Would a 25-buck discount make you buy an ad-supported Kindle?
Amazon’s released a third Kindle into its line-up. As reported in TUAW, the $189 3G and $139 Wi-Fi models are joined by a ‘with special offers’ edition. It costs $114 and the discount is supported by adverts that appear on the screensaver and home screen, but not inside books.
The decision is interesting. Amazon’s one of the few companies able to rival Apple in terms of experience. If you’ve unboxed and used a Kindle, it’s rather like doing the same with an iPad. Despite the relatively low price of the gadget, it feels like a luxury item, and so adverts might place it in a rather different category, cheapening the experience.
Also, arguments are currently raging online that the adverts should have resulted in a much greater discount. Ian Betteridge counters this argument on Technovia:
I think that $25 is a fair reflection of the value of the ads. Remember, these ads are home-screen only, and not in the books. Pundits constantly over-estimate the amount of revenue that ads can bring in, and the expectation that Amazon could price a Kindle at $99 based on these kinds of ads is wrong.
Ian’s right: people often massively over-estimate the value of advertising. It’s pretty clear that Amazon will have reduced the price of the ad-supported Kindle by the same amount of money the adverts are bringing in—while Amazon’s happy to operate on razor-thin margins much of the time, it’s not a company keen to make a huge loss, especially on a top-selling item.
But this leads me to wonder whether Amazon should have bothered at all. I don’t see many people avoiding buying a Kindle but saying they’d be tempted if it was 25 bucks cheaper. In order to get this version of the Kindle flying off the shelves, it really needs to be at an impulse price—$99 would be the sweet-spot in the USA.
The thing is, Amazon knows what it’s doing in retail, and I suspect this new Kindle price-point is nothing more than a test-run, to see if the model works. If it sells, Amazon can up the price of the adverts, and, if it wishes, drop the device’s price accordingly. This could be the long-run to an end-game of a free ad-funded Kindle, supported and subsidised by advertisers, enabling Amazon to continue making huge piles of cash by selling many more eBooks than it otherwise would have.
Well, having already grabbed a Kindle and, despite being incredibly skeptical of the device, loving it, I must admit I wouldn’t even consider buying an ad-supported version. It would, as you point out, incredibly cheapen the experience. A book -digital or not- cannot abide ads.
can’t imagine 25$ would make me change my mind.. that are the porto costs for the kindle ffs.. (kindle 3 is lovely though)
I (presumably, like most people reading this site) don’t have any apps on my iPhone that show any kinds of ads. If there’s an ad-free version I can buy, I will. If there’s none, I won’t use the app.
However, most people I know are different. They’d rather look at ads every time they use an app than pay 99 cents to get the ad-free version. I have no idea whether people will pick up the ad-supported Kindle to save 25 bucks, but let’s not extrapolate from ourselves to the average Amazon customer.
@LKM: Maybe you’re right, but I think there’s a big difference between ‘pay 59p’, ‘get this for free, but with ads’ and ‘pay 49p, but get ads’, the last of which is the closest equivalent to what Amazon’s doing with Kindle. The more I think about this, the more I think the end game is a free Kindle, though.