Amazon Launches $114 Kindle With Ads

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NEW YORK (MainStreet) — Shoppers can save $25 on the newest Kindle if they don’t mind having to read a few ads.

Amazon (Stock Quote: AMZN) launched an alternate version of its bestselling e-reader this week that is the same as the previous Kindle in every way except that it displays advertisements and special offers from companies like Visa and Buick at the bottom of the home screen and when the device is in screensaver mode.

The new Kindle, which Amazon is calling the “Kindle with Special Offers” (not the catchiest name), sells for $114, cheaper than the traditional Kindle without ads that costs $139 and well below the price of competing e-readers from Sony (Stock Quote: SNE) and Barnes & Noble (Stock Quote: BKS). The obvious caveat, however, is that consumers must accept having advertisements incorporated into their overall reading experience.

Amazon, for its part, has tried to make the new sponsored feature as unobtrusive as possible. Shoppers have the ability to customize the style of the ads, with options ranging from landscapes to literary references, so that the advertisements better match the reader’s tastes. Moreover, the new Kindle boasts a special app called AdMash that lets users vote on ads to determine which ones will be featured on their devices.

Most importantly though, the ads are not incorporated into the e-books themselves (at least not yet). Instead, readers would only see the promotions as small banner displays on the home screen or displayed in full on the screen when the product is no longer in use. Regular Kindles, by contrast, have no ads, and instead display random black and white pictures of famous authors and novels as a screensaver. But unless you’re someone who really wants to see an old picture of a grimacing Emily Dickinson, the advertisements might not be so bad.

Amazon wisely decided to add on special promotional offers as part of this new feature, so that consumers aren’t just bombarded with advertisements but also deals like $1 MP3 records and half-priced Amazon gift cards. Still, it’s impossible for Amazon to conceal the fact that this is a shameless money-making scheme to boost ad revenue while simultaneously trying to undercut competitors on price.

What is particularly surprising though is that the price point isn’t lower. If Amazon really wanted to capture the market, the company could have used this sponsorship opportunity to price the Kindle at $99, just $15 less than it is now, but a milestone price that would potentially attract many more consumers on the fence about investing in an e-reader. Plus dropping the price further would provide a bigger incentive for consumers to accept the occasional nuissance of watching ads.

Amazon’s move arguably fits into a broader trend that is turning advertisements into a monetary incentive for consumers. Companies like Delta and Airtran have begun rewarding customers with free miles for watching short promotional videos, while others like Chipotle have given out free meals for watching commercials online. And in a particularly odd twist, Mark Ecko recently announced that it would give discounts to customers who got a tattoo of the brand's logo, the ultimate advertisement.

This model has been particularly prominent in the tech world of late, as dozens of companies now offer free or discounted smartphone apps that display ads and charge more for those that don’t. In effect, these companies, like Amazon, are using ads to subsidize the lower cost of the product and may be establishing a new normal where consumers come to think of ad-free content as a luxury rather than the standard, making it a premium that some may consider worth paying extra for, and others not.

The real question now is whether other e-readers and tablets may follow in the Kindle’s footsteps and release ad-supported versