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I just bought one off Craigslist as well, 5 months old, same price. I couldn't be much happier, except for trying to get library books to work.
At any rate the previous owner deregistered his Kindle right in front of me. I registered myself shortly after and his books remained. As far as I can tell they'll stay with the device forever. I ended up deleting most of them (there's no accounting for taste...) but kept a few that looked interesting.
Greg
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