Most of my corners of the internet have been ablaze over the piracy witch-hunt that shut down legal lending website LendInk. I have seen pitchfork-wielding mobs gather many times in the past, but this one was fast, vicious and amplified by careless RTing and a lot of authors who seem to know nothing about ebooks or how they actually work. This is terrifying to me on so many levels: that people agreed to the Amazon ToS without understanding them, that people jumped to the worst assumptions without taking time for research, and then that they went and made “legal” threats based on those assumptions.
But that’s not what this post is about. This post is about a misconception so common I’ve seen it on both sides. I think Amazon is to blame in some ways for not giving two completely different functions slightly more distinctive names. There are two types of “lending” on Amazon–one that is Amazon-to-Prime-Customer and one that is Paying-Customer-To-Non-Paying-Customer, and people seem really confused over what they both mean.
How it Works
Kindle lending (like Nook lending) is a customer-to-customer transaction. Someone who has legally purchased an eligible kindle title can lend that title to anyone else with a kindle account. The option shows up on eligible books:
Ebook lending is meant to mirror the act of physical lending–the book “disappears” from the lender’s account and “appears” in the lendee’s account. The lending period is restricted to two weeks, and a book can only be lent once. In many ways, it’s far more restrictive than its physical counterpart, even if the internet allows you to easily use your one lend on people outside your immediate geographic area.
Which books are eligible? For larger publishers, that’s their call. Lots of the Big Six books are not eligible. Anyone using KDP (Kindle Direct Publishing), however, is automatically opted in to this lending service if they select the 70% royalty option. (Note: this is NOT related to KDP Select. This is just about 35% vs 70%. To receive the 70% royalty, you have to do many things that make your book more useful to Amazon, including opting in to lending and agreeing to stay within a set price range.)
This is the option LendInk was using to arrange book lending. User A would say, “I have a copy of Cipher by Moira Rogers that I am willing to lend” and User B would say, “I’d like to read that book!” LendInk would give User B’s e-mail address to User A, and User A would go to Amazon, click the “Loan this book” link and the standard (legal) transaction would occur. If User C wanted to borrow Cipher, too, they would be out of luck. User A can only loan that book once. However, User C might click on the “Buy this Book” link and purchase the book. That would give the author royalties and give LendInk a small referrer fee. That was the business model in play.
There are no royalties for kindle lending. An author gets their royalty when the lender originally buys the book. The lending procedure is consumer-to-consumer, facilitated by Amazon but having nothing to do with the author.
You can find the full FAQ on Lending for Kindle here.
The Kindle Lending Library
How it Works
The Kindle Lending Library (sometimes called the Prime library, or Prime lending) is a completely different beast. You can visit the main page here. This library is only available to customers who belong to Amazon Prime.
This operates more like a library. Amazon has a catalog of books that are available. Kindle users who are also Prime members (and they must be both–this function is not available in the kindle apps, only from an actual kindle device) can check out one book per month. The user must check the book out on their kindle, and can keep it for as long as they want. But as long as they have that book checked out, they can’t check out any other books from the lending library.
It’s a fairly simple transaction from the consumer end–much more simple than book lending–but from the author side it’s a bit of a mess.
When Amazon launched their Lending Library, they wanted it to look like an awesome resource full of bestselling books. To accomplish this, they chose a tactic that caused quite an uproar–enrolling popular books (like The Hunger Games) in the lending program with the understanding that they’d let Prime-enrolled kindle users borrow them for free but would pay royalties to the authors. This became a rather ugly PR mess for authors and publishers, who understandably didn’t want Amazon distributing their books in a way that violated agreed upon contracts, but came off looking uncharitable for protesting an action that allowed readers access to free books while authors still got paid.
At this point, I can’t begin to tell you what the arrangement is between publishers and Amazon when it comes to the Lending Library. One good assumption, however, is that authors are being paid royalties each time a user borrows a book. How much or whether it’s comparable to sales royalties, I can’t say, but I would assume publishers are protecting their interests there.
It gets even more complicated for self-published authors or small publishers using KDP. In order to have your books available in the Kindle Lending Library, a KDP user must enroll in KDP Select. Availability in the Lending Library is considered a perk of KDP, because every month Amazon sets a budget for how much they’ll pay authors who participate in the Lending Library. The simplest explanation of how this works is: if Amazon sets their budget to $600,000 and 600,000 prime users check out books during the month, an author would get $1 for every time a user had checked out one of their books. If only 300,000 prime members check out books, an author gets $2 per check out.
So, yes. In theory every time someone checks out a book from the Kindle Lending Library, an author is being paid some unspecified amount for it.
Amazon says a lot of what I just said in a much pithier format:
What is the difference between “Kindle Owners’ Lending Library” and “Lending for Kindle”?
Kindle Owners’ Lending Library is a collection of books with US territory rights that US Amazon Prime members can borrow for free once a month, with no due dates. The “Lending for Kindle” feature allows readers to lend digital books they have purchased through the Kindle Store on Amazon.com to their friends and family. For more info on “Kindle Owners’ Lending Library”, click here. For more info on “Lending for Kindle”, click here.
Both types of lending are legitimate. Both types are good. Ebook readers give up some of their rights when they purchase in digital. I see a lot of authors upset over the “devaluation” of books and sometimes I want to ask them what they expect. Ebooks are locked up in DRM that makes them difficult to read on various devices and easy to lose access to. They can’t be resold. They can’t be easily (legally) lent. Sometimes the production value is even astonishingly low, as if ebooks are the afterthought. And if they are, well, that’s fine. But that means you are contributing to the devaluation of the product.
Anything that makes ebooks more useful to a consumer makes them more valuable. Lending makes them more valuable. Don’t think of that one stingy lend as a lost sale. Think of it as raising the value of ebooks. Everyone seems willing to lose thousands of sales by making ebooks prohibitively expensive, so why not try something really edgy and “lose” sales while adding value. In the long run, you might even convince people ebooks are worth more.