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Amazon offers 70-30 revenue share to magazine and newspaper publishers

post #1 of 14
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Online retail giant Amazon announced Monday that it will begin offering magazine and newspaper publishers the same 70-30 revenue split as Apple's App Store for periodicals sold through the Kindle Store, possibly opening up an opportunity for Apple to open its own digital newspaper store.

The new 70-30 split, a model popularized by Apple's App Store, will go into effect on Dec. 1 for publishers who meet certain requirements, such as making titles available on all Kindle devices and applications and offering titles in all geographies for which the publisher has rights.

"Building on the recent introduction of Wi-Fi-enabled Kindles and the upcoming availability of newspapers and magazines on Kindle Apps, we're pleased to add an increased revenue share and a great new tool for making Kindle better and easier than ever for publishers," said Amazon Director of Kindle Periodicals Peter Larsen.

After Monday's announcement, pundits speculated that the changes could reflect new contracts between Amazon and the publishers, which could bode well for Apple and its iPad. In May, Gawker Media's Valleywag blog reported that newspaper and book publishers were "grappling" with Kindle licensing issues that prevented them from selling "a cheaper, comparable e-edition on a competing tablet."

A Silicon Alley Insider report suggested that Amazon's move to the same revenue sharing model as Apple could allow publishers to offer their content on both an Amazon and an Apple digital store at the same price, thereby avoiding the licensing issues that have reportedly blocked publishers. The report goes on to speculate that an iTunes newspaper store could come as soon as early next year, "whenever [Apple] announces a new iPad and/or iOS 5."

Pre-existing Amazon contracts haven't been the only obstacles for publishers trying to bring their periodicals to the iPad. In the past, Apple and the publishers have disagreed over subscription plans for the iPad, with publishers initially lacking a way to offer the iPad version of their magazines free to subscribers. Time Inc. finally broke the impasse in August, offering subscribers free access to the People iPad app.

Earlier this year, Amazon adopted a 70-30 revenue split for some of the books sold through its Kindle Store, although the requirements for qualifying books were more strenuous than Monday's requirements for qualifying newspapers and periodicals.
post #2 of 14
I wonder where they got that idea from?
Enjoying the new Mac Pro ... it's smokin'
Been using Apple since Apple ][ - Long on AAPL so biased
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Enjoying the new Mac Pro ... it's smokin'
Been using Apple since Apple ][ - Long on AAPL so biased
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post #3 of 14
Can you imagine Apple selling its, say, iPhones with this revenue model? No.

Given that this is Amazon's core business, a move like this would have to hurt their margins, I would imagine.
post #4 of 14
I was looking at some of the prices posted by some mass media publishers, and they are just "too high", especially for products that become obsolete in a matter of days, weeks or a month. They have to be discarded to devote the disk storage space for more recent materials.

Unless publishers remove their free online (browser-based) newspapers and magazines. I doubt majority of the mobile users would pay massmedia apps at the prices the publishers wanted.

There is another bigger threat to the strategy: a great number of online readers of mass media are more "skimmers or browsers" so that many would consider consolidator sites, like those of Yahoo, Google, Huffington, etc. -- as news-magazine substitutes.

Then, there are also consolidator Apps, already available that may even be customized by the user to cherry-pick the type of online "news-info" to download.

Both forms of "consolidators" have no regard for copyright restrictions; all profits go to the consolidators, not to the source media.
post #5 of 14
Quote:
Originally Posted by digitalclips View Post

I wonder where they got that idea from?

Couldn't agree more.

When anyone copies what Apple does, it's STEALING..

When Apple copies ideas or functionality it's "Standing on their shoulders"...

RDF
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post #6 of 14
There is a point at which anything can find a buyer. Sometimes the price is 'free' and there's no changing that, but the newspapers, magazines and periodicals WILL eventually find the sweet spot where buyers find their offerings irresistable and they can still make a healthy profit.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #7 of 14
But it already does sell under those terms. Apple makes about that in profit margins.

Quote:
Originally Posted by anantksundaram View Post

Can you imagine Apple selling its, say, iPhones with this revenue model? No.

Given that this is Amazon's core business, a move like this would have to hurt their margins, I would imagine.
post #8 of 14
Quote:
Originally Posted by TBell View Post

But it already does sell under those terms. Apple makes about that in profit margins.

Perhaps I did not state it well the first time, since you appear to have missed my point.

Apple makes about 50% in gross margin, 30% in operating margin, and 20% in net income (profit) margin. (Amazon's are nowhere near close).

The '30' in the 30/70 would be more akin to the gross margin. It is well known that Apple is willing to live with the 30/70 pricing model for songs, books, apps etc so that it can sell more of its higher-margin hardware. Amazon has nothing of similar scope in hardware (no, not the the Kindle; it doesn't even merit a segment report yet). In the case of Amazon, I would expect that a pricing scheme such as this would pressure their already lower margins.

I was suggesting that Apple is pushing firms like Amazon to bend to its pricing model without their having the benefit of positive spillovers on higher-margin, hardware side of the business (like Apple has).
post #9 of 14
Quote:
Originally Posted by Bibbler View Post

Couldn't agree more.

