Amazon Needs Content to Redeem Kindle Sales

October 24, 2012

Our beloved chief goose has commented about Amazon’s battle with its rising costs. Selling hardware at a loss in the hopes that the business model of Richard King Gillette will work is the sign of an optimist.

According to a recent admission from Amazon CEO Jeff Bezos, Amazon needs content, and it needs it to sell fast. The company stated that it makes virtually no money on its Kindle hardware and is counting on content to sell to make the ebook venture worthwhile. The reporting article, “No More Games: Amazon Admits it Needs Content Sales for Kindles to Fly” on Ars Technica, shares that the company is hoping that content purchases from Kindle users will redeem the profit margin on the ereader.

The article reveals more information about the pricing and the company’s game plan:

“The Kindle line has long seemed like it might be a loss leader for Amazon, though the company has been reticent about stating that outright. Bezos said at the press event announcing the new Kindle Fires and the Kindle Paperwhite that ‘We want to make money when our customers use our devices, not when they buy our devices,’ before unveiling their competitive (but not staggeringly low) prices.”

The revelation sounds particularly dreary for Amazon and its content providers. We wonder if the company will be able to control its costs at this time of tactical loss leaders in tablets and ebook readers? What happens if the costs exceed revenues? Interesting question.

Stephen E Arnold, October 24, 2012

Sponsored by ArnoldIT.com

Comments

2 Responses to “Amazon Needs Content to Redeem Kindle Sales”

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  2. Stephen E. Arnold on October 27th, 2012 9:51 am

    Tyler B,

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    Stephen E Arnold, October 27, 2012