The
Kindle DX launch might have sparked a wave of hype about the next generation of newspapers, but not everyone's so quick to agree: Dallas Morning News CEO James Moroney told a Senate subcommittee yesterday that the Kindle isn't a "platform that's going to save newspapers in the near term." According to Moroney, Amazon demands 70 percent of subscription revenue from newspapers, and further requires content owners to grant Amazon the right to republish content to other devices -- like, say,
the iPhone. That's a pretty inequitable split, and while we understand that Amazon has to pay for Whispernet somehow, it's hard to imagine newspaper publishers lining up to wager 70 percent of their digital subscription revenues and a perpetual license to their content on devices that are far from proven. On the other hand, it's innovate or die time for these guys, so we'll see what happens -- with all the
competitors out there poised to make a move, things are about to get interesting.
posted May 7th 2009 1:32PM
Well that's bullshit. Apple only demands 30% take on app sales (when it actually pays out the 70%).
That's a piss-poor comparison. Applications and books/newsprint are very different beasts. As are the Kindle and iPhone.
And it should be noted that Apple's cut for apps is unprecedented. For example: know how much cut Google gets from Android app sales? Zero.
For the record, I'm not defending the 70% cut. Just pointing out that you're comparing Apples to Oranges (no pun intended).
Android is different because it's open source - Google made it and let it loose on it's head, so they can't really expect to garner profits (even if they do run the store involved).
Apple and Amazon on the other hand run entirely closed ecosystems.
Until Apple starts paying for the data plans, they shouldn't be taking 70% of anything.
@ran good thing they arent taking 70% of anything. And don't try to make it sound like amazon has some HUGE data plan bill. People arent surfing the Internet on these things, it’s a reader, you download you read.
Oooooh its like that Jeff? Come on, your a smart man. So don't be "penny wise and pound foolish" The Kindle should be $99.00 (Subsidized) with a 2 year contract. You will move MILLIONS of them!!
Previous rant here:
http://www.engadget.com/2009/05/06/amazon-kindle-dx-first-hands-on/#comments
It is the model that started the growth in the cellphone industry back in the late 80's when the majority of telco bigwigs thought it was a gimmick and a toy that would go nowhere. It is what helps to move iPhones today.
Take a ride down the road and ask your fellow WA state Billionaire Creg McCaw (a genus with such incredible incite that he raked in the dough so much so that he could afford to pay a one Billion *yes Billion* dollar divorce settlement with out blinking). Now that's Cheddar!
PS the best part is that the subscription and newspapers paying you could pick up the Subsidy. THE KINDLE SHOULD BE $99.00 Period...
That sounds awful for the already struggling papers. This is assuming that people (a) buy the Kindle (b) want the newspaper. I think it ends up being, what, half of an already niche ownership? THEY'RE SAVED!
you do realize the 50 cents you pay for a morning paper doesn't even pay for the paper and ink, the money comes from the ad revenue so while 70% sounds like a lot, its understandable
I get this image in my head of the newspapers crawling onto the beach of the Kindle after being lost at sea for weeks and weeks, arriving emaciated, scruffy and holding up their hand for food and water, and Bezos hands them a turd sandwich.
How is 70% "understandable"? The newspapers provide all the content while Amazon does nothing and reaps nearly 3/4 of the rewards.
@paul, actually Amazon is doing quite a bit. They are proving the devices, the bandwidth / distribution, and content storage.
As stated before, newspapers almost never sell at the cost it takes to print them. Ad revenue usually covers the cost and profits.
While it sounds crazy, it's actually a great deal if you think about it. Sell printed versions at a loss or sell digital verisons with a 30% profit for each sell, not counting the ads.
The more I watch the Kindle DX news, the more sure I am that this product is going to be the biggest flop in Kindle history. It's a minor upgrade to a product that is itself a minor upgrade to the original. It's price is outrageous, its not in any way better than the original kindle except for its size and button placement.
What exactly is the market for this thing? 300 College students? Newspapers that are getting ripped off? I own the original Kindle, and while its a neat product and great for travelling, e-ink isn't replacing traditional books or newspapers anytime soon.
So why can't Amazon just sell the device, and leave what people subscribe to alone?
What they was sounds like like me buying a laptop, then making a subscription to a website that delivers news, and my laptop manufacturer asking for 70% of that subscription.
WHY? It makes no sense to me. Amazon sells a device only, what people decide to read on it shouldn't matter.
What's next - if I subscribe to a book club and use Wi-Fi to transfer the books over to the Kindle, they will demand 70% of the my book club subscription too?
