The problem with Amazon's Kindle Owners' Lending Library

The Kindle Lending Library needs a pay-for-performance model, not a flat fee.

Amazon Kindle logoIt’s no secret that I’m a big Amazon fan. In fact, I recently took the Amazon side in a debate about platform superiority. (I won that debate, by the way …) That’s why a lot of people are surprised that I’m such an outspoken critic of Amazon’s new Kindle Owners’ Lending Library. The program is great for Amazon and maybe even for consumers, assuming they’re willing to live with the many restrictions, but it’s awful for publishers and authors.

Why? As Amazon stated in its press release, “For the vast majority of titles, Amazon has reached agreement with publishers to include titles for a fixed fee.” So no matter how popular (or unpopular) the publisher’s titles are, they get one flat fee for participation in the library. I strongly believe this type of program needs to compensate publishers and authors on a usage level, not a flat fee. The more a title is borrowed, the higher the fee to the publisher and author. Period.

Even if a flat fee made sense, how can a publisher try to estimate a fair amount? One key factor is the number of Amazon Prime subscribers. There are a variety of estimates on this figure, but those estimates only apply to this specific point in time. How can you possibly know the number of Prime subscribers Amazon will have in six months? In 12 months? Don’t assume you can simply extrapolate this number from historical trends. When the Kindle Fire comes out later this month it will include a 30-day Prime trial, and I expect the Fire’s availability and the upcoming holidays to create an enormous surge in Prime subscribers. When will Prime double today’s levels? It’s impossible to say, which means there’s no way to estimate how many times a book might get loaned out. That also means it’s impossible to come up with a reasonable estimate on a flat fee for a publisher’s list.

I hope Amazon reconsiders and switches this program to a pay-for-performance model. That’s the only way I’ll ever support it as a publisher.

What’s your take? Please weigh in through the comments.

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