[gigamonkey]

Of course in this case Amazon is in the middle, right? Suppose publishers demand to be paid by usage. Amazon can still charge their customers a flat fee--it just moves the risk of mis-setting the flat fee onto Amazon rather than the publishers.

Also, consider the incentives that a flat fee system sets up for publishers and writers: if you get paid per title rather than per reader, you're motivated to flood the market with books not to try to write a few really good books that lots of folks want to read.

[alttag]

Your second point is key: the fixed fee plans compensate poor writers as much as excellent ones. With that argument, I think publishers could sell a variable fee.

Maybe there's a slightly more middle ground--pay based on the number of peak _simultaneous_ borrows in a period. Just as a library would have to pay for each physical copy lent, is it too Luddite to suggest Amazon do something similar? Not pay for each borrow, but based on the peak simultaneous borrows?