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Amazon is Getting Those 180 Thousand Kindle Exclusive eBooks Damned Cheap

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.

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Mike Cane August 28, 2012 um 10:27 am

Exclusivity is *never* a good idea. But some writers has seen for themselves that Amazon brings in most of their sales with others being negligible, so they jump. All this does is again highlight the failure of those who compete against Amazon, whether in p or e.

Richard Adin August 28, 2012 um 11:19 am

Mike, it highlights the failure of both Amazon’s competitors and the indie authors. Every time I read soemthing by an indie author, they provide a link to Amazon — even if their book is also available at B&N, Sony, Kobo, or Smashwords. IOW, the authors are making true what Amazon claims is true. You cannot increase your sales at B&N if you don’t tell people your book is availkable at B&N. I know that when I see only an Amazon link, I assume the book is not available elsewhere and do not bother looking for the author’s books at the places I shop. I suspect there are plenty of others like me.

Peter August 28, 2012 um 10:41 am

Amazon isn’t paying a LOT for the titles. But the fact that they are paying for them at ALL makes it a terrible deal for them.

These titles ARE the long tail. The rare titles that have always been exclusive to Amazon due simply to the fact that noone else had the space to carry them or the presence to attract them. And because of that fact, Amazon used to make all their money off of these sort of titles. Paper bestsellers are clearly sold at a loss, but look at how much you have to pay for rare paper books through Amazon’s marketplace. It’s highway robbery!

To take the titles they were previously selling for a $10, $20, $30 profit, and instead be forced to pay to keep these titles away from everyone else (who never had them anyways) is a bad deal for Amazon.

Peter August 28, 2012 um 10:48 am

Read the rest of the article under the jump. You’re correct that it’s also a terrible deal for the authors. And competitors.

Mike Cane, THIS belongs squarely in the "stupid" quadrant.

carmen webster buxton August 28, 2012 um 10:43 am

I like to say that KDP Select is a good place to START selling a book but not a good place to STOP. The real power of it is not the Kindle Owners Lending Library, which doesn’t have much impact if you don’t already have a following, or at least a decent level of sales; your book disappears in the KOLL if it hasn’t got a sales record, partly because it’s hard to browse from your Kindle when there is so damn much porn. You can search the KOLL by author and title (which is what people do when they see the "Free with Prime" notation in the web), but browsing sucks.

The real reason to go with KDP Select is the ability to make a book free in the Kindle store. And of course, they limit that to 5 days out of the 90 that you have to sign up for. For one thing, free books are available to all Amazon customers, not just folks who have Prime and own a Kindle or Kindle Fire, which greatly expands your audience. Of course, you get no money for the free book, but it can really help get you reviews and it gets your book into people’s buying history.

A.R. Williams August 28, 2012 um 11:59 am

When it first came out, I thought that Kindle Select was a bad idea since it demanded exclusivity. However, I have since changed my mind and will eventually place one work in Select before I rotate it out and a new one in.

As Carmen said above, the benefit of Select is that it gives you five days to make your work free. Although, it’s not as successful a strategy as it was in the past, those are days that can still be used to help garner more readers to your work.

Personally, I think authors make a mistake when they put ALL of their work in Select. But the use of it for a limited time, with a limited selection, just may be what helps that author find readers for their other work.

Carol Bodensteiner August 28, 2012 um 12:01 pm

KDP Select and KOLL have been good for me. Select and the free day promotions put my indie published memoir in front of tens of thousands of people who would not have seen it otherwise. Sales and loans following the free days have been solid. I get about half as many loans each month as I get e-book sales.

I’ve thought of leaving Select, but my sales in all other venues were a fraction of my Amazon sales and there was no loan-earning option. I’d love to have my book available to users of all e-reading devices, but the economics just don’t work.

Nate Hoffelder August 28, 2012 um 12:09 pm

But can’t you drop the price on a title down to free without putting it into KDP Select?

John Betcher August 28, 2012 um 1:18 pm

Nate: At present, for most authors, Amazon allows kindle prices of $.99 and up. If one wants to "sell" a book free on Amazon outside KDP Select, the seller must offer the book for free at some other site and Amazon will (likely) price match the freebie. My recollection is that listing a book for sale on Kindle for a higher price than elsewhere is a violation of the listing contract; but Amazon doesn’t seem to care.

John Betcher August 28, 2012 um 1:14 pm

My borrowing revenues from the Kindle Owner’s Lending Library (KOLL) alone were just over $2,000 last month. I know that’s not a living by itself; but it’s a nice addition to regular book revenue. At present, Amazon exclusivity is a proposal I am willing to swallow in exchange for the cash. I doubt KOLL will remain profitable in the long run. But as long as it is, I will be there.

Peter August 28, 2012 um 4:15 pm

John: totally off-topic, but I just took a look at your book assortment.

Thriller, thriller, thriller… Volleyball Coaching.

I don’t know why, but the juxtaposition just made me crack up.

In all sincerity it made my day, thank you.

John Betcher August 29, 2012 um 3:14 pm

Peter: I always endeavor to be a source of entertainment, whatever form that may take. 🙂 Cheers!

Cypher Lx August 29, 2012 um 5:55 am

I’ve been asked by other indie authors if KDP Select worked for me. The short answer is no. Thousands of copies were downloaded, but I received very few actual sales and no reviews. The exclusivity was preventing people who owned a Nook to purchase my work and they kept asking when the books would be available again. As for the lending aspect, only two copies were borrowed, so you can imagine how little I got from that. It may work for some, but not for me. My books are no longer enrolled.

Omar Luqmaan-Harris (@BookMarketing33) August 29, 2012 um 5:16 pm

My big issue with Amazon’s announcement is they refuse to reveal the number of Prime members they have. If authors knew there were only 100,000 prime members vs. let’s say 3MM, we could make a more informed decision about whether or not to join the KDP Select program. Because they don’t want us making these sorts of informed decisions, they refuse to reveal the numbers. This is counter intuitive to me because the better job Amazon does at getting more Prime members, the more valuable the KDP program truly becomes for authors.

Nate Hoffelder August 29, 2012 um 5:37 pm

I don’t think the total number of Prime members is that important.

We already know that the number of loans has stayed right around 300,000, plus or minus 10%. You can use the loans to approximate the number of participating Prime members and work from there.

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