An American Editor

December 14, 2011

eBook Exclusivity — A Good or Bad Idea?

The answer really is “it depends.” It depends on who you are and where you are in the ebook world.

Recently, Amazon started a program for its Prime members: they can borrow 1 ebook for free each month, choosing from a list of more than 30,000 titles (and the list is growing). The source of these ebooks appears to be the Kindle Direct Publishing (KDP) program. Amazon is encouraging self-publishing authors to participate in KDP. KDP will “lend” books in its program to Amazon’s Kindle Owners’ Lending Library, which is part of the Prime membership.

Amazon hasn’t ignored compensation, either. It has set up a pool of money ($500,000), which is the pool for the first month (Amazon plans to set aside $6 million for the 2012 pool). Every indie-author-participant whose book is borrowed will receive a share of the pool based on the number of times the book is borrowed as a share of total borrowings of all particpating ebooks. Presumably, if your book is borrowed 100 times and the total number of borrowings is 500,000, you would receive $1 for each borrowing (hopefully my math is correct). If, on the other hand, your book is lost in the ever-growing list and not borrowed at all, you will receive nothing except for whatever royalty you are due in the normal course of business with Amazon as a result of sales.

So far, so good — or so it would appear.

Let me say upfront that I am not a friend of Amazon. I disapprove of Amazon’s attempts to dominate the ebook market. But I do admire Amazon’s creativity. The one thing I truly feel confident in stating about Amazon is this: whatever Amazon does, it has carefully thought about how it will ultimately benefit Amazon and further Amazon’s dominance interests. In other words, Amazon is a business’ business. Unfortunately, a corollary to that equation is that what is good for Amazon may not be good for consumers and/or authors and publishers in the long-term. Amazon is proving adept at focusing everyone outside Amazon on the short-term and assuming that the long-term will be equally glorious. As the song goes, “It ain’t necessarily so.”

The deal with Amazon is this: The author/publisher agrees to give Amazon’s KDP exclusive rights to the ebook. The author/publisher agrees that the book will not be available at any place other than Amazon, not even the author’s own website, during the exclusivity term, which term runs for 90 days and is automatically extended unless the author/publisher takes affirmative action to withdraw from the program — with the long-term consequences of withdrawal not currently known.

Exclusivity both bothers me and worries me. It bothers me because Amazon’s environment is a closed environment (yes, I know one can strip the DRM but most consumers can’t and won’t, and I know that Amazon has application for nearly every reading device known to humankind, but that means that even though I’ve chosen Sony or Barnes & Noble over Amazon, Amazon is pressuring me to kowtow to it), unlike virtually every other ebook retailer (with the notable exception of Apple). To read an Amazon DRMed ebook, you must use an Amazon device or application; with most other ebook retailers all that matters is that your device be ePub capable. (And, yes, I do know that there is a DRM problem with B&N and even more so with Apple.) So the exclusivity program bothers me because Amazon is locking up authors and their books to the Amazon platform, whether I want to be on it or not.

Yet worse is what worries me about this program — all the unknowns. I know that Amazon’s big ebook authors — its million sellers like J.A. Konrath (whose books I have never read or bought) — signed on but what I don’t know is whether they signed on under the same terms as Sally Unknown has to sign. More importantly, however, is that Amazon is trying to get the Agency 6 to sign on and is rumored to be offering them a set fee for each borrowing, that is, they would not participate in the pooled money.

If the deal being offered the indie authors is such a sweetheart deal, why isn’t it the same deal as being offered to others? The mighty shaft is rising and it’s not aiming for the Agency 6!

I am also concerned that authors may feel they must join this program in order to stay within Amazon’s good graces. After all, for most authors currently, the bulk of their sales are via Amazon. Yet, there is something that indie authors need to look at, and do so carefully: how are their sales trending?

Jeff Bennington, a suspense writer, explains at his The Writing Bomb blog his decision to participate. Personally, I don’t find his arguments convincing. Bennington states he is joining because 97% of his books have sold via Amazon. One needs to back up a bit from giving that fact too much credence. For example, that number represents past sales not future sales. More important than past sales is the sales trend: has growth on Amazon plateaued while sales at B&N are growing at a 30% rate? What has the author done/not done to promote his book at the Sony store? Have all his promotion efforts been geared to Amazon?

Ultimately, the exclusivity arrangement will hurt lesser-known authors for several reasons: (1) once on the exclusivity bandwagon, it will be difficult to get off (not only must one take affirmative steps to get off, but one has to overcome the fear factor of doing so). (2) Amazon dominates the U.S. market but does it dominate elsewhere? As I understand it, the exclusivity is worldwide. (3) Authors face the same problem in KDP that they face outside KDP — who knows of them or about their book? If KDP already has more than 50,000 participating titles, what are the odds of someone picking your book over another book? (4) If Amazon is successful in getting the Agency 6 to participate and that participation includes the top-tier authors — the Stephen Kings and Clive Cusslers and Ruth Rendells of the publishing world — how likely is it that someone will pick Sally Unknown’s ebook to read for free as opposed to one of Stephen King’s ebooks, especially when the reader can only borrow 1 ebook a month?

