This post, by Moira Rogers, originally appeared on her site on 8/10/12.
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.
Kindle Lending
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.
Royalties
Read the rest of the post, which also explains the Amazon Prime Lending Library and author lend compensation, on Moira Rogers’ site.