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Amazon's new Kindle lending program causes publishing stir

November 4, 2011 | 11:46 am

Kindleownerslendinglibrary
Amazon has made it possible for some readers to share ebooks on the Kindle, the company announced with some fanfare Thursday. The new Kindle Owners' Lending Library is available to Amazon Prime members (an annual $79 fee), turning Kindles into a member-supported private library. Amazon announced in its press 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. No other e-reader or ebookstore offers such a service.  With an annual Prime membership, the Kindle Owners’ Lending Library is included at no additional cost.  Millions of Prime members enjoy free two-day shipping,  unlimited streaming of nearly 13,000 movies and TV shows, and now thousands of books to borrow for free with a Kindle.

Amazon's move is causing consternation behind the scenes in publishing. The online retailer had approached publishers about participating in the program for a flat fee -- and many turned them down. Much to their surprise, their books appeared as part of the program anyway. The industry newsletter Publishers Marketplace wrote Thursday:

As publishers and agents have started to realize with exasperation today, a number of titles in the Kindle Lending Library program -- including some of the bestselling, prominently-promoted titles on the program's home page -- are part of this new initiative without the consent or affirmative participation of the publishers and rightsholders. Not only that, but at least some come from companies that directly turned down Amazon's initial offer over the past few months to license a broad selection of backlist for a flat fee. Multiple participants were only told by Amazon yesterday (or found out themselves this morning) that this was happening. How could such a thing be possible, many people are wondering?

Publishers Marketplace went on to explain that the books included in the program are those that were bought by Amazon under publishing's traditional wholesale-retail model. Once Amazon or any other retailer buys a book at wholesale, they can sell it for whatever price they want. The idea, of course, is that the book will be sold for the recommended retail price that comes printed on the book jacket. Most retailers sell books to readers at that marked-up retail price -- that's how bookstores make a profit -- or with some discount. But legally, it can sell a book for 1 cent, if it doesn't mind taking a loss. It can even give the book away for free.

While the terms of agreements with publishers vary -- and are undisclosed -- some of the books have been included for a flat fee. Others are wholesale titles that Amazon buys once and adds to the library. In some cases, it may compensate a publisher each time a book is borrowed from the library as if it were a sale.

"[I]t's awful for publishers and authors," writes Joe Wikert  plainly at O'Reilly Media. Why? Because a flat fee to a publisher isn't compensating authors for their individual work. He'd prefer to see a pay-for-performance model -- which some publishers, or some specific books, are apparently getting.

Amazon has not yet responded to our request for a list of publishers actively participating in the program. We also asked whether any publishers had requested that their books be removed from the Kindle Owners' Lending Library, but we have yet to receive a response.

As the story evolves, it underscores just how much Amazon can set the agenda for publishers, particularly when it comes to readers' expectations around e-books. Amazon is a retailer and has its customers' ear -- and eyes, credit card numbers, and shopping and reading habits. All publishers have are books.

RELATED:

Now libraries can loan Kindle e-books

Amazon offers trade-in program for old Kindles

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-- Carolyn Kellogg

Image: Screenshot of the Kindle Owners' Lending Library.

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