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free[1]More rumors are flying around about Amazon giving away Kindle e-readers for free, probably to Prime members. This time CNET’s Crave blog picks up on it. Though it doesn’t mention the price point chart I brought up a few days ago, it does link to a GeekWire interview with a venture capitalist who used to be on the Kindle team at Amazon, which in turn links to a CNN piece which mentions it.

Taken together, the pieces make some good arguments. The Kindles have always been loss leaders—Amazon makes its money off the e-books (especially now that agency pricing is forcing Amazon to take a 30% cut of every e-book rather than treating the e-books as loss leaders too). That’s why Amazon has been so good about getting a Kindle reader app onto every major mobile platform. Kindle owners tend to buy more books than non-owners, and getting more Kindles into more people’s hands could accelerate the growth of the overall e-book market.

The synergy would also work the other way around: Amazon’s highly-profitable Prime program would become attractive to even more consumers, leading more of them to shift their purchasing habits to buy more physical goods from Amazon, as well as e-books.

Some people have been a bit skeptical of the idea, though. They point out that not every Prime member would necessarily want a Kindle—they subscribed to get no-cost 2-day shipping on their orders, and Kindle e-books aren’t shipped at all. On the other hand, it’s hard to say no to “free”, and it’s a demonstrated fact that often people don’t care for gadgets they don’t have until they get them, then after they use them they discover they can’t do without them. (My parents and cell phones, for example.)

Even if the free Kindle recipients turn around and eBay them or give them to friends or relatives, someone ends up with that extra Kindle, and it still grows the market and gives Amazon additional market share. And who knows? Perhaps Barnes & Noble might just follow suit. And if that’s the case, the e-reader market is going to get that much harder for smaller companies to break even in.

 
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