Why Kindle haters are wrong

My goodness. That was my first reaction when I started reading the stories and blogs after Amazon announced its new Kindle DX. Several said there’s no way this new device will save newspapers. Others ridiculed the $489 price. I’m surprised no one called for burning Amazon in effigy. (I suspect many of these blogs were written ahead of time because some appeared online right before or just as Amazon made the DX announcement. So much for understanding your topic).

Folks, let’s all take a deep breath. The Amazon announcement really isn’t about whether an e-reader can save newspapers. It’s about whether media companies can partner with device manufacturers in a way that creates a sustaining revenue model for all.

Look at all of the hints here. The New York Times is cutting its subscription rate on the Kindle DX’s to $9.99 a month from the $13.99 a month it costs on the current Kindle. Does that mean that Amazon worked with the NYT to set a price both could live with? That would be a departure from the current practice, in which Amazon sets the price, and newspapers have to live with it. Has Amazon also negotiated a better revenue split on subscriptions? It’s no secret newspapers only keep 30% of the Kindle subscription sales, a fee that rankles publishers.

Amazon will discount the price of the DX to any customer who purchases a long-term subscription to one of its newspaper partners (NYT, Boston Globe, Washington Post). We don’t know how much they’ll discount the price, though I’m sure that’ll leak at some point. Does this mean the newspaper companies also get a piece of any Kindle sales made under this arrangement?

I haven’t heard anyone in the newspaper business claim e-readers are going to save newspapers, yet blogs and stories fixate on that issue. E-readers ARE NOT going to save newspapers, but they can be a viable option for information delivery if the terms are right. And I think that’s what the parties are focusing on. Can we get the terms right?

The views expressed on this blog are mine alone. You can already read me at www.aimgroup.com and www.newsandtech.com


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