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Amazon awards self slimmer slice of newspaper pie

Doubles cut for publishers

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Amazon is reducing its cut on newspapers and magazines to 30 per cent, improving the margin considerably - though publishers will have to shoulder a share of the distribution costs first.

The new split will see 70 per cent of the subscription price going to the publisher, which is something in the region of double what News International was getting last year according to the Associated Press. Which should help Amazon cling on as the e-book business takes off.

And it is taking off - Forrester Research reckons that seven per cent of US adults are reading e-books, but those people are the ones who spend most on books anyway. Once users have an e-book reader they're buying 66 per cent of their reading material digitally.

This is a relief when the National Literacy Trust tells us that more UK children own their own mobile phones than their own books (85 per cent compared to 73 per cent), but if they've got the Kindle app installed on their phones then there's really no problem.

Still, magazines and newspapers are hoping that electronic distribution, paid by subscription, will revive their industry - and Amazon wants to maintain control of the distribution mechanism which means enticing content into the Kindle ecosystem.

The software incarnation of the Kindle, installed on a phone or tablet, synchronises over the device's internet connection, under Amazon's control and at the expense of the user. But the Kindle hardware has a more direct connection using Amazon's Whispernet (a cellular network the user never sees, or pays for) - that makes for simplicity of use, but incurs a delivery cost which will be deducted before the 70 per cent publishers' cut is calculated.

Amazon reckons a 9MB magazine will cost about $1.35 to deliver over Whispernet. That rate is surely comparable to the cost of sticking a copy in the post, though the publisher will be saving on printing costs too and will want to ensure its part of the future. ®

The smart choice: opportunity from uncertainty

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