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emellaich · 05-08-2009, 11:19 PM

Let's look at the math. The KindleDX costs $489. Half price is $244.50. So we must assume that sponsors are willing to pay $244.50 for you to receive the Kindle.

In addition, the half price company has operation costs. Amazon will ship them free to halfprice company. I assume halfprice will ship them free to you in order to be equivalent to Amazon. In addition, halfprice needs to unpack each Kindle and load it with their books. Then halfprice also wants some margin of its own. How much is this piece? Could be $25; could be $100; I don't know. However it is more than the $244 discount.

So, how do the content providers expect to get more than $250 in value?

1) The content is actually a subscription and you are required to sign a 'contract' for a multi-year subscription. Say the NY Times at $12 a month for two or three years. However, if this is what is going on, then it is not very transparent.

2) They are 'giving' away content in the hope you will buy new content from them. This giveaway model is NOT the same as what others are trying (ie, Baen, Doctrow, etcetera). The reason it is not the same is that they supposedly are paying you (subsidizing) even if you don't ever buy future content.

In contrast, Baen may give away some books to tempt you to buy more, but it does not really cost them anything to give away those books. Even if Baen's conversion rate is typical (1% to 5% of free readers ==> book purchases) they generate a net profit since the cost of giving away books is neglible.

However, in this promotion, there is a tangible cost to the giveaway. If everyone who gets a KindleDX buys additional books they must buy goods with a net margin of over $250 to pay off the subsidy. If only half of the recipients buy books, they must buy more than $500. At more typical conversion rates, each buyer may need to buy $2,500 or even $25,000 of goods.

Therefore, this program can not work unless all buyers are forced to buy goods; ie, see the subscription option in number one above.

So, I would either wonder just what I am subscribing too with my purchase, or I would be really skeptical that it could work.

05-08-2009, 11:19 PM	#12
emellaich Wizard Posts: 1,101 Karma: 4388403 Join Date: Oct 2007 Device: Palm>Ebookman>IPaq>Axim>Cybook>Kndl2>IPAD>Kndl3SO>Voyager>Oasis	Let's look at the math. The KindleDX costs $489. Half price is $244.50. So we must assume that sponsors are willing to pay $244.50 for you to receive the Kindle. In addition, the half price company has operation costs. Amazon will ship them free to halfprice company. I assume halfprice will ship them free to you in order to be equivalent to Amazon. In addition, halfprice needs to unpack each Kindle and load it with their books. Then halfprice also wants some margin of its own. How much is this piece? Could be $25; could be $100; I don't know. However it is more than the $244 discount. So, how do the content providers expect to get more than $250 in value? 1) The content is actually a subscription and you are required to sign a 'contract' for a multi-year subscription. Say the NY Times at $12 a month for two or three years. However, if this is what is going on, then it is not very transparent. 2) They are 'giving' away content in the hope you will buy new content from them. This giveaway model is NOT the same as what others are trying (ie, Baen, Doctrow, etcetera). The reason it is not the same is that they supposedly are paying you (subsidizing) even if you don't ever buy future content. In contrast, Baen may give away some books to tempt you to buy more, but it does not really cost them anything to give away those books. Even if Baen's conversion rate is typical (1% to 5% of free readers ==> book purchases) they generate a net profit since the cost of giving away books is neglible. However, in this promotion, there is a tangible cost to the giveaway. If everyone who gets a KindleDX buys additional books they must buy goods with a net margin of over $250 to pay off the subsidy. If only half of the recipients buy books, they must buy more than $500. At more typical conversion rates, each buyer may need to buy $2,500 or even $25,000 of goods. Therefore, this program can not work unless all buyers are forced to buy goods; ie, see the subscription option in number one above. So, I would either wonder just what I am subscribing too with my purchase, or I would be really skeptical that it could work.