The problem with Amazon's Kindle Owners' Lending Library | Hacker News Reader

The problem with Amazon's Kindle Owners' Lending Library

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20 pointsGarbage17 comments

Hmmm... he says that Amazon doesn't pay publishers enough for the lending library. How much does my local library pay publishers for the same dead-tree book? Cover price, right? And nothing for each reader? Actually, they probably pay the volume discount price, not even cover price.

I like to see him argue this from the ground up. Start with the local-library model: why should Amazon pay anything for book lending? Aside from the fact that technology has made it possible?

As I recall from the three books I wrote, authors don't get crap from discount, book club, or library sales.

Is the publisher is trying to make a little extra margin for itself, by demanding a fee for loaned books? Will a standard author's contract now include an author's cut of these lending fees?

Technology, economics, and society don't develop independent of each other. Due to physical distribution constraints, there were artificial limits on how widely a single book copy could be distributed. Hence, simplest system that compensated all parties appropriately, was the the policy of a fixed fee to individual buyer and library (the "first sale doctrine" may also apply here).

Now, with the Internet allowing practically infinite lending, should the policy be different? Probably.

Think about it the dual of your though experiment: if lending libraries were invented in a world with effortless, almost-infinite lending among a 25-million-or-so "library", don't you think per-usage charges would be an automatic feature?

Btw,AFAIK DVD rentals work this way: Netflix can't rent out more than 100 times or so before paying for a new copy. Please correct me if I'm wrong.

If Netflix wanted to go to Best Buy and buy dvds and lend them out they legally could, but that doesn't stop the content providers from being able to make other deals like this. It easily could be worth it for netflix if the dvds need to be replaced less than every 100 viewings on average.

> Now, with the Internet allowing practically infinite lending, should the policy be different? Probably.

Well sure. The question is whether something that has no inherent cost (electronic duplication) should have an artificial cost imposed on it for no apparent reason. The answer is clearly no.

> Btw,AFAIK DVD rentals work this way: Netflix can't rent out more than 100 times or so before paying for a new copy. Please correct me if I'm wrong.

Any DVD purchaser can lend them, just as any book purchaser can lend them. This has been litigated.

>Any DVD purchaser can lend them, just as any book purchaser can lend them. This has been litigated.

He means that the DVD wears out after 100 or so views, so Netflix must buy a new one. In other words, the DVD is not an infinite good.

The local library pays proportionally to the number of simultaneous readers it wants to be able to handle for the book. For popular books the library will by more than one copy.

This breaks the analogy between Amazon's library and local physical book libraries.

If the library is paying a bulk/discounted price such that the author's cut of the price for each book sold is effectively zero, then it doesn't matter how many books they pay for simultaneously. A billion times zero is still zero.

In the UK at least the library also pays a per-loan (a few *10c) to the author.

I was hoping he was pointing out the painful thing about it from the user side --- you have to use the Kindle itself to borrow a title, which (at least on their e-ink readers) requires a level of patience I don't possess. Browsing through hundreds of pages of titles with a second of refresh between each brings back unpleasant memories of 9600 baud modems and scrolling through BBS file listings.

I really hope they add the Borrow button to the website.

Publishers love variable fee rates. Consumers prefer flat fee rates. Such is life. I don't understand why they are not looking at the renting as advertisement. It would be interesting to see if sales go up as a result of the borrowing. The other problem is that there really is not very many books available (5,000 sounds like a lot, but if you can't find anything...). The last problem is that it is at most one book a month. I can read a substantial book in 3 days.

Of course in this case Amazon is in the middle, right? Suppose publishers demand to be paid by usage. Amazon can still charge their customers a flat fee--it just moves the risk of mis-setting the flat fee onto Amazon rather than the publishers.

Also, consider the incentives that a flat fee system sets up for publishers and writers: if you get paid per title rather than per reader, you're motivated to flood the market with books not to try to write a few really good books that lots of folks want to read.

Your second point is key: the fixed fee plans compensate poor writers as much as excellent ones. With that argument, I think publishers could sell a variable fee.

Maybe there's a slightly more middle ground--pay based on the number of peak _simultaneous_ borrows in a period. Just as a library would have to pay for each physical copy lent, is it too Luddite to suggest Amazon do something similar? Not pay for each borrow, but based on the peak simultaneous borrows?

I don't believe the goal at this point is to be the Netflix equivalent of books. This is an incentive to get people to sign up for Amazon Prime which should translate into sales across the other realms (purchasing, videos etc..). If you look at one book a month that's about $6.50 per month which might still be making Amazon a profit depending on their margins, especially if they purchase other products as a result. This is a stepping stone and a feature of Amazon Prime only - it's not for people that read 10 books a month nor is it to replace their book library.

If I were an author or publisher, I'd try the drug dealer model -- give away ($2.99 Kindle price, or participation in Lending Library) the first book or two in a series, or the first non-fiction book on a related set of topics -- with the remainder being $9.99 or higher.

Here's a simple suggestion. Carve out a portion of the Prime fee for book borrowing, say $12/year. Since you can rent 1/book per month, each publisher gets $1/month per borrow. Someone takes six months to read your book, you get $6. 1000 people check out your book this month, you get $1000.

The price is just an example, but it seems a reasonable compromise. Fixed fee for the customers, variable fees for the authors.

"For the vast majority of titles, Amazon has reached agreement with publishers to include titles for a fixed fee." So no matter how popular (or unpopular) the publisher's titles are, they get one flat fee for participation in the library.

What makes you think that is an Amazon stipulation? Maybe publishers wanted the flat fee.

As a Kindle Direct Publisher myself, my problem with the Lending Library is they have excluded KDP books from it. I want my books in the Lending Library!

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