Amazon put out another press release today, once again touting some detail about their services with the hopes getting blogs to give them free advertising. (It's probably going to work, too.) Today's press release covers the Kindle Owner's Lending Library, which now has 180,000 titles for Kindle owning Amazon Prime members to borrow. Amazon wants to be sure that you know the 180k titles have been "purchased, downloaded, or borrowed" over 100,000,000 times.
I'm covering this press release today not because I find the 100 million impressive (it really isn't) but because I want to point out what Amazon is not saying.
First, that figure of 100 million "purchased, downloaded, or borrowed" looks to count a single ebook transaction multiple times. If you buy an ebook and send it to 4 Kindles, that counts as 5 actions, not one. And if you borrow an ebook and leave it sitting on your Kindle for a few months, each month counts as a separate borrow.
But the more important story today involves details which Amazon didn't include in the press release. They point out the 180,000 titles which are only available via the Kindle Store, but they left out how much it costs them and what authors are getting in exchange.
Amazon got the vast majority of the titles via a program called KDP Select. Authors can sign up for the program and in exchange for Kindle exclusivity, the authors will be paid a fee each time one of their ebooks is borrowed from the KOLL.
Amazon is funding the KDP Select program at $600,000 a month. That's chump change for them, and it means they're getting an exclusive block of ebooks for under $4 a title. I'd say that's a good deal - for Amazon.
I'm sure that some authors think they could benefit from the loans, but I would not count on that. I've done the math. Amazon has kept KDP Select funding constant for the past several months, and the payments have stayed right around $2. That means that the number of borrows is hovering around 300,000 per month.
Right now all 180,000 ebooks in the program are chasing that limited supply of fees, so authors need to ask themselves how many of those fees will their ebooks get? Basic math suggests that the answer is damned few, and that is the detail Amazon doesn't want you to notice.
Instead Amazon touts how some specific authors are making lots from loaned ebooks, and they're hoping you won't realize that each fee going to one of the mega authors is a fee which the average author cannot earn - thus shrinking the potential earnings of the average author even more.
When Amazon launched the KDP Select last fall I held off on forming an opinion because I wanted to see what the numbers were like. Now I see that I should have listened to some like Rich Adin, who called into question whether the exclusivity was a good idea at all. The figures above show that this truly is not a good deal for authors. They give up a lot and receive very little in return.
The scary part is that Amazon is building a solid core of exclusive titles for chump change. All these authors are giving Amazon more and more power and getting almost nothing in return. I'm not one to bash Amazon unnecessarily but that doesn't mean I think this is a good idea.