model of a fixed pot is a dangerous precedent, and I would much prefer if a per-download fee was negotiated – that could then be revised upwards or downwards by mutual agreement in the future.

Right now, authors get to set the price of their work. We put a dollar value on it whether we self-publish and sell through Amazon, or whether we license it to publishers and accept payment in return.

By accepting the compensation system Amazon is proposing, we are agreeing to fight for a limited pot of cash – no matter how many authors are scrambling for it. Amazon say they will raise it if the scheme is popular, but it’s all at their discretion. We have no say. They have all the power under this new model.

Gaughran thinks Amazon is open to discussing the program with self-published authors, and that it may make changes based on their suggestions: “If enough self-publishers don’t enroll (or opt out after enrolling), I’m sure Amazon will reach out to the community to see how they can make the program more attractive to us.”

Concerns/benefits that I am missing? Let me know in the comments.

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