Posted by Victoria Strauss for Writer Beware

Almost since Amazon’s controversial Kindle Owners’ Lending Library–which allows Amazon Prime members to borrow selected ebooks for free–debuted, there have been rumors that Amazon was inviting KDP self-publishers to participate.

Amazon has just unveiled KDP Select, which allows self-publishers to “Distribute books through the Kindle Owners’ Lending Library and reach the growing number of US Amazon Prime members.” Authors will receive not just exposure, but payment, through a special fund established by Amazon. $500,000 is available in December, and “at least” $6 million in 2012. (See Amazon’s detailed FAQ.)

The enrollment term for KDP Select is just 90 days, but enrollment renews automatically unless you opt out (and you can opt out at any time). During each 90-day term, you can promote your book to Amazon customers as free for up to 5 days; during those free days, however, your book won’t be available in the Lending Library.

Payment is calculated according to a complicated formula:

Your share will be calculated as the number of times that the Digital Book has been borrowed during the month as a percentage of the number of times all KDP Digital Books have been borrowed, multiplied by the fund amount we establish for that month…For example, if the fund for a particular month is $500,000, your Digital Book is borrowed 1,500 times, and all participating Digital Books are cumulatively borrowed 100,000 times, your Digital Book will earn $7,500 ($500,000 x 1,500/100,000 = $7,500).

It sounds lucrative, but it should be remembered that this is only an example; KDP Select is too new for anyone to predict what the actual borrowing rates will be (according to Publishers Lunch, 129 titles are currently enrolled, from top KDP authors). Also, Amazon appears to have complete discretion in establishing the amount of the monthly fund, and in deciding on “the criteria for determining which borrowing events qualify for this calculation.”

Also important to consider, if you’re thinking of participating: you must be willing to distribute your work exclusively on the Kindle. Here is the relevant language:

1 Exclusivity. When you include a Digital Book in KDP Select, you give us the exclusive right to sell and distribute your Digital Book in digital format while your book is in KDP Select. During this period of exclusivity, you cannot sell or distribute, or give anyone else the right to sell or distribute, your Digital Book (or content that is reasonably likely to compete commercially with your Digital Book, diminish its value, or be confused with it), in digital format in any territory where you have rights.

This is a grant of rights and a non-competition clause all in one, and authors need to think carefully before agreeing to it. Contrary to what many authors seem to believe, the regular KDP program does encumber rights, and gives Amazon considerable control over intellectual property (see this comment from me on an earlier blog post for an analysis)–but it does so non-exclusively and imposes no burden on other works. KDP Select goes much farther: it makes Amazon, in effect, your publisher while your book is included in the program, and potentially has an impact on other work you are or are planning to publish. (See this post from Passive Voice for a detailed analysis of the dangers of non-competition clauses.)

Other things to note: if you opt out of KDP Select, your book remains subject to the Terms and Conditions until your current 90-day term expires. And if you violate the Terms and Conditions, there are consequences:

we will not owe you Royalties for that Digital Book earned through the Kindle Owners’ Lending Library Program, and we may offset any of those Royalties that were previously paid against future Royalties, or require you to remit them to us. We may also withhold your Royalty payments on all your Digital Books for a period of up to 90 days while we investigate. This doesn’t limit other remedies we have, such as prohibiting your future participation in KDP Select or KDP generally.

As always, read and be sure you understand the fine print.