Amazon sells a device and offers the content access service for "free." Notably, that means free to you, but not free to Amazon. In your example, if you join a book club and use Whispernet to transfer files to the Kindle, then I would expect they will take some chunk of the book club revenue.
I agree, but you have to keep in mind that Kindle uses the 3G network to get content to the device - which they pay for not the user (although I'm sure someone could argue that the higher price point covers it). In your analogy, it's the same as getting a laptop with a 3G card in it, then charging the content provider for your usage instead of you. I still feel it is a complete load of BS that it is 70%, it's a ridiculously high percentage that undermines the writers of the content. Grr.
Reminds me of Xbox Live, you are paying them for you to access the internet and use their servers, while using those servers are free on the computer such as Hotmail and MSN IM. With that said if I had an Xbox 360 I would gladly pay for Xbox Live since it is a great service, but the reason why they are charging for it is because they know they can. But with the Amazon thing, 70% of the profit1? That's just ridiculous. We were sitting her thinking that the Kindle was actually going to save papers, but with this kind of loss that isn't going to happen.
With regards to Xbox Live, there is a free option (Silver) that gives you basic services like chat and non-in-game frills. It's a very neutered version of Xbox Live Gold but it gets you online and going. You can still choose to use Marketplace to download free and paid content for a fee. Most people I know get the Gold membership because of the in-game capabilities of the Xbox and to access Netflix.
Sure, Amazon has to pay for Whispernet, but you don't think the papers have to pay for the content in their papers? 70/30 split in favor of Amazon seems ludicrous.
What a load of bollocks. They take a product with amazing potential and screw it over. Biggest disappointment yet if you ask me. Its selfish and greedy, especially looking at the price they are charging for the device itself.
The product has made Kindle 2 owners angry and now will make Newspapers angry. They should have thought about this more, and done more negotiating to get deals that are meaningful to customers and to companies, as well as the device. Grrr. 70% Grr.
If you take out the costs associated with printing papers and the delivery and paper distributing a PDF online is significantly cheaper.
In fact if a news source was to go online only nearly anybody could publish news considering the costs associated with it would be much cheaper than printing and sending out millions of newspapers.
Fact of the matter is when your just taking your print publication and converting it to a PDF and then having somebody else handle the distribution your not exactly entitled to a lot of money considering most electronic products are sold at a loss with cost recuperated with media on the device.
These guys are about three steps away from the RIAA and their claims about piracy and terrorism and all that crap.
Newspapers in the USA are doomed to falling sales but the pdf online electronic version might appeal to me but guess what I don't need them as I get all my news to free via my iPhone. WSJ NYT telegraph all have great apps. Who Needs a Kindle indtab black and White no coir pica for how much undone think so.
So you don't think anyone pays the columnists, photographers, etc...?
Columnists and photographers are not required when your talking about e ink.
In fact a lot of people get taken out of that chain from the newspaper distributors to the people selling the newspapers and then the material costs from shipping trees, making them into paper and producing ink.
I mean if you look at it objectively it's as simple as taking the stories you publish and digitising them then letting somebody else send them somewhere for you.
"Columnists and photographers are not required when your talking about e ink."
Ummm... what? Maybe photographers are less important right now due to the limited image capabilities of e-paper, but columnsists? Are you on crack? Columnists are why many people read papers in the first place. They are what help give papers their identities.
What your saying is purely subjective how can you pass off something like "It's what gives papers their identity" as a fact in a debate?
Truth be told digital media is the future and if these papers dont learn to adapt they will die.
The irony is your getting this information from a blog that doesn't require a lot of the people the 17th century newspapers manufacturers do.
You mean getting this information from a "blog" with editors and writers and people who buy tickets to travel to trade shows and product announcements and have to stay in hotels and dining and pay for mobile services so that they can "live blog" and when not away pay for rent and make sure that their 401ks are up to snuff (even in this era of economic turmoil). . . yea. . . that "blog"?
Or are you seriously making the claim that the bullshit opinion posts are news???
@Tony Montana
I'm just saying that editorials and columnists are part of the main content of newspapers. Amazon is doing nothing but providing delivery whereas the paper has people to pay, whether you value their content or not. So I don't see how a 70/30 split makes any sense. That was my point.
And I've said nothing about the value of newspapers vs blogs and such, there's no irony to be had... sorry. But since you brought it up, I'd actually agree that newpapers are in a bad position, but we still need actual investigative journalism... something blogs are quite short on. Even then though, I don't really see how papers have an advantage over broadcast news and their associated websites (e.g. CNN TV + CNN.com). IMO, they're ultimately going to have to transition to web based content.
