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.

+-