Amazon Inks Magazine Publisher Deals for New Kindle Fire
Hours after Amazon.com (NAS: AMZN) officially unveiled its long-awaited Kindle Fire tablet, a series of high-profile publishers say they've completed deals with the online retailer to bring magazines like Esquire, Elle, Cosmopolitan, GQ, Martha Stewart Living and Glamour to the Android-powered device.
Citing executives familiar with the talks, The Wall Street Journal reports that negotiations between Amazon and publishers including Conde Nast, Hearst Corp. and Meredith Corp. went far more smoothly than earlier discussions with Apple (NAS: AAPL) in part because Amazon has agreed to share more customer data, including subscribers' names and addresses. The negotiations were "a very smooth process," said Hearst Magazines general manager and executive vice president. "I think that Amazon had the benefit of listening to the broader market discussion during the last 18 months and came to publishers with a compelling story."
Publishers will claim about 70 percent of revenues derived from Kindle Fire digital magazine sales, sources say. Amazon will control pricing of magazine subscriptions, a source of contention with at least one publisher: Time Inc., the largest U.S. magazine publisher thanks to properties like Sports Illustrated and People, has not completed a Kindle Fire deal, and sources point to Amazon's subscription pricing demands as the culprit. The Wall Street Journal adds that Amazon and Time are expected to reach an agreement by year's end -- sources also say Amazon is expected to grant its partners greater pricing flexibility over time.
Amazon will sell the Kindle Fire for $199 (compared to $499 for Apple's cheapest iPad), called an "attractive price" by Bob Sauerberg, president of Conde Nast, which will offer 17 brands available on the tablet. The Kindle Fire effectively gives consumers a single, portable point of access to digital media initiatives including the Kindle Fire Newsstand, as well as the Kindle e-book catalog, Amazon Appstore for Android, Amazon Instant Video and Amazon MP3, with all content backed up in the cloud. Kindle Fire also heralds the launch of Amazon Silk, a new browser promising to accelerate the mobile web user experience by caching and compressing data and images.
Unlike Apple, which relies on content from its iTunes digital media storefront and App Store to boost sales of hardware like the iPhone and iPad, Amazon is looking to the Kindle Fire to stoke consumer interest in its premium digital media ambitions.
"For 15 years we've been building our media business and it's become a $15 billion a year business," said Amazon founder and CEO Jeff Bezos during Wednesday's Kindle Fire launch event, stating that the company now offers more than 100 million feature films and television programs available to buy or rent. In addition, the Amazon MP3 storefront touts more than 17 million songs, some priced as low at 69 cents.
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