I think a lot of this problem is caused by they failure of an idea to include the 3g service. Not really necessary at all, and only adds to the cost. No real reason to have anything other than Wifi, and then they won't need these 70% margins to make their monthly payment to Sprint. A carrier that has the worst 3g coverage in the nation.
Agree completely. Yes, the 3G offers some convenience, but if it would mean lowering the price of the Kindle and giving content providers a better cut I'd be all for just going with WiFi. I'm at home most of the time anyway, it would be nearly as convenient to just connect through my own WiFi at home... and likely much faster anyway.
Publishers are now suffering from karma. For years they robbed writers, editors, photographers and other creative persons of their rights. By forcing work for hire contracts on us just so we could eat another day.
Now publihsers are being placed at the other end of the barrel which they once pointed our way.
Vive Le Resistance
...so now the writers, editors, photographers and other creative persons are really fucked. Kicking the guy who kicked the dog isn't going to result in dinner leftovers but less dry food.
They shot themselves with high power greed............let them die...........we shall survive living free of slavery.... our abilities were not provided to us by them...........we shall use the talents our creator lent us in other ways without their cowering to their greedy oppression.
Screw that man. Does the printing press demand 70% of revenue also?
Um.... do you guys realize that it's only going to be available to people in areas where delivery is not available? In other words, it can only mean extra money for newspaper companies. 70% does sound harsh, though... Oh, well... goodbye, old media, ain't gonna miss you too much. :D
Yeah, who needs investigative journalism when you have blogs to republish press releases?
70% does seem a little... disproportionate.
It said this deal was negotiated with the Dallas Morning News (read link), any idea if NYT got a better (or worse) deal?
No way! This seems distorted. The newspapers may give to Amazon what used to be cost (printing and delivery) but no way will they dig deeper into their shallow pockets. And if the do share some of the advertising revenue but this will be limited and it will be more dynamic than the static ads that are there now. (i.e. If I read a week old publication, I may see ads that are irrelevant and outdated.)
The newspaper and journal publications will become extremely efficient from this. They will begin to sell what is demanded. Think about all the newspapers and journals that are printed and never sell. I am not sure if they will be able to track eyeballs on actual articles but they are moving closer to this. When they are able to track this, they will similar to Google, be able to sell actual ads that are view. A more efficient model for everybody.
70% my ass. And if they do give up 70%, Amazon deserves it for applying the technology in this way and getting the news print industry out of the 17 century.
Someone please send a Kindle to the CDC pronto. There must be some sort of toxin in the case that causes people to become delusional after extended use. I don't know any other way to explain Jeff Bezos's rationale for taking a 70% cut for a device that is far from having been adopted. Content is king here. If I were Bezos I'd want to sign up as many newspapers and magazines as I could to justify to people that buying a Kindle, especially a $500 DX, which was supposedly designed FOR newspaper reader, is a worthwhile purchase. Instead of offering incentives he tries to mug them. That is insanity for a smart biz guy like Bezos. Seriously, check the Kindle for toxins ASAP.
Look, Amazon isn't paying reporters salaries, or editors, or wire reports, or pens, paper, gas, cell phones, etc, etc. How does Amazon justify a 70% cut in the price? It's ludicrous. The people who deliver newspapers don't get nearly that and they do a lot of schlepping too. If I was a newspaper I'd tell Amazon to screw off and let Kindle buyers look at their dim reflection on a blank screen.
T
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This sounds way too much like a highway robbery. There must be more to this story. Maybe Amazon demands a 70% cut if they (Amazon) sell subsidized Kindle DXs?
The market will determine how long Amazon can keep demanding 70%, there are plenty of other readers geared towards newspapers and magazines on the horizon. Whispernet is good but WiFi and deals with other wireless companies will materialize for these devices
I want to buy an ebook/newspaper/magazine reader badly, but no way will it be either of the Kindles.
Must haves:
1) Flash memory upgrade (swap in out)
2) Don't need G3, I need it to be preferably WiFi enabled or usb attachable to a PC
3) I must get all my car magazines etc
4) Good size (between the 2 Kindles
5) Good battery life
6) Access to paid and free library of books
Price up to $300.00
30% of something is a lot better than 100% of nothing. What is the newspaper's cost of doing business here? Pretty close to zero?
That's just crazy. There are plenty of other companies that can make an ereader as good or better than the Kindle. Amazon has gone completely insane lately. The prices they are charging for this device is just idiotic. Waiting for the Apple Mediapad...
You expect better prices from Apple? O_o
Greedy!