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Free Kindle? Mounting Circumstantial Evidence That Amazon Is Headed Towards Giving the Kindle Away.

The free Kindle rumor mill might have something to it.   On 2/25/10, Kevin Kelly (i.e. former Wired editor) wrote about an old projection that the Kindle price drops were in a straight line that would end in the Kindle being free in November of 2011. He notes that Amazon founder, Jeff Bezos, gave a wink-wink “Oh, you noticed that” response that could be interpreted as either conspiratorial or sarcasm.

Kelly then quotes a Tech Crunch piece about a rumor that Amazon wants to send a free Kindle to every one of its Amazon Prime ($79/year for 2-day shipping on all orders and video streamed movies) customers.  Amazon Prime customers being high volume customers, it would only make sense that Amazon would want to get them off paper and onto a platform that Amazon owns lock, stock and barrel.

Kelly looks as this as a revision of his old theory of free Kindles, where he initially said:

“When I brought it to the attention of publishing veterans they would often laugh nervously. How outrageous! they would say. It must cost something to make? The trick was figuring out how Amazon could bundle the free Kindle and still make money. My thought was the cell phone model: a free Kindle if you buy X number of e-books.”

Guess what, Mr. Kelly?  You may have been right the first time.

I recently did an article for Publisher’s Weekly on the problems Amazon’s/Kindle’s digital delivery fees are causing publishers who want to make graphic novels available on the Kindle.

If you’re not familiar with the Kindle delivery fees, if you want to get the highest royalty rate for selling your book (70%, the same as on Apple’s platform), you have to pay a $0.15/per MB “delivery fee” on your eBook.   Otherwise, you can take a 35% royalty and not pay data charges.

Amazon told me that delivery rate “roughly covers [Amazon’s] costs of delivery.”  However, I checked out AT&T’s website and discovered that excess data for their wireless network (which connects the 3G Kindles) will run you about $0.01/MB with the “DataPro” plan.  And yes, we’re essentially talking about cell phone data plans, here.

Personally, I would assume that Amazon ought to be able to negotiate a lower rate than the bulk plan for a consumer.  Either way, they would appear to be charging a considerable mark-up for the data transfer on an individual file/ebook.

Is this:

1)    Amazon trying to recoup any costs associated with a Kindle owner browsing the Internet, using e-mail, etc.  (i.e., making the publishers pay for the Kindle’s over-all connection, not strictly the cost of downloading the individual book)?

2)    Kevin Kelly’s cell phone model, where this download charges are intended to aggregate and reimburse Amazon with the manufacturing cost of the Kindle?

I suspect Amazon is anxiously waiting to see how frequently the first (test) set of Amazon Prime users who were sent a Kindle are downloading.  If they do it with any volume, yes, I’d say there’s even more circumstantial evidence to think Amazon would ship out cheaper or free Kindles to a wider audience, potentially financing it with delivery fees charged to the publishers.

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1 Comment

  1. It has been rightly said that there is no such thing as a free lunch. It is easy to give something away if somebody else is paying for it (generally when a bartender invites a pretty client to a drink, the drink is not paid out of their pocket, for example.)
    It behoves Amazon to take advantage of the privileged position kindle now holds by saturating the market as quickly as possible. To do this they should give away the kindle, no strings attached, and not charge the publishers who are necessary to create the range of content needed to make this support attractive.

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