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Wednesday, November 23, 2011

Amazon Launches Digital Book Lending Library

Story first appeared in the Wall Street Journal.

As the e-reader and tablet wars heat up, Inc. is launching a digital-book lending library that will be available only to owners of its Kindle and Kindle Fire devices who are also subscribers to its Amazon Prime program

The program will be limited, at least at the beginning, in what is available to borrow. Amazon will initially offer slightly more than 5,000 titles in the library, including more than 100 current and former national bestsellers, such as Stephen R. Covey's "The 7 Habits of Highly Effective People."

None of the six largest publishers in the U.S. is participating. Several senior publishing executives said recently they were concerned that a digital-lending program of the sort contemplated by Amazon would harm future sales of their older titles or damage ties to other book retailers.

Moreover, Amazon will restrict borrowers to one title at a time, one per month. Borrowers can keep a book for as long as they like, but when they borrow a new title, the previously borrowed book automatically disappears from their device.

The new program, called Kindle Owners' Lending Library, cannot be accessed via apps on other devices, which means it won't work on Apple Inc.'s iPad or iPhone, even though people can read Kindle books on both devices. This restriction is intended to drive Kindle device sales, says Amazon.

The program, which is effective Thursday, comes a few weeks before Amazon ships the Kindle Fire tablet on Nov. 15, which is a direct competitor with the iPad.

The lending library reflects a broader effort by Amazon to lure consumers to Prime, a service that costs $79 a year.

Amazon Prime began as a membership plan to offer package-shipping perks. Then, earlier this year Prime added a video-streaming feature to the subscription. Nearly 13,000 movies and TV shows are now available under the streaming feature.

Amazon, the market leader in e-readers, made Kindle titles available to libraries beginning in September and libraries said the impact already has been significant.

At the Seattle public-library system, e-book borrowing rose 32% in the month after Kindle books became available, said Seattle's electronic-resources librarian Kirk Blankenship. E-book borrowing had typically been rising 10% or 15% a month, he said.

Mr. Blankenship said he isn't worried about Amazon starting its own lending service.  He said there's a lot of people that can't afford Amazon Prime, so we also want to be a resource for people looking for other things beyond the best-seller list.

Russell Grandinetti, vice president for Kindle content, said the vast majority of participating publishers were receiving a flat fee for their titles, while a more limited group is being paid the wholesale price for each title that is borrowed. For those publishers, we're treating each book borrowed as a sale, he said.

Despite concerns among major publishers about the potential impact on sales of the program, some see it as a positive. Arthur Klebanoff, chief executive of RosettaBooks LLC, an e-book publisher that is making Mr. Covey's title available under a flat-fee arrangement, said he did so because he believes it will spur sales of Mr. Covey's other works.