Kindle Select is a program wherein publishers give Amazon the exclusive digital rights to make their products available through Kindle and by default incorporated into the KOLLP (Kindle Owner’s Lending Library Program…”where it will earn a share of a monthly cash fund when readers borrow it”.

When you read the fine print in the terms and conditions this is where things get interesting.  Basically, the royalty program is a very inventive crapshoot that Amazon has concocted to deal with the “royalty problem” of digital file sharing through Kindle.

• This program is fundamentally established to provide an ongoing incentive to publishers to continue publishing through Kindle Direct.  When I buy a DVD from Target and loan it to a friend, the movie company receives no royalty for that exchange.

• Amazon has now set up a program where authors and publishers receive royalties when their books are loaned.  In other words, they have made a way for you as a publisher to get ongoing royalties when your work is “checked out”. Pretty cool.

• The reason this is an experimental crapshoot is because when you look at the fine print in section 2.3 below: …

2.3 KDP Select Fund. We will establish a fund on a monthly basis and you will earn a share of that fund for each of your Digital Books included in the Kindle Owners’ Lending Library Program. 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. This share is your total Royalty for borrows of that Digital Book through the Kindle Owners’ Lending Library Program. 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). We will determine in our sole discretion the criteria for determining which borrowing events qualify for this calculation. A maximum of one borrowing per customer will qualify. We may publically announce the top Digital Books borrowed, including the author, publisher, number of borrows and KDP Select fund royalties earned.

… What we find is that Amazon is pulling numbers out of thin air because they really have no idea how this KDP Select Fund Royalty thing is going to work.  At this point it is an experiment.

There is no relationship (yet) between:

1. “Participating Digital Books”
2. “cumulative borrowed”
3. And how many times “Your Book” is loaned out
4. “the Fund Amount”.

Essentially what happens here is that Amazon holds out a carrot that your e-book might be loaned out and if so you will get a royalty based on an unknown percentage of total Kindle e-book loans from an unknown ongoing fund amount of whatever Amazon decides.   Amazon in return gets up front exclusive digital content.

Right now no one knows if it’s a good deal or bad deal but at least it’s something.   If you have personal experience with this program post a comment and let us know how it is working out.  Thanks.