Portions of _The writer's legal companion_ are available through google books. From page 312 in Appendix C, section "I" of the contract:
"The Publisher may permit others to publish ... book club ... editions...The net amount of any compensation received from such use shall be divided equally between the Publisher and the Author." (There's a lot more in that paragraph. Next paragraph, same section "I") "The Publisher may authorize such use by others without compensation, if, in the Publisher's judgment, such use may benefit the sale of the work. ... On copies of the work sold through the Publisher's book club divisions or institutes ... the Publisher shall pay to the Author a royalty of 5% of the cash received from such sales. If the Publisher sells any stock of the work at a price below the manufacturing costs of the book plus royalties, no royalties shall be paid."
I have a bunch of phrases that I pull out when assessing the merits of an argument. One of these phrases is, "Compared To What?" I find it shines a Bright, if Cynical, Light on a lot of foolishness that otherwise seems plausible but suspicious.
ETA: Here is Joe Wikert complaining about the kindle owners lending library terms for authors and publishers.
ETAYA: Here is coverage of the Author's Guild on the subject:
Point 2: "Ask your publisher why your book is in the program. The publisher may be using the program to introduce your books to Amazon Prime customers with the hope that they’ll then come back to buy your other titles. Other publishers may be seeking to give some life to quiescent titles. Once you’ve heard your publisher’s rationale (it may be well considered and in your favor), you’ll have to decide whether you’d like your book to remain in the program." Not if the contract is written like the one I quoted above. _Publisher_ reserved the right to decide -- not the author.
This is a tricky situation, tho, because as far reaching as contracts are, I don't think they've ever imagined a situation quite like this one.