Amazon to release ad-supported Kindle for $114

Wednesday, April 13th, 2011 By

An older-model Amazon Kindle sits atop a traditional book for size comparison.

Will an ad-based Amazon Kindle ruin your reading experience? (Photo Credit: CC BY-SA/Graeme Douglas/Planning for Fun)

The traditional publishing industry has lost ground to e-readers, tablets and other mobile devices, and Amazon is sitting pretty with its Kindle platform. Industry studies indicate that the Kindle currently holds a 60 percent share in the e-reader market, a figure that will no doubt improve as the company introduces the $114 Amazon Kindle with Special Offers. Yet there’s a catch – those Special Offers are advertisements, a move that has many worried about the shape of the reading experience to come.

Is an ad-based Kindle worth $25 off standard price?

The price of the Amazon Kindle has fallen a few times since the first generation was introduced at $399 in 2007. This is the first time, however, that a price reduction will include the placement of ads on the popular e-reader, a move geared to capture ground from the iPad in the e-reader market. The Kindle with Special Offers is slated to ship May 3. Target and Best Buy will sell the ad-supported version of the Kindle 3 in stores at that time.

Amazon founder and CEO Jeff Bezos sees the $114 Kindle with Special Offers as a “chicken in every pot” move:

“We’re working hard to make sure that anyone who wants a Kindle can afford one,” he said via a statement.

Reader response to a Christian Science Monitor article about the price cut seems to echo the fears most consumers have about an ad-based Kindle. One reader argues for a free ad-based Kindle with $0.99 books, but that reflects another thorny issue regarding the price of e-books. Another reader concurs that a $25 discount isn’t enough to make up for the presence of ads, but one thing experts believe Amazon has done right is to isolate the ads to the Kindle’s screensaver and the bottom of the home screen.

“It’s very important that we didn’t interfere with the reading experience,” Kindle director Jay Marine told the Associated Press.

What’s in a price?

TechCrunch predicts that the $114 Amazon Kindle with Special Features is an intermediary step toward a $99 Kindle for Christmas 2011. Traditional marketing psychology suggests that the “.99” price point is a magic number.

However, new research from New York’s Columbia Business School indicates that the advantage is more imagined than it is real anymore. The “dollar-minus” approach (down to 99 cents, for instance) was actually less effective than “dollar-plus” price points (like $4.01), according to the Columbia study. Sales of products that used the dollar-plus method increased by 3 percent, and consumers felt greater trust for dollar-plus brands because the prices were perceived as being less manipulative.

Sources

Christian Science Monitor

Columbia Business School

Knowing and Making

TechCrunch

Kindle sales tripled after last price drop

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