When anyone copies what Apple does, it's STEALING..

When Apple copies ideas or functionality it's "Standing on their shoulders"...

RDF

Think you missed the point. The 70/30 split was something Apple did originate with the App Store. That Amazon is now copying that proportion was what the poster was alluding to.
A.k.a. AppleHead on other forums.
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post #10 of 14
Quote:
Originally Posted by Robin Huber View Post

Think you missed the point. The 70/30 split was something Apple did originate with the App Store. That Amazon is now copying that proportion was what the poster was alluding to.

I don't think I missed anything. The idea of selling digital (print) media on mobile devices was popularized by Amazon with the Kindle. That Apple is now coping the business model was what I was alluding to.

Furthermore, when Apple does it, it's not really "copying", it's "standing on the shoulders of...."
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post #11 of 14
Quote:
Originally Posted by Bibbler View Post

I don't think I missed anything. The idea of selling digital (print) media on mobile devices was popularized by Amazon with the Kindle. That Apple is now coping the business model was what I was alluding to.

Furthermore, when Apple does it, it's not really "copying", it's "standing on the shoulders of...."

Huh? What are you talking about? Amazon did not invent a 70/30 split business model for its ebook Kindle. They sold ebooks for a multitude of devices INCLUDING iPhone apps, taking a small profit on each sale.

Apple started the 70/30 app store concept when the 3G came out in 2008. Your not comparing the same thing here. Personally, I don't feel either one is copying. Amazon started selling print on Kindle (mobile device) before Apple and Apple started the 70/30 split profit concept before Amazon. They are both just utilizing the these ideas for the same gain.

Your argument would be like saying Wal-Mart stole the retail model concept from K-Mart or Target. Really? How else are you supposed to sell items in a store. There is only so many ways to skin a cat.

Plus this article is all about the 70/30 split profit concept, not about selling digital media on a mobile device, which btw Apple popularized with its app store. Job done!
post #12 of 14
Quote:
Originally Posted by Pennywse View Post

Huh? What are you talking about? Amazon did not invent a 70/30 split business model for its ebook Kindle. They sold ebooks for a multitude of devices INCLUDING iPhone apps, taking a small profit on each sale.

Apple started the 70/30 app store concept when the 3G came out in 2008. Your not comparing the same thing here. Personally, I don't feel either one is copying. Amazon started selling print on Kindle (mobile device) before Apple and Apple started the 70/30 split profit concept before Amazon. They are both just utilizing the these ideas for the same gain.

Your argument would be like saying Wal-Mart stole the retail model concept from K-Mart or Target. Really? How else are you supposed to sell items in a store. There is only so many ways to skin a cat.

Plus this article is all about the 70/30 split profit concept, not about selling digital media on a mobile device, which btw Apple popularized with its app store. Job done!

Please tell me your NOT that hardheaded...

I never said ANYTHING about Amazon inventing the 70/30 split..

I did say that Amazon absolutely made popular the reading of ebooks through a hand-held device.

And whether you understand it on not, Apple choose to COPY that model and COMPETE against Amazon.

Get it!! APPLE is the copy cat... They were YEARS behind Amazon.

Will the original poster admit that???? Of course not. It's Everyone else that copies Apple in fanboy's eyes. That's why there are posts here "Hahahahha Wonder where Amazon got the idea for the 70/30 Split?".. to which I am replying "Wonder where Apple got the idea to sell books on the iPad??"

APPLE Copied the concept . PERIOD.

They BOTH copied. That's a difficult concept for a fanboy to admit...

Come the think about it, you weren't even part of this conversation.
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post #13 of 14
Quote:
Originally Posted by Bibbler View Post

Please tell me your NOT that hardheaded...

I never said ANYTHING about Amazon inventing the 70/30 split..

I did say that Amazon absolutely made popular the reading of ebooks through a hand-held device.

And whether you understand it on not, Apple choose to COPY that model and COMPETE against Amazon.

Get it!! APPLE is the copy cat... They were YEARS behind Amazon.

Will the original poster admit that???? Of course not. It's Everyone else that copies Apple in fanboy's eyes. That's why there are posts here "Hahahahha Wonder where Amazon got the idea for the 70/30 Split?".. to which I am replying "Wonder where Apple got the idea to sell books on the iPad??"

APPLE Copied the concept . PERIOD.

They BOTH copied. That's a difficult concept for a fanboy to admit...

Come the think about it, you weren't even part of this conversation.

... and you clearly did not read what I wrote. Oh and you don't 'have to be part of the conversation' to address posts. It's called blogging and if you blog, you have to be prepared to have your comments challenged; part of the game hommie. You saying that, made me laugh ... so thanks for that!

okthenthankyoubuhbyenow!
post #14 of 14
Quote:
Originally Posted by Pennywse View Post

okthenthankyoubuhbyenow!

Oh My, what a BIG BOY post!!!!! buh bye now!!!
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