Amazon Kindle Owners’ Lending Library

None of the Big 6 publishers are currently participating, but many smaller and independent publishers are. Here is Amazon’s list of books available for lending. If you scroll through it, there appear to be a handful of currently popular books along with some classics and a smattering of informational and how-to books. As far as I can tell (somebody correct me if I’m wrong), you can’t tell from a book’s Amazon listing whether it’s available in the lending program. However, if you’re browsing Amazon using your Kindle AND you’re a Prime member, if the book is available to borrow, then below the “Buy” button is another button that says “Borrow for Free.”

What are people saying?

Most online speculation is that Amazon is trying to lure people to become Prime members at $79 a year. More importantly, according to technology website CNET (hi Nathan!), the Lending Library is intended to drive Kindle sales and is another move in the battle over different e-book devices and formats. (You may have noticed Barnes & Noble’s big announcement of their upcoming color-screen Nook tablet, a direct competitor for the Kindle Fire and the iPad.)

What are the issues for publishers and writers?

This is where it gets complicated, and as time goes by and we all have more time to explore this, there will be much more to say. Right now, a major issue is how payment to publishers will be handled, and then how publishers will in turn pay their authors.

From the Amazon press release: For the vast majority of titles, Amazon has reached agreement with publishers to include titles for a fixed fee. In some cases, Amazon is purchasing a title each time it is borrowed by a reader under standard wholesale terms as a no-risk trial to demonstrate to publishers the incremental growth and revenue opportunity that this new service presents.

Russell Grandinetti, vice president for Kindle content, said “the vast majority” of participating publishers were receiving a flat fee for their titles, while a more limited group is being paid the wholesale price for each title that is borrowed. “For those publishers, we’re treating each book borrowed as a sale,” he said.

This “fixed” or flat fee is the problem. It means that a publisher is being paid one fee for a group of books, all by different authors.

If a publisher is receiving a “flat fee” from Amazon for the inclusion of, say, 100 titles, how will authors be compensated? Will Amazon keep track of every free download, pass that information along to publishers, who will then divvy up that “flat fee” according to how many “reads” each author got? There are so many problems with that, I can’t even get started.

Most importantly, there’s no language in the typical author’s publishing contract that adequately covers this or gives the publisher the right to grant multi-author “subscriptions” to that publisher’s catalog.

Some of the publishers who’ve already opted-in believe the extra promotion will help their authors’ books. The more on-site visibility an author has, the better, so if an author has a book in the “Lending Library,” they have better visibility and this can help the sales of all that author’s books.

Is anyone asking the authors’ permission to use their books in this program?

In a word, no. Some people are saying the lending program would fall under the “licensing” part of your contract, but it doesn’t really fit the definition of licensing because of the way Amazon is not paying “per title” but for a group of titles from a publisher.
Here’s a quote from the statement released by the AAR:

“The agent and author community have not been consulted about this new sort of use of authors’ copyrighted material, and are unaware of how publishers plan on compensating authors for this sort of use of their books, which is unprecedented. But we think free lending of authors’ work as an incentive to purchase a device and/or participation in a program is not covered nor was anticipated in most contracts between authors and publishers—nor do most contracts have any stipulation for how an author would be compensated for such a use. Without a clear contractual understanding with their authors, it is unclear to us how publishers can participate in this program. We take very seriously our role to protect the interests of our clients, and at this stage it is difficult to see how this program is in the best interests of our clients.”

So – should authors be worried?

Probably not. Like I said in our discussion yesterday of piracy, it’s good to stay informed. Ask questions. Try to understand how your agent and your publisher are responding. But don’t get all freaked out. There are going to be changes like this happening constantly, because we’re now in a world where technology is in the driver’s seat. It’s going to drive everything that happens in publishing, and we’d all better hang on for the ride.

What are your thoughts about the Kindle Owners’ Lending Library?