Amazon has introduced a new option for publishers/authors — Kindle Direct Publishing Select. What is it?
KDP Select is a new option that features a $6 million annual fund dedicated to independent authors and publishers. If you choose to make a book exclusive to the Kindle Store for at least 90 days, the book is eligible to be included in the Kindle Owners’ Lending Library and you can earn a share of the fund based on how frequently the book is borrowed (click here to see how payments are calculated). In addition, by choosing KDP Select, you will have access to a new set of promotional tools, starting with the option to offer enrolled books free to readers for up to 5 days every 90 days. Authors and publishers can enroll a single title, their whole catalog or anything in between within KDP Select.
Basically, if you agree to have your eBook exclusive to the Kindle store, then it can be costly accessed by Kindle owners. You’ll then receive a part of Amazon’s funds based on how often the book is borrowed. Interestingly, this is as close as we have come to rewards based on reading (although borrowing does not necessarily equal reading and moreover books that get borrowed and returned quickly will get more than books that are borrowed and read!). But that is not the bit I want to focus on here.
Instead, why is Amazon requiring exclusivity? Part of the reason may be access to promotion but that could be something done separately. More critically, from Amazon’s perspective, exclusivity gets more eBooks on its platform that are unavailable elsewhere. One potential payoff from that is reduced competition but that is something that should surely concern us from a competition law/anti-trust perspective.
Imagine what happens if there isn’t exclusivity. Because of Amazon’s reward structure — encouraging you to have books borrowed from Amazon rather than purchased or borrowed somewhere else — you have ample incentive to restrict competing sales elsewhere if you want to maximise your Amazon returns. Of course, as a publisher, you might want something more balanced. In fact, a large publisher would want their books available for lending and also for sales through other channels. For smaller publishers or for less popular books, the loss of other distribution channels isn’t as much an issue. Seen in this light, perhaps exclusivity is Amazon’s way of excluding the larger publishers from their prize pool.
Thus, our concerns about exclusivity rest on what large publishers choose to do and whether Amazon extends exclusivity to them. Otherwise, I think this is best seen as a strategy to secure the long tail for Amazon. That may also be a long-term concern but it is harder to fit it into traditional competition law. It will be interesting to see if this features in the new US and European investigations into eBook pricing practices.
Digitopoly 
This is an interesting idea, by being exclusive it funnels traffic to their website. Its great for unknown writers, but for someone who is well known; I would like to know who makes out better in the end, the author or Amazon, or maybe both (I don’t know how likely that is).
If Amazon offered these terms, minus the exclusivity, would the promotional activities put those authors in violation of the “most favored” clauses of other e-book publishers?