Amazon’s Kindle Lending Library–What Does it Mean For Publishers? IBPA Wants to Know What You Think

November 21, 2011

Following are two perspectives on the Kindle Lending Library. The first piece entitled “Controversy Rages: Amazon to Lend Books” was originally written by IBPA Board Chair Stephen Blake Mettee for his blog, The Write Thought and appears here with his permission. The second piece, written by IBPA President Florrie Binford Kichler, raises some questions for publishers and a request for feedback. We want to know what publishers think about the Amazon Kindle Lending Library so please leave your comments!

Controversy Rages: Amazon to Lend Books

by Stephen Blake Mettee

There’s been quite a ruckus in the book publishing world lately. Amazon.com has recently announced its long-anticipated foray into lending e-books.

Kindle owners who are also Amazon Prime members, in addition to getting free two-day shipping on their orders and “unlimited instant streaming of thousands of movies and TV shows,” can also borrow books to read without an additional payment (Amazon Prime membership costs $79 per year). There doesn’t appear to be any limit on how long a book can be borrowed but only one book can be borrowed at a time.

Amazon says its lending library offers over 5,000 titles including 100 New York Times bestsellers. This is a far cry from the millions of print titles available on Amazon or the hundreds of thousands of e-books available as Kindle editions, but it is a toe in the water and publishers, authors, and literary agents are nervous.

How’s it work?

Amazon Prime members who are also Kindle owners are now presented with a “Borrow for Free” button next to the “Buy” button on selected books. When the member chooses to borrow a title, Amazon credits the publisher’s account with the same dollar amount as if the e-book was sold rather than loaned. At this point, the Amazon Prime member gets to read the book as a part of his or her yearly fee and the publisher effectively gets a full-priced sale.

So, why the controversy?

This sounds fair to me. I’d sign The Write Thought titles up. So why the hubbub?

I think the concern from the publishers—most publishers with titles among those available for loan weren’t notified that their titles would be included in this program—is that they haven’t agreed to Amazon “lending” titles even if Amazon pays as if they sold it.

Also, apparently Amazon plans to report revenue from this program to publishers as a lump sum leaving the publishers to allocate this revenue their authors. Amazon is said to be basing this lump sum by looking at the 12-month sales history of titles included in the program. A rather nebulous reporting method at best.

I think the Authors Guild and the Association of Authors’ Representatives (literary agents), two groups that have spoken out about this, are concerned since most contracts between authors and publishers have a set royalty paid to the author based on revenue from each e-books sale, say 25% of net revenue and a different amount on revenue generated from rights sales, say 50% of net.

The question being, which is this? Revenue from the sale of a book or revenue from a subsidiary right? And, of course, how is a publisher to properly allocate each of its author’s revenue share if Amazon doesn’t supply a complete breakdown by title?

Another concern, of course, is if this is simply Amazon’s first salvo; will Amazon attempt to morph the program into something else. For instance, can Amazon purchase one copy of an e-book and “lend” or “rent” it as many times as it likes? Pay the publisher once and rent or loan it many times. Libraries do this and many years ago so did bookstores.

The world is still hazy when it comes to e-books.

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Kindle Lending Library—What Does it Mean for Publishers?

by Florrie Binford Kichler

Amazon recently announced that it was going to begin “lending” e-books to its Amazon Prime customers.

Quoting from Amazon’s news release:

“With an Amazon Prime membership, Kindle owners can now choose from thousands of books to borrow for free – including over 100 current and former New York Times Bestsellers – as frequently as a book a month, with no due dates.”

“Titles in the Kindle Owners’ Lending Library come from a range of publishers under a variety of terms. 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.”

The Big Six publishers did not sign onto the Lending Library program. The Author’s Guild contends that nonetheless Amazon has included many publishers’ titles (not the Big Six) without the publisher’s permission. In addition, the Guild says that those publishers who have submitted their books to the Lending Library program “signed licensing agreements with Amazon for a selection of their titles, providing for a flat annual fee per title. While these publishers generally have the right to license e-book uses for many of their authors’ titles (just as most trade publishers do), our reading of the standard terms of these contracts is that they do not have the right to do so without the prior approval of the books’ authors.”

The Guild says that such a “bulk licensing program” is outside the scope of most publishing contracts and that publishers need to get permission from their authors to participate along with a contract amendment. They urge their members to contact their publishers if their books are in the Kindle Lending Library program.

The Bigger Picture

The reality is that Amazon has leveled the playing field for smaller publishers, enabling them to reach readers online in huge numbers, and publish their content quickly, easily and efficiently.

But at what cost?

The Author’s Guild claims that Amazon has included publishers’ titles in the Kindle Lending Program without consent but no publishers to this point have confirmed that publicly. If that is indeed the case, should Amazon have asked first? Or, as the company says, is “purchasing a title each time it is borrowed by a reader” plus a flat licensing fee simply another sale under standard contract terms, requiring no special handling?

“Purchasing a title each time it is borrowed by a reader” sounds like a sale, which is a good thing.  But could Amazon decide to begin lending titles more than once to multiple readers without compensating the publisher (and the author)? And if so, what recourse would publishers have?

More questions than answers. What do you think? Is the Kindle Lending Library a way for Amazon to increase device sales at the publisher’s and author’s expense or a “no-risk trial to demonstrate to publishers the incremental growth and revenue opportunity that this new service presents.”? Are you currently participating in the Kindle Lending Library and if so, how’s your experience been so far?  Would you include your titles if asked?

Let us know by commenting on this blog. Member feedback will help determine  IBPA’s  position on this issue.

One response to “Amazon’s Kindle Lending Library–What Does it Mean For Publishers? IBPA Wants to Know What You Think”

  1. Dale Copps says:

    We need MANY more hard facts regarding what is going on here. In the meantime, it seems to me that if Amazon purchases a copy of a book they want to loan to a Prime customer, they have the right to loan it to as many Prime customers, one at a time, as they wish (see the First-Sale Doctrine). A standard royalty would then be paid to the author on that sale. If Amazon loans one copy of a book they have purchased to more than one Prime customer at a time, they will be in violation of copyright. How to monitor compliance is a separate issue.

    The flat-fee arrangement Amazon has with “the vast majority” of participating publishers is more problematic from the authors’ point of view. How are they to be fairly compensated in these instances?

    And now Penguin pulls the plug on library lending and next month Amazon acquires many new exclusive properties from self-publishing authors. Where will it end?

    In the final analysis, authors want readers and readers want eBooks. Anyone standing in the way of that relationship does so at their peril.

    See, The End of Libraries (and, possibly, traditional publishing houses)
    http://alltogethernow.org/showtag.php?currid=85

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