Amazon KDP Select: Friend or Foe?

Recently, Amazon opened a new program called KDP Select. This program enables offers indie authors the possibility to include their ebooks in the Kindle Owners’ Lending Library.  The Kindle Owners’ Lending Library enables Kindle owners who purchase an Amazon Prime membership or take up the offer of a one month free trial of Amazon Prime membership to download a limited number of books for free every month.

The compensation system for authors who include their books in KDP Select is based on a pro rata repartition of the sums dedicated to the program in the form of a new fund created by Amazon for that purpose.

Currently, the monthly fund is $500 000 that is to be divided between the 47 000 books included in KDP Select program so far. This means that in the unlikely case where all books have the same number of downloads, whether it is one or 10 thousands, each book would earn $500 000/47 000 = $10.64 for that month through FDP Select program.

This case scenario differs slightly from the one offered as an example by Amazon KDP Select “Your share of the Kindle Owners’ Lending Library Fund is calculated based on a share of the total number of qualified borrows of all participating KDP titles. For example, if the monthly fund amount is $500,000 and the total qualified borrows of all participating KDP titles is 100,000 in December and if your book was borrowed 1,500 times, you will earn 1.5% (1,500/100,000 = 1.5%), or $7,500 in December.”

In order to be included in that program, authors will have agreed to grant Amazon exclusivity on their book for a period of at least 90 days. To spell it out more clearly, these authors agree not to sell the title elsewhere, including other ebook stores or even from thrit own web site during that exclusivity period.  The initial period is 90 days and this renews automatically unless you opt out.

Amazon explains, “When you make any of your titles exclusive to the Kindle Store for at least 90 days, those with US rights will automatically be included in the Kindle Owners’ Lending Library and can earn a share of a monthly fund.  The monthly fund for December 2011 is $500,000 and will total at least $6 million in 2012.”

Amazon interest in opening KDP Select is clearly to secure exclusivity on a large number of books and thus gaining a considerable advantage on its competitors, while raising the number of titles.

The larger number of titles available through Kindle Owners’ Lending Library will act as an incentive for Kindle owners to purchase an Amazon Prime Membership, thus enabling Amazon to make up for the losses made through the sales of Kindle Fire that is sold at a price below production cost.

So is KDP Select worth it?

Let’s have a look at the Pros and Cons

Pros:

Gaining Exposure
The first benefit of participating in KDP Select is that your book will gain some added exposure and attention from being there.

Downloads resulting from borrowing a book through Kindle Owners’ Lending Library are affecting the book’s ranking exactly in the same way than a regular purchase of the book, increasing the book’s visibility.

Prime members will be able to identify ebooks that are part of the Kindle Owners Lending Library by a small “Prime Badge” alongside the item in search results,which may lead readers who have got to know the author’s work through one book to purchase other books from that author that are not included in the Kindle Owners’ Lending Library

Limited Duration of Exclusivity
Participating titles are only tied to a minimum 90-day exclusivity period, automatically renewed for another 90 days if the opt-out option has not been activated.

Limited Negative Effect on Regular Sales
Only Amazon Prime members are eligible to borrow your ebook and even they can borrow only one book per month.

Access to Promotional Tools
Amazon states that by participating in KDP Select you gain access to a new set of promotional tools starting with the option to promote your KDP Select-enrolled titles for free for up to 5 days every 90 days. There might be other promotional tools available, and more will probably be added in time.

Cons

Granting Exclusivity
Opting in the KDP Select implies granting  Amazon exclusivity on the title for periods of 90 days each time.

Getting Borrowed

The term borrowed is misleading, as the borrower can actually keep the book for as long as he chooses.

Not Enough Compensation
Time will tell, the amount of compensation received per “borrow” being affected not only by the number of downloads but also by the amount available in the monthly fund and by the number of participating titles.