Will Pubit's LendMe Program Hurt Author's Sales?

Barnes and Noble has recently opened its new Pubit tool for publishing eBooks on their Nook platform.  The Pubit system allows users to upload their book in a variety of file formats (HTML, RTF, TXT, DOC or DOCX) to be converted into an eReader friendly ePub file.  The system seems to mirror Amazon's Digital Text Platform (DTP) for the Kindle.  The thrust behind the Pubit tool is to allow independent authors and publishers the chance to get into the ePub marketplace with relative ease.   Even Barnes and Noble's marketing efforts are bent towards indie authors/publishers.

Looking simply at margins, using Pubit to publish an eBook is not a bad deal.  Pubit is offering a 65% return on the sales price to the author.  Considering the delivery costs and price matching of Amazon's 70% royalties program, Pubit is an attractive option.  This is especially true if you've been using Smashwords to distribute your book to Barnes and Noble.  Pubit will allow independent authors and publishers to forego Smashwords middleman fees.  All would seem to be running on greased grooves for Pubit's contribution to the independent publishing universe.

That is until you take a close look at Pubit's terms of service.  If you blink you'll miss that when signing your book up for the Pubit service, you are also agreeing to their LendMe program.  The LendMe program allows the purchaser of an eBook to "loan" their copy to another Nook user for up to 14 days.  This is taken directly from the Pubit terms of service agreement:

""Barnes & Noble shall have the right to institute a program whereby customers of any eBook Store can loan eBooks to others. A customer who has purchased an eBook may loan such eBook to one (1) lendee during a lending period. No more than one (1) copy of any one (1) eBook can be on loan from an eBook lendor at any given time. The lending period is for up to fourteen (14) days. By submitting your eBook for distribution using the Service you agree to allow your eBook to be distributed through Barnes & Noble's lending program pursuant to the terms listed in this Section IV.H. and as may be modified from time to time by Barnes & Noble, in its sole discretion."

According to this TOS clause, there is no limit on the number of times one may loan a book.  Theoretically, if one could lend an author's book out an infinite number of times for periods of less than a day if the borrower returns the book the same day.  If you look closely, Barnes and Noble may modify the program from time to time.  Taken to an extreme, Barnes and Noble could turn the LendMe program into a sort of Netflix for print.  The question that no one seems to be asking is what will that do to the sales of independent author's works?  The old adage of "why buy the cow when the milk is free" comes to mind. 

Naturally, I was concerned about this program and the impact it would have on the authors Grave Distractions Publications represents.  On one hand, an author's works could reach a wider audience by being freely distributed via LendMe.  This could potentially lead to long term sales growth by fostering a fan of one's work.  The potential short term consequences are a loss of sales.  So what is the answer?  Is there any advantage to the author/publisher for being forced into the LendMe program?

I didn't have that answer for my company, so I turned to the experts at Barnes and Noble.  One would think that they would have done marketing research on the effects of LendMe and sales.  I penned a nice email to the Pubit team voicing my concerns and asking for data to set my mind at ease.  For my effort I received a form letter saying that: "We respect authors' copyright and would never institute a program that we did not believe created an opportunity to generate sales."

While I appreciated the warm fuzzy of Barnes and Noble creating a program that they felt would assist my authors, I like hardcore data.  After a couple of emails back and forth reiterating my request for something tangible to make me believe LendMe would be beneficial.  After another couple of rounds of emails, this is what I received: "We understand your request for data.  Our response is that participation in PubIt! is dependent on the accepting the whole agreement which includes LendMe.  If you are not comfortable with the program as described we cannot be of further assistance."

I could have understood proprietary data being an issue or even "we're taking a chance and want you to take the risk with us."  However, the answer Barnes and Noble gave brought back memories of "because I'm your father, that's why".  The question remains, will Pubit's LendMe program hurt an author's sales?  I don't know the answer.  If Barnes and Noble does they're not saying.