What exactly is the indie author getting by participating — not what does the indie author hope to get by participating? All I see that is definite are benefits flowing to Amazon, which has put itself in a no-lose situation; it is wishful thinking and hopes that flows to indie authors.

One other issue matters, I think. What KDP indie-author-participants earn is based on the percentage their sales represent of all sales (unlike the Agency 6 who get paid a set amount each time a book is “borrowed” and who knows what the million ebook club members get). Who has the right and is going to audit the program to verify that the numbers are correct? As far as I can tell, authors are not given the right to audit the entire program, which seems to me to be fundamental to determining whether exclusivity with Amazon is the right move for your book. When Amazon sends you a check for $10, how do you know that it shouldn’t be for $100 if you cannot audit the whole program? And if this is such an up-and-up sweetheart deal for the indie author, then why can’t an indie author or a group of indie authors audit the program? I guess it all boils down to believing “Amazon is my friend and will do me no harm.”

As I noted earlier, I am not a friend of Amazon. I fear what will happen when the only choice for buying an ebook is Amazon, and Amazon is doing everything it can to hasten that day. It is worrisome when indie authors are willing to jump on Amazon’s bandwagon without looking in depth at Amazon’s KDP program and its exclusivity arrangements and the red flags that should be arising. Instead of joining the herd and singing the mantra “Amazon is my friend, I need not worry,” indie authors should be singing the mantra “Amazon is Amazon’s friend, and I do need to worry.”

Indie authors — and all publishers and authors — need to think and look long-term and not be seduced by the possible but uncertain short-term. The waters are shark infested.

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15 Comments »

  1. In response to: “I fear what will happen when the only choice for buying an ebook is Amazon, and Amazon is doing everything it can to hasten that day.”

    Well, it will create a nice backlash opportunity for the print-book industry!

    As well, it will inevitably give rise to a counter-movement in e-books, wherein everybody who doesn’t buy in to the Amazon enterprise will either come up with a new way to market and distribute their offerings collectively, or be goaded even further into creative self-promotion via individual websites and the like.

    Things are going to be all bolluxed up for quite a while as the publishing industry as a whole reinvents itself. Amazon’s lead and dominance will have many effects, some already predictable, others not; but the company is no more invincible than the publishing houses and channels it is taking down.or blocking. There are just too many people out there who want to read books, write books, and sell books. Not all of them will get sucked into the vortex. Innovation, in fact, tends to come from folks on the fringe.

    The other thing to keep in mind is Amazon is not unique in pursuing its own business interests to the exclusion of other parties’ interests. Large companies since the beginning of time have done this and always will. The purpose of having a business is to make money. Organizations with broader or higher goals tend to be nonprofits or charities.

    Smart companies offer products and services that many people want or need. Savvy companies consider other things besides their own bottom line and have a moral position, but really smart, creative, and aggressive ones influence the way the world works. Just look at the railroad companies back in the 1800s. And through most of the 1900s, what we now consider traditional publishing houses — especially the big 6 — designed and influenced the way books entered the world. Television began the process of changing that. Computers continued it. Now Amazon has pushed in front and become the focal point for the next era. Something/someone else will surely follow.

    Comment by Carolyn — December 14, 2011 @ 7:03 am | Reply

  2. [...] An American Editor /* Share [...]

    Pingback by eBook Exclusivity — A Good or Bad Idea? - The Digital Reader — December 14, 2011 @ 10:26 am | Reply

  3. Ironically, recently I finally decided to take the plunge into KDP, and was faced with the decision as to whether to agree to KDP Select. I opted not to enroll so I can continue to sell my ebooks on Smashwords.

    Now, I’ll sell them on Amazon as well, without joining the KDP Select program. I agree with you. As a reader, if I could get a big name author for free, I’d take it. Indie authors are likely to get lost in the shuffle. In the meantime, they’re foreclosed from selling anyplace else.

    I opted out. I’m not making a fortune from distribution through Smashwords channels, but I’m earning enough to make it worth my while to continue.

    Comment by Meredith Morgan — December 14, 2011 @ 6:23 pm | Reply

  4. I’ve noticed that a lot of indie books that go on Prime$0 also become free for all for varying lengths of time. Know if this is part of agreement at all? Noticed this via eReaderIQ which is reporting hundreds of newly free books a day since the Prime$0 started.

    Comment by Tony Wilson — December 14, 2011 @ 6:26 pm | Reply

    • My understanding is that ebooks that are not priced free can be priced at free for one 5-day period during each exclusivity term. Aside from that, I do not know why so many ebooks are being priced at free.

      Someone else noted that some previously free ebooks are now carrying ridiculously high prices. The idea is that people will sort the listings from highest to lowest thinking that this way they can read for free a very expensive book that interests them but that they would not have bought.

      I suspect that there are various schemes afloat to “game” the system. I would think an author would want to find some way to bring attention to his or her book, which is hard to do when your book is one of many thousands in a limited-scope program.

      Comment by americaneditor — December 15, 2011 @ 3:55 am | Reply

      • Great reply, thanks. The trick I knew of pre-prime-lending is: pub on KDP min 99c; 0 not allowed for indies. Pub on Smashwords at 0. Wait until Amazon competes to 0 and leave for few days before pushing Smashw price back up. When Amazon restores price your positions benefit from units “sold” at 0. Although the bestseller lists distinguish between free and not, counts carry between them. I believe they should not. Interestingly, FT Press regularly drops a few of theirs for a week or two every monday, I assume for the same positioning. I “bought” a few that are back to $20+.

        Comment by Tony Wilson — December 15, 2011 @ 8:48 am | Reply

      • Pricing at 0 is also used to gather those otherwise allusive reviews.

        Comment by Tony Wilson — December 15, 2011 @ 8:54 am | Reply

  5. Lordy, this all sounds stupidly complicated to me!

    Comment by Carolyn — December 15, 2011 @ 9:04 am | Reply

  6. [...] a view to writing an analysis of it for my blog, when I saw what Rich Adin had written on his blog (An American Editor), and felt that he had managed to encapsulate it all very well, and that I probably wouldn’t be [...]

    Pingback by Kindle Direct Publishing - A Good Idea Or Not? | eBookanoid.com — December 15, 2011 @ 6:51 pm | Reply

  7. [...] a view to writing an analysis of it for my blog, when I saw what Rich Adin had written on his blog (An American Editor), and felt that he had managed to encapsulate it all very well, and that I probably wouldn’t be [...]

    Pingback by Amazon’s KDP (Kindle Direct Publishing) program – The pros and Cons for ebook authors | Ebooks on Crack — December 15, 2011 @ 11:28 pm | Reply

  8. Interesting thoughts as always, Rich, I was not aware that the Amazon exclusivity was automatically self-renewing. I had considered test participation on the thought that the exclusivity would terminate (and I’d still be part of the program). If your reading is correct, this program becomes much less interesting to me.

    I value Amazon and recognize their critical role in turning eBooks from a tiny niche into the mainstream of current publishing. I also recognize the risk of any single player gaining market power over the distribution of books. Even if today’s Amazon had the best possible intentions, if they gained an effective monopoly, they’d almost have to exercise that power… or Bezos would be fired and replaced by someone who would.

    Comment by Rob Preece — December 17, 2011 @ 6:25 pm | Reply

    • Rob, the terms of the “contract”, as I understand them, are that the exclusivity period is 90 days. The author/publisher can elect to opt out for another 90 days, but if the author/publisher doesn’t affirmatively do so, then the exclusivity is renewed automatically. I suspect a lot of authors/publishers have not either carefully read the agreement or asked for a legal opinion.

      I don’t consider that the most egregious clause, however. The one that — if I were an author/publisher contemplating participation — would worry me the most is the lack of ability to audit the program. The program requires the participant to accept blindly that Amazon will always act in good faith and honestly. But such trust, I have always thought, either goes both ways or goes not at all, so if I have to trust Amazon, why doesn’t Amazon have to trust me? The right to audit, whether exercised or not, is what helps keep parties to a contract honest. (I also find it interesting that there are no contractual penalties should Amazon breach the contract, but penalties are implied, if not explicitly stated, should the author/publisher breach the contract, say by continuing to sell their ebooks in Indonesia.)

      Following the audit issue in importance, to my way of thinking, is that I have no idea what deal has been offered the Konraths and Kings of the publishing world. If I am being offered such a great deal, one would think that the Konraths and Kings would sign up under the exact same terms as me, but I have doubts that the deal offered authors of that status is exactly the same as that offered me.

      Similarly, if my deal is such a great deal, why aren’t the Agency 6, who we all know are driven by dollar signs, jumping on the bandwagon? Why are the rumors flying about a wholly different deal being offered those publishers? Why isn’t Books for a Buck being offered that deal?

      I see Amazon practicing the divide-and-conquer strategy that it initiated when it chose to use wholly different DRM and format from other ebooksellers and to not allow anyone to simply buy and download an ebook unless the person had a Kindle or an Amazon app on their device.

      Comment by americaneditor — December 18, 2011 @ 7:23 am | Reply

  9. I’m an indie author and a completely unknown.

    I enrolled one of my novels for one reason only: to give copies away.

    I’ve since done one 24 hour promotion. 285 people downloaded my novel. I don’t know how else to put a free copy of my ebook in the hands of 285 Amazon customers.

    The $500,000 pot is a joke IMO. The odds that some Amazon Prime member will pick your book as the one book he/she borrows that month are vanishingly small.

    I see it as a way to get exposure and, hopefully, reviews.

    I’ll be posting updates to my blog on how it (and other marketing things I try) work for me over time . . .

    Comment by Kirsten Mortensen — December 20, 2011 @ 9:11 am | Reply

  10. [...] not going to repeat the details involved as it’s covered pretty well in the blogs by American Editor and Publish your own ebooks, but for those who want a quick [...]

    Pingback by The path to e-book domination | Indie Ebooks — December 23, 2011 @ 6:08 am | Reply

  11. Well, I will give it a try. The most important thing is to develop a good fan base. If this works, I will enroll my two upcoming books as well. If not, I will not.

    Comment by Augusto Alvaro — January 16, 2012 @ 12:59 pm | Reply


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