Amazon.com is slashing $25 off the price of a new Wi-Fi-only Kindle electronic reader. The catch: to get a Kindle for a new low price of a $114, you must purchase a version with sponsored screensaver ads and special offers. In all other respects, the new Kindle is identical to the Kindle now selling for $139. The only difference: Ads replace illustrations of classic authors like Virginia Woolf and Jules Verne that appear on current Kindle screensavers.
Amazon?s Kindle vice president, Russ Grandinetti, says the lower-price sponsored ad strategy will ?serve us well and make us an attractive option to the widest possible group of people.?
Amazon starts taking pre-orders Tuesday on Kindle with Special Offers ? as the new model is being called. The device ships May 3. The third generation Kindle has been the bestselling product in the online retailer?s history.
The company introduces the ad model at a time when the market for eBooks and eReaders is become very competitive, with traditional eBook rivals such as Barnes & Noble?s Nooks and Sony Readers, and full-featured tablets such as Apple?s iPads.
Forrester Research analyst James McQuivey says the special offers that come with the new Kindle have the potential to turn Amazon into a mini-Groupon. He says Amazon is building a digital relationship that is not just about the single product or service originally purchased.
Buick, Olay (Procter & Gamble), Visa, and Chase are sponsoring the first series of screensavers. Initial special offers include a $20 Amazon.com gift card for $10, an Amazon MP3 Store album for $1, a $100 Amazon.com gift card when you get an Amazon Rewards Visa card, and a $99 Roku Streaming Player for half off.
Ads appear in the screensaver or on the bottom of the Kindle home screen. Consumers who express interest in various ads (by using Kindles controls to click on them) will receive emails with detailed instructions.
Buick?s Craig Bierley says ?Consumer perception of our brand is still an old and dated perception and we need to force a reappraisal. Partnering with other progressive brands helps us to do that.?
Amazon?s Grandinetti wouldn?t disclose specifics on how the ad partnerships will work. ?Obviously we want to make it something that advertisers feel great about that the people who make offers feel great about.?
But Kindle customers who don?t embrace the idea can still purchase an ad-free Wi-Fi only Kindle for $139 or a model with 3G wireless for $189. Forrester?s McQuivey doubts there will be many customers put off by the new model.?Who is going to object to buying a cheaper Kindle just because the screensaver has a Buick ad,? he asks?
Customers who purchased a Kindle in the last 30 days can swap for a Kindle with Special Offers.
Consumers will have some say on the ads they?ll see. From the Kindle website, you can indicate whether you?d like to see more or fewer ads with humor, scenery, photography and so on. Amazon is also introducing a free (and optional) Kindle app and website called AdMash in which you can vote on which of a pair of screensaver ads from the same sponsor you find more appealing.
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