With KDP Select, Amazon Gains Authors' Exclusivity — Cheap

Amazon (NSDQ: AMZN) released some select Kindle Owners’ Lending Library numbers today, aiming to position its KDP Select program as a good deal for self-published authors. The program is indeed a good deal for some self-published authors. But it is also a good deal for Amazon.

The Kindle Owners’ Lending Library allows Amazon Prime members who own a Kindle to “borrow” one e-book per month. In exchange for agreeing to sell their e-books exclusively in the Kindle Store, self-published authors can add those books to the Kindle Owners’ Lending Library through a program called KDP Select.

Authors who participate in KDP Select are paid, per borrow, out of a monthly fund. In February and March, that fund is $600,000 per month. In January, it was $700,000.

Let’s go through the interesting parts of the press release, shall we?

“Since launching the Kindle Owners’ Lending Library in November 2011, selection has grown by over 20 times.” Nearly all of that growth comes from self-published books added to the library, which now includes 100,000 titles — up from about 5,000 at launch, yes, but with little if any increased participation from traditional publishers. (Some traditional publishers were included in the library without their consent, and Amazon pays them an e-book’s wholesale price each time it is borrowed. No big-six publishers are participating.)
— So when Amazon says the library includes “over 100 New York Times (NYSE: NYT) Best Sellers like The Hunger Games trilogy,” that number hasn’t changed since November. In other words, 0.1 percent of the books in the library are NYT bestsellers.
— “More than a third of the Top 20 Kindle Best Sellers in February are enrolled in the library and available to borrow for free.” I don’t have the Kindle bestseller list for all of February but it would definitely include the three Hunger Games titles, leaving three to four places for KDP Select titles (or for traditionally published titles in the Kindle Owners’ Lending Library.)
— “More Amazon customers are reading independently-published books.” That’s vague; we don’t know how many more or whether they’re reading them specifically through this program, etc.
— “Over 1 million KDP Select” books have been borrowed since the program launched in December. This doesn’t mean, of course, that 1 million different KDP Select titles have been borrowed. We don’t know how many books in the library have been borrowed at least one time. Some books have likely not been borrowed even once.
— The release hints several times that participation in KDP Select also increases paid sales. It mentions three self-published authors who increased paid sales. Kindle VP Russ Grandinetti also suggested this is the case at Digital Book World in January.
— Participating self-published authors “have earned $1.8 million from the KDP Select Fund so far.” Remember every one of those authors has agreed to make their books exclusive to Amazon and they are only paid if their book is borrowed.

I think the main thing to keep in mind is that the $1.8 million is a pretty good deal for Amazon. Think of it like this: Let’s say there are 95,000 self-published titles in the Kindle Owners’ Lending Library. (That’s 100,000 minus the roughly 5,000 traditionally published titles Amazon started with.) Some self-published authors have more than one book in the library, so let’s say 90,000 self-published authors are participating. I have no idea if that’s actually the number but you can fiddle around as you like; anyway, $1.8 million divided by 90,000 authors is $20 per author.

Update: I checked out this list of authors — I think it’s the complete list of authors who are participating in the Kindle Owners’ Lending Library. There are 2,238 names on the list. Those not participating via KDP Select are paid separately. At any rate, 2,238 is FAR less (duh) than the 90,000 I estimated above. So the $20 figure I cited above is misleading, and I’m sorry.

Here’s a better way to think about it: by BOOK. Right now I see 116,982 Prime-eligible Kindle books. Subtract 5,000, the rough number contributed by traditional publishers. That leaves 111,982 titles. Divide that by the $1.8 million that has been paid out since December and you get $16.07. That’s the amount that Amazon has paid, on average, so far, for exclusive selling rights to each book in the Kindle Owners’ Lending Library today.

Some authors’ books are borrowed many times and this is a good deal for them (even though in March they’ll be paid out of a smaller fund than they were paid out of in January despite the fact that WAY more of them are participating). But don’t forget it’s a good deal for Amazon too.