On the back of Amazon’s announcement about Amazon.it (Italy) and Amazon.es (Spain) comes a new Kindle program; the new KDP Select program.
Each month, Amazon will make a “pool” of money – $500,000 in December. To get a cut of the money you have to enroll your book. Each time it is borrowed, you get a “point”. At the end of the month, the total points are counted, the money is divided up by that number (for example if there are 500,000 points from all authors and $500,000, each “point” is worth $1) and you receive your share of the “pot” which would be X$ x How-many-times-your-book-was-borrowed (not purchased, but borrowed through the kindle Library lending program - which only Amazon Prime members can borrow from.)
So if no one borrows your book, you make 0% of the pot.
In Amazon’s press release, several authors such as J.A. Konrath and C.J. Lyons have gone on record, lauding the program. Meanwhile, Mark Coker has posted, explaining why this is a bad thing, while Writer Beware has warned authors to “read the fine print”.
And you should. While at first this seems like a way to earn royalties on book borrowing, there is one condition: You must have your book (in digital format) EXCLUSIVELY published with Amazon. This means it can not be on Smashwords, Barnes & Noble, Kobo or even your personal website or blog (blogs and websites are specifically mentioned in the terms). This further means that if your book is already published elsewhere you must first remove it so that Amazon is the only person who carries it. (This does not effect paper back/dead tree versions)
Before you take your books down from B&N, Kobo, Smashwords, etc. and enter the program, ask yourself this question, “Is my book likely to be borrowed enough times to make up the money for those lost sales?”
The answer for me is a simple “No”. Your answer may be different, but as Writer Beware has cautioned, make sure you know what you’re getting into.
You can read the entire FAQ & terms on Amazon’s site
EDIT: Check out Kim Wolterman’s blog Amazon: Author Friend or Foe where she explains the Kindle Lending Library.