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Dispatches from the Digital Revolution

Sales or reads: Is there a difference anymore?

How do you define a sale?

I’ve always pictured some sort of monetary exchange, coupled with receipt of a product or service, and, heck, perhaps even a handshake. And the number of sales and their resulting revenues have normally been the benchmark measurement of success in business.

But in the age of digital everything, it seems the new measurement of success has more to do with the number of downloads—sold or gratis.

Case in point: Amazon recently explained to Publishers Weekly why the Harry Potter ebooks were showing up in its Kindle bestsellers lists. As the Harry Potter series is only available for ebook purchase on Pottermore, it was certainly peculiar to see it on Amazon’s lists. The Amazon spokesperson explained, “borrows of Kindle books that are included in the Kindle Owners’ Lending Library (like the Harry Potter e-books) count as sales for the paid Kindle bestseller lists.”

Uh, what?

Kindle Owners' Lending Library

Source: Amazon.com

The way the Amazon Kindle Owners’ Lending Library works is that any Amazon Prime member who owns a Kindle device (Kindle app users on other devices are not eligible) can borrow one book in the library collection, which Amazon says consists of more than 145,000 titles, per month. In the press release announcing the library program last November, Amazon explained:

For the vast majority of titles, Amazon has reached agreement with publishers to include titles for a fixed fee. In some cases, Amazon is purchasing a title each time it is borrowed by a reader under standard wholesale terms as a no-risk trial to demonstrate to publishers the incremental growth and revenue opportunity that this new service presents.

Some were skeptical that the flat fee paid to publishers would be fair (see Joe Wikert’s criticism of the program on the O’Reilly Radar blog), and that only the pay-per-borrow model would guarantee copyright holders receive the royalties they deserve for participating in the program. I tend to agree, especially since the formula Amazon uses to pay authors whose titles are in the program is pretty screwy: an author receives a percentage of the total monthly fund based on how many times the author’s title is borrowed (sounds reasonable so far), but the amount in the fund each month is determined arbitrarily by Amazon.

If the pay-per-borrow model, such as it exists with Pottermore, were to become the norm, the total sales numbers for ebooks that are listed both on Amazon.com for regular sale and in the Kindle Owners’ Lending Library become artificially inflated. What you’re measuring, then, is not sales but downloads—or total reads. So the question becomes, should Amazon be including each library loan in its sales numbers? Surely not all of the “sales” that occur would have taken place if the reader had to pay full-price. What does that imply about the accuracy of sales data for ebooks participating in the lending library program?

More importantly, since Amazon’s Kindle bestsellers lists are the industry’s best barometer for ebook sales (alas, there is no Nielsen BookScan for ebooks), what author wouldn’t want his or her sales rankings to get a little—or big—bump from library borrows? Could this be Amazon’s master plan to secure more titles for the library program?

Regardless of intent, Amazon is redefining the word “sale.” It now not only includes a single copy of a consumer-purchased book but also how many times a copy is lent to Amazon customers. Amazon even knows how frequently you’ve lent your Kindle books to your friends (yup, Amazon has a program for that too). The potential influence of this combined data would be invaluable to publishers, who could use it  to more accurately estimate a title’s sales potential on the print end (buh-bye, twenty, thirty, and forty percent returns). But only if retailers would share that information with publishers.

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This entry was posted on July 18, 2012 by in Culture and tagged , .

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