Amazon.com this morning made a new move to increase the number of digital titles available to readers through its Kindle Owners’ Lending Library, announcing a $6 million annual fund that will be shared by independent authors and publishers as an incentive for making their books available for lending to Kindle owners.

The “KDP Select” initiative is an extension of the company’s existing Kindle Direct Publishing program for self-published digital books. Amazon says authors and publishers who make any of their books exclusive to the Kindle Store for at least 90 days can earn a share of the fund, with the monthly royalty payment depending on the book’s share of the total number of borrows of all Kindle Direct Publishing books made available through the lending library.

The announcement provides new insight the underlying business model for Amazon’s Kindle Owners’ Lending Library, announced last month. That program (separate from Kindle book lending through public libraries) lets owners of Amazon Kindle devices (not Kindle apps on non-Amazon devices) borrow up to one book a month, one at a time, from a selection of eligible Kindle titles, if they’re members of the $79/year Amazon Prime subscription service.

Amazon has struggled to get major book publishers to participate in the Kindle Owners’ Lending Library, based on the underlying economics

The KDP Select Program for self-published books will require indie authors and publishers to make a book exclusive to the Kindle Store for at least 90 days to participate.

In a news release, Amazon explains the economics of : “For example, if total borrows of all participating KDP Select books are 100,000 in December and an author’s book was borrowed 1,500 times, they will earn $7,500 in additional royalties from KDP Select in December. Amazon expects the fund to be at least $6 million for all of 2012, in addition to the $500,000 allocated for December 2011. Enrolled titles will remain available for sale to any customer in theKindle Store and authors will continue to earn their regular royalties on those sales.”

Amazons says 30 of the top 50 Kindle Direct Publishing authors have already enrolled a total of 129 titles in the KDP Select program.

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