Amazon wants a 70% cut for newspaper content on the Kindle

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Amazon is not playing around with its revenue streams when it comes to offering content on the Kindle. They want a 70% cut of the subscription revenue and the rights to offer the content on more platforms than just the Kindle.

In a senate committee meeting where options are being discussed on how to save the failing newspapers industry a questions was asked if moving to a Kindle type platform could save the industry. Dallas Morning News Publisher and CEO James Moroney responded by saying:

"The Kindle, which I think is a marvelous device, the best deal Amazon will give the Dallas Morning News—and we've negotiated this up to the last two weeks—they want 70 percent of the subscriptions revenue. I get 30 percent, they get 70 percent. On top of that they have said we get the right to republish your intellectual property to any portable device".

Amazon is playing hardball and demanding a serious percentage for content that it did not create. The Kindle is merely a publishing platform like the Apple App Store, Steam, and many others but this type of model is unheard of.

It remains to be seen if the Kindle can survive considering its low penetration rate and high margin cost skimming model.

#1 simon360 on 07 May 2009 - 20:30

Yeah. Take the profits from the newspapers which are already going under.

Stickin' it to the man!

#2 Brandon on 07 May 2009 - 20:31

It should be the other way around

#3 ninjagowoowoo on 07 May 2009 - 20:43

Pretty ridiculous. I hope the papers look into other epaper/reader devices.

(3 replies) #4 hkgonra on 07 May 2009 - 20:53

The papers that are going under have done it to themselves with one-sided coverage for years. People get sick and tired of reading the same socialist dribble.

#4.1 JrDZ13 on 08 May 2009 - 03:22

hkgonra said,

Haha. So they turned to blogs? Yeah no liberals there.

#4.2 rob.derosa on 08 May 2009 - 06:51

JrDZ13 said,

I think he is saying at least it is more balanced in the blogsphere

#4.3 neufuse on 08 May 2009 - 11:11

rob.derosa said,

Balanced? Gawd, I think it's more crazy and wacko in a lot of instances...

#5 m.keeley on 07 May 2009 - 21:01

So not only do they make a packet from the actual device but they take the majority of the profits from content that they didn't have to pay to create.

(1 reply) #6 Nexx295 on 07 May 2009 - 21:13

70% is just too much. Considering that they aren't doing absolutely anything for the content, up to 10% would be fair enough.

#6.1 AltoidBox on 07 May 2009 - 22:34

Nexx295 said,

Well, they are delivering the content to the user over cellular networks free of charge. Actually, 30% revenue for newspaper owners probably isn't that bad considering that they take a loss to print and deliver papers the traditional way. Newspapers make all their money from ads, not subscription fees; those are just there to help offset the cost.

(1 reply) #7 C_Guy on 07 May 2009 - 21:17

I see someone is trying to mirror the iPod/iTunes business plan. Jobs got away with it. Amazon, you won't. Stick to what you know. This whole Kindle thing must be embarassing for you.

#7.1 NeoTrunks on 07 May 2009 - 21:38

C_Guy said,

It's the other way around. Apple gets 30%.

(3 replies) #8 Raven on 07 May 2009 - 23:48

You really need to learn how the newspaper business works. They buy the news from AP and other sources and print it. It's not like they have teams of reporters on staff to report the news. Amazon knows this, hence the high percentage take. Once you remove the cost of printing, delivery, related staff, etc then the newspaper industry would have huge profit margins if all they had to do is to edit a story and place it where the Kindle can access it. Those who work for any newspaper better be worried about their jobs. The future may hold the newspaper industry staffing a few editors, local reporters, and office staff. They won't need anyone else.....

#8.1 simon360 on 08 May 2009 - 03:49

Don't know when you last read the newspaper, but a large chunk of it is in fact original, not copied from the Associated Press.

#8.2 dimithrak on 08 May 2009 - 16:08

simon360 said,

I think he may work for amazon! lol

#8.3 Kevin on 09 May 2009 - 12:59

Depends on your paper and where you live. Most national news is from AP although there's also local news for the major metro areas. If you live in the boonies though, chances are the AP wasn't covering that new car wash grand opening...

#9 dimithrak on 08 May 2009 - 11:08

I think this whole Kindle thing is still stupid.. I the real things always better... its cool to have this gadget. but the wow factor really dies down soon..

#10 JustinTime on 10 May 2009 - 02:42

Amazon is demanding too much, 70% is absurd and if the papers capitulate; we the consumer will subsidize the cost by them charging more. No wonder books in print almost always cost the same as kindle books. Amazon needs to lower costs so the kindle becomes more attractive. It's expensive and the content pricing scheme is currently too excessive. They are also making a large margin on each unit sold.

#11 shial on 11 May 2009 - 22:53

Did any of you actually try to understand the article first?

Amazon wants 70% of SUBSCRIPTION revenues. The newspapers still gets 100% of their ad revenues. This is extremely reasonable of amazon. The newpapers don't need printing presses, paper, ink, maintenance crews to keep the machines running, if a last minute story comes out they don't need a re-run. No need for offices with a loading dock and no expense to ship papers around to delivery points. Plus no losses when people pay for one and grab the whole stack to hock in a parking lot. Amazon is paying for the bandwidth and network capabilities.

The subscription costs still don't cover how much the paper actually cost the papers, it just offsets the loss, the real money is the ads. With this model instead of taking a small loss on subscriptions the newspapers are suddenly taking a 30% profit.

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