Amazon has made it official: Authors who publish their work through Kindle Direct Publishing exclusively will have the option of putting their titles in the Kindle Owner's Lending Library, and will be compensated through pro-rated shares of a fund "expected to be at least" $6 million for all of 2012 (beginning with $500,000 allocated for the month of December).
Titles must be exclusive to the Kindle store for a minimum of 90 days
(which is a reduction from the 180 days Amazon initially sought from
some authors). If books are currently available through multiple
retailers, authors must withdraw the titles from competitors and
restore exclusivity to Amazon in order to participate. VP of Kindle
Content Russ Grandinetti claims that the "short 90-day commitment
allows authors and publishers to experiment at very low risk."
Participating authors will also be allowed
to promote their books for free without jeopardizing their high-royalty
status, for up to 5 days each 90-day period. (This allows those authors
to try to boost their visibility and ranking within the Kindle store.)
There are no "rollover days" from one 90-day period to the next; it's
use-it-or-lose-it, according to Amazon documents shared with us.
The monthly royalty payment for each KDP Select book is based on
that book's share of the total number of borrows of all participating
KDP books in the Lending Library. Amazon cites a representative example
of 100,000 total borrows in a month of all KDP Select titles. If an
author's book is borrowed 1,500 times - or 1.5 percent of the total -
then the author would earn $7,500 from the pool of $500,000. (If your
book is not borrowed, you do not share in the pool; but in this
example, a single borrow earns $5.)