How is the Kindle DX going to save the newspaper industry when Amazon demands a whopping 70 percent of all revenue, plus the right to license that content (“the mayor said something important today at City Hall”) wherever it chooses? Such is the plight of the Dallas Morning News, and, presumably, other, smaller (compared to the New York Times, Washington Post, etc.) newspapers.
The Morning News’ publisher, James Moroney, spoke at a Capitol Hill hearing yesterday, and tried to play down the Kindle’s ability to save print. (Meanwhile, the Huffington Post’s Ariana Huffington, whose Web site doesn’t have the same fixed costs as a newspaper does, raved about the Kindle’s prospects at the same hearing.) While Kindle is neat and all, you can’t ask someone like Moroney to hand over 70 percent of his revenue. The future is… handing over all of your money to Amazon, for the privilege of being read by a few early adopters?
Long term, Amazon and the newspapers may work out some sort of beneficial deal, but, as they say, in the long term we’re all dead. So…
My completely fact-less take: who reads newspapers? Older people. Who doesn’t buy the latest, greatest technology at the drop of a hat? Older people. That’s a problem.
I certainly wouldn’t want to be a newspaper executive right now, that’s for sure.
Photo: Flickr
70% does sound usurious, but…
You are misquoting the original article. It is not 70% of “all revenue”, just 70% of “subscription revenue.” I believe the majority of revenue for a print newspaper comes from advertising. (NY Times revenues are 2/3rd advertising, 1/3rd circulation).
Does anyone know what the markup is when a newspaper is sold by a retailer at a newstand? I’m betting that it is 50% or more. In the print example the newspaper bears most of the distribution cost (printing the paper, shipping it to the retailer). So 70% might not be that out of line, given that Amazon bears all the distribution cost, not the newspaper.
The real question is will advertisers pay to advertise on the Kindle at similar rates to what they pay for print?
There is no advertising in Kindle editions – at least not the ones that I’ve seen. And the only reason I subscribe for $14/mo. for the NYT on the Kindle is because it is ad-free. If they were to start putting ads in, I wouldn’t pay nearly as much.
That 70% has got to change. Amazon clearly has more costs associated with newspapers than they do with books, since a newspaper has to be delivered over the wireless network every day. But taking 70% really takes away the incentive that a newspaper has for putting together a Kindle edition.
If the newspapers on Kindle will remain ad-free then the 70% certainly seems too much.
Don’t forget that the Kindle delivers it’s content over 3G wireless internet, without a monthly fee being charged to the customer. Those costs have to be paid somewhere, and I think we just found it.
There are no ads on Kindle, pushing ad content over 3G is impractical. This is pure greed. Reminds me of Apple.