The Down-Low on Exclusivity Clauses

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Is Amazon’s new KDP Select program a game-changer for authors? Well, yes, no, and maybe.

Columns, Featured, Homepage Sub, Terri Giuliano Long  •  Feb 29, 2012

By Terri Giuliano Long

For indie authors, Amazon’s new KDP Select program, launched in December 2011, is a boon, supporters argue. The program, rich with incentives, raises the visibility of participating authors and introduces them to new audiences. Are advocates right? Is KDP Select a game-changer? Well, yes, no, and maybe.

When authors sign on, Amazon automatically places the enrolled eBook in their Kindle Owner’s Lending Library. Eligible members of Amazon Prime can borrow one book per month from the Library, with no due date, giving readers free instant access to thousands of eBooks, including New York Times and USA Today bestsellers.

To sweeten the deal for authors, Amazon dedicated a fund—totaling at least $6 million for 2012—to independent authors and publishers enrolled in the program. Each time a book is borrowed by a unique Amazon Prime member, its author receives a share of the fund. Amazon reviews and adjusts the fund monthly, with a pool of $600,000 slated for March.

This week, Amazon reported that in January authors received $ 1.60 per borrow. For new or unknown authors, who typically sell a handful of books per month, 500 borrows—earning $800 in royalties—would be a windfall. Remember, books enrolled in KDP Select remain on the sales shelf. Authors earn royalties on borrowed books in addition to royalties on paid sales.

A blue and orange badge identifies enrolled eBooks as eligible for borrowing; these eye-catching badges attract readers who otherwise might not have noticed the book. Enrolled eBooks are also eligible for special promotions. Authors may offer their enrolled books for free for up to 5 days over the 90-day enrollment period. Free downloads earn no royalties, but the promotions can, and often do, result in increased paid sales. A recent promotion lifted one author’s book to #23 on the chart for paid Kindle bestsellers—depending on daily fluctuations, this can translate to 1000 or more sales per day.

Exclusivity Limits Availability

Like any new program KDP Select has its downsides. Books borrowed from the Kindle Owner’s Lending Library can be read only on a Kindle device—they cannot be downloaded to Nook, Sony or Kobo devices. Nor can they be read on Kindle applications for computers, iPads, iPhones, or other eReaders.

Barbara Freethy, a #1 New York Times bestselling author, opted against enrolling for the sake of her fans. “It’s important to keep my readers happy,” she says. “They read across a variety of devices, so I would be disappointing many of them if I chose to limit the availability of my books to one retailer.”

To enroll, authors must agree to distribute their eBook exclusively through Amazon for a minimum of 90 days. During the enrollment period, the eBook may not be distributed anywhere else in the world – including the author’s website or blog or on sites like Smashwords, an aggregator and eBook retailer, and the primary eBook provider for many international consumers.

Distributing an eBook exclusively on Amazon “cuts out important segments of the market,” says Emlyn Chand, president of Novel Publicity, and author of the award-winning Young Adult novel Farsighted. When an eBook is sold only on Amazon, readers in countries like Indonesia, with no access to Kindle devices or Kindle content, are left with no means for purchasing the book.

Readers can buy enrolled eBooks through regular Amazon sales channels, download the books on free promotional days, or, assuming the author enabled lending, borrow from a friend. Exclusivity applies only to eBooks, leaving free access to paperback, hardcover and audio formats. For some consumers, though, the higher cost—$7 a pop and up, plus shipping, if applicable—makes these alternate formats prohibitively expensive.

Exclusivity is not ideal for consumers, says Barry Eisler, former CIA, coauthor of the earthshaking indie publishing manifesto, BE THE MONKEY!; in the long-run, they may benefit. “New York’s longstanding quasi-monopoly on the publishing business hasn’t been ideal for consumers, either,” he points out, citing delayed digital releases, too-high digital prices, and a lack of consumer- and author-centric innovation. If exclusivity “introduces meaningful competition into publishing, consumers will be better off.”

Exclusivity May Also Limit Reach

For authors, the exclusivity agreement limits access to important sales and discoverability channels and can prevent them from breaking out.

Even today, the majority of books are sold the old-fashioned way: by word of mouth. Enthusiastic bookstore owners and employees can turn a debut novel like The Help into a sensation. Because few indie and small publishers can afford to offer returns, bookstores rarely stock their books.

Increasingly, bloggers and social media mavens are taking over the booksellers’ role, generating buzz, spreading the word about books they love across social networks. Listing titles on a variety of online retailer sites enables authors to take immediate advantage of these critical online recommendations. If an eBook is available only on Amazon, consumers who don’t or can’t use Amazon may forgo purchasing the title.

For a hot new novelist like Darcie Chan, author of the runaway bestseller The Mill River Recluse, exclusivity could be a career buster. With only one book on the market, Chan’s goal is to reach as many readers as possible. “I’m interested in continuing to build a readership for future work,” she says. “I don’t think it would be the best option for me to limit the availability of my one title.”

The exclusivity agreement limits author reach in subtle ways, too. While Melissa Foster, an award-winning author of three international bestsellers, likes the fact that members of Amazon Prime can read her book free of charge, “exclusivity does have its downfalls.” To make the NY Times or USA Today bestseller list, a book must meet criteria on at least two reporting venues. Amazon’s exclusivity clause prevents KDP Select-enrolled authors, even those like Foster with highly competitive monthly sales, from making high visibility bestseller lists.

Authors Should Consider Their Options Carefully

With an array of enticing benefits offset by a plethora of potential disadvantages, it can be hard for authors to decide whether or not to enroll. Industry expert Carolyn McCray, founder of the Indie Book Collective, has written an in-depth analysis of the KDP Select program. McCray, whose novel Thirty Pieces of Silver (among others) made the Top 10 on KDP Select for December, suggests that authors evaluate their income stream.

For an author earning 95% of eBook royalties on Amazon, KDP Select a “no brainer,” McCray says. Kathleen Valentine, author of 14 digital books, falls into this category. In December, Valentine sold over 8400 eBooks on Amazon (all paid), 50 on B&N, and 12 on Smashwords. As an experiment, she enrolled three titles in Select, two poor sellers and one brand new to the market. Sales of all three titles have increased. “For slow sellers the Select promotional feature does seem to give a boost,” Valentine says.

For authors on the opposite end of the spectrum, with strong sales on multiple retailer sites, KDP Select may not be a viable option. While Barbara Freethy enjoys a good working relationship with Amazon, the bestselling author feels that selling through any one retailer “would be both logistically difficult and financially unwise.”

For authors in the middle, earning 66% to 94% of their eBook income from Amazon, the decision can be tough. Authors in this higher risk category must weigh lost revenue against the possibility for greater visibility on Amazon and a potential increase in paid sales. To make an informed decision, McCray advises these authors to study the lists carefully and watch the performance of books similar to theirs.

While KDP Select can be a career changer, the program is not a panacea.

New York Times and USA Today bestselling thriller author CJ Lyons worries that authors may be swayed to accept exclusivity terms by the promise of quick money. “I try to be very cognizant of what my readers want,” she says. “We all need to be looking at the long-term impact for ourselves and our audience.”

For now, this is a grand experiment. Time will tell how it pans out. Authors who wish to take advantage of the opportunities afforded by participation in KDP Select are required to enroll for only 90 days. When the enrollment period ends, they may remove their title from the program. If the Lending Library and free download promotions elevate new indie authors and titles to the top 100 lists, a short period of exclusivity may be a small price to pay.

BIO

Terri Giuliano Long is the bestselling author of the novel In Leah’s Wake. She lives with her family on the East Coast and teaches at Boston College.

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Terri Giuliano Long
Terri Giuliano Long is the author of the award-winning novel In Leah's Wake. Her life outside of books is devoted to her family. In her free time, she enjoys walking, traveling, and listening to music. True to her Italian-American heritage, she's an enthusiastic cook. In an alternate reality, she might be an international food writer. She lives with her family on the East Coast and teaches at Boston College. In Leah's Wake is her debut novel.
  • http://writeitforward.wordpress.com Bob Mayer

    Every author is in a different situation. Those of us with backlist view this very differently than those who are just starting out. I’m not seeing many borrows but the “free” option catapulted my scifi novel Atlantis to #1 in science fiction free and the follow on sales were solid. I think it’s too soon to judge.

    • http://www.tglong.com/ Terri Giuliano Long

      Great points, Bob! As Carolyn points out, it’s essentially no risk for authors who sell very few books on other retailer sites. Those who do sell well on multiple sites must, as you say, evaluate their options based on their own experience and books. You also make a great point about authors with a backlist. I’ve been watching the backlists to try to determine if increased sales of one book boosts the sales of others. It seems that it does.

      Of course, you’re in a very different category from most of us, so it’s interesting to hear your perspective. Thank you!

  • http://www.emlynchand.com Emlyn Chand

    Great overview, Terri. After fighting it for weeks, I finally decided to take the plunge with KDP Select as something of an experiment. I don’t regret it, but I’m not all hearts and flowers about it either. I’ve also noticed that the novelty of the program is starting to wear off on readers.

    • http://www.tglong.com/ Terri Giuliano Long

      Thank you so much, Emlyn! I understand your ambivalence. I haven’t figured out why some books rise into the stratosphere while others see a tiny blip. In a new press release, Amazon reports that one author, who’d sold only a handful of books before joining, has earned $ 36K. That’s a compelling figure, but seems there is more to the story. It will be interesting to see what happens long-term and if readers do become increasingly bored.

      Thank you for visiting. And thank you again for contributing to the piece, sharing your insights!

  • http://www.jameswlewis.com James W. Lewis

    Great post. I already have one book enrolled and I hope to do another next week, one non-fiction, the other a suspense. I’m curious to see how it goes.

  • http://www.ingridricks.com Ingrid Ricks

    Great post, Terri. For me, the KDP Select program was an amazing three-month ride. It resulted in nearly 25,000 free downloads for my new memoir, Hippie Boy: A Girl’s Story, which in turn drove paid sales. I could have never gotten that kind of exposure so quickly without KDP Select. At the same time, I like choice and very much disliked the idea of going exclusive — even though most of my sales pre-KDP Select were through Amazon. I love what Amazon is doing for indie authors and I’m a huge Amazon fan. But this morning, the first day my three-month exclusivity ended, I put my book back up for sale in the BN Nook store and will publish it on the other platforms over the next week. I definitely don’t rule out using KDP Select again for the future. It really was a gift. But it feels good to be able to give readers a choice again.

  • LJBooker

    No one seems to be mentioning the fact that the bestselling books that are in Amazon’s select program are not exclusive, like, for example, the Harry Potter books. Those are for sale at Barnes and Nobles Nook store. It seems that there are two sets of rules. Only the indie authors have to give up their rights to sell elsewhere. This way Amazon gets to brag ‘exclusive’ books, while undercutting the other stores with free popular books. And those free bestsellers are getting all the funds in the pot. This whole promotion is about putting everyone else out of business. Has no one else noticed this?