Publishers Are Seeing Red Over Amazon’s Kindle Library

NEW YORK (MainStreet) – Earlier this month, Amazon introduced the latest perk for members of its $79-a-year Amazon Prime Service: The Kindle Lending Library, which allows Kindle-owning Prime subscribers to “borrow” one book a month, free of charge. It was a boon to Prime subscribers, and in advance of the launch of the Kindle Fire, another argument for joining the retailer’s rapidly growing content ecosystem.

For some publishers and authors, though, the new service looks like a harbinger of doom.

On Monday the Authors Guild, a writers’ advocacy group, became one the first elements of the publishing industry to officially register its objections to the service, blasting it with an extensive blog post that accuses the retail giant of running roughshod over its contractual agreements with publishers.

According to the post, Amazon approached the six major publishers asking them to include their books in the list of available titles, but all six refused. Amazon then went to the next smallest tier of publishers, but when they likewise refused, Amazon went ahead and included their titles in the library anyway.

Paul Aiken, the Authors Guild’s executive director, explains that the major six publishers have “agency model” contracts with Amazon, allowing them to set the retail prices of books sold on Amazon. By contrast, all smaller publishers have “wholesale” contracts, which allows Amazon to sell the books at any price it chooses so long as it pays the wholesale price to the publisher. According to the Guild, though, such contracts don’t extend to actually giving away the books for free.

Still, Amazon will still be paying the wholesale price on each book that’s borrowed through the library, clearly on each individual transaction will be compensated by Prime memberships.

So if publishers are still getting paid, why are they so upset?

“A publisher wants to control the marketing of their books across many different formats,” explains Aiken. “They do not want to give up that control.”

A publisher may, for instance, be planning to heavily promote certain books for the holiday season, or do a special edition of a book that’s being turned into a movie. Suddenly having Amazon give away that book for free undermines those plans, and bodes poorly for the publishers’ ability to have predictable marketing plans in the long term.

Meanwhile, authors and their agents are likewise angered by the move: The Association of Author Representatives, which represents literary agents, expressed concern that authors would not be properly compensated for the use of their books in the library.

Amazon did not respond to requests for comment on the controversy as of press time.

What’s clear, however, is that the publishing industry as a whole is dreading the long-term implications of ceding this sort of control to Amazon.

“In the short term, giving away books and paying wholesale price on those to publishers is great – what’s not to like?” says Aiken. “It’s only if you lift your eyes and look a couple quarters down the road that you see it won’t end well.”