location based blog: Amazon Launches Ad-Supported Kindle For $25 Cheaper (AMZN)

Monday, April 11, 2011

Amazon Launches Ad-Supported Kindle For $25 Cheaper (AMZN)

Amazon has found a new way to make its Kindle e-book reader even cheaper: It will start shipping a new edition next month that is supported by advertising.

The new Kindle with Special Offers will sell for $114, or $25 cheaper than the $139 Kindle, and will ship on May 3.

The ads and special offers will show up as full-screen screensavers on the Kindle device and as small banner ads at the bottom of the Kindle home screen.

Existing Kindle owners will not see any ads, and Amazon will continue to sell ad-free Kindles. This program is starting from scratch, only on this new, cheaper Kindle device. So advertisers will be buying a market of zero devices right now.

Luckily, Amazon itself can seed the device with offers for its own products and services. (Some potential deals Amazon suggests could include 50% off Amazon gift cards, $1 Amazon MP3 albums, etc.)

And as Russ Grandinetti, Amazon's VP of Kindle Content, told us this afternoon, Amazon has seen Kindle sales continue to rise as it has made the cost of the device cheaper. And Amazon has big hopes that this cheaper device will sell very well, creating a large potential market of ad viewers.

The company is also working on an app called "AdMash," which will allow Kindle owners to vote on which ads they prefer. (Sort of like Mark Zuckerberg's original web project, "Facemash.")

Will people opt for this slightly-cheaper Kindle in exchange for a lifetime of ads? Will Amazon eventually be able to sell enough ads and deliver enough impressions to make the subsidy more than $25? (About 2,500 impressions per device at a $10 eCPM, or effective cost per 1,000 impressions.) Will an ad-supported 3G Kindle ever exist? We'll see.