My books Sensation and Warden are both in the KDP Select program. For those unfamiliar with KDP Select, it is a program in which an author agrees to make his or her ebook available exclusively in the Kindle Store for 90 days. That means no selling your ebook on Smashwords, B&N, etc. (You can still sell print versions wherever you like.)
In exchange, the author receives - among other things - higher royalty rates in some regions and 5 days during that 90-day period in which to offer his/her ebook for free. The book also gets included in the Kindle Owners' Lending Library, where it can be borrowed for free by Amazon Prime members. Books that are borrowed earn of a share of a global fund established by KDP. Each borrow has historically earned about $2 (although the exact figure varies month-to-month), so if you have a book in KDP Select that is borrowed 152 times during the month, you can expect to earn about $304 from that. (That's borrows, not sales, which would be entirely different.)
Needless to say, when you offer your book for free, you can expect for the amount of downloads to increase significantly. Initially, this was a boon for authors since - in the early days of KDP Select - a free download was essentially the same as a sale in terms of how if affected your rankings, and there was a good chance your book would be comfortably positioned in the upper echelons of your category when the free promotion ended (which usually resulted in a post-promo bump in sales). However, Amazon has done a fair amount of tweaking to the algorithms since then that significantly affect the weight given to freebies.
In my case, for example, I published Sensation on Kindle in early May 2013 and picked two days in early June to offer the book for free. (I figured a month would give me enough time to do adequate promotion, if necessary.) Much to my surprise, sales for the book took off, and by the end of May it was #1 in one of its categories.
At that juncture, I became a little nervous. The book was selling well, so I was afraid that free days would cannibalize sales. I was seriously tempted to pull the plug on the free days altogether, but I had already arranged free promotions on a number of sites. Therefore I decided to stick it out, thinking that maybe if there were something like a 10-to-1 ratio between the weighting of free downloads to sales (ie, every 10 freebies were equivalent to 1 sale), I could still make out alright.
Over the next two days, over 3000 copies of Sensation were downloaded, and I broke into the Top 100 of the Kindle Free Store. (I don't know exactly how high I got, but the highest I saw was #90.) That was far more than I ever anticipated, so I was hoping that the payoff would come in the form of a higher ranking in the Paid Store and the post-promo bump that many other authors have experienced. I got neither.
Both my overall ranking and my daily sales fell following the promotion, and neither has recovered. When I discussed it with a fellow author, he mentioned that it was his understanding that the ratio between free downloads and sales is something like 220:1. In other words, 220 free downloads is worth about 1 sale. In essence, a free download is worth almost nothing (outside of additional exposure).
In retrospect, I can't help feeling that KDP Select has lost much of its sex appeal. For instance, while it can help you get your books into the hands of more readers via free promotions, you don't need Select to offer your book for free. Moreover, I think that borrows - just like freebies - cannibalize sales. I'm not saying that getting 152 borrows in a month means that you would have gotten 152 additional sales if you weren't in Select. However, I do think that at least some of those borrows definitely would have become sales.
Bearing all this in mind, I will probably pass on renewing with Select when the current exclusivity period expires, as the party is clearly over. This will let me dip my toe into some other waters (B&N, Smashwords, what have you) and hopefully expand my audience. (And if I don't like it, I can always come back to Select.)
Side Note: For those who may be interested, I had the opportunity to write a guest post on Joe Konrath's blog, which may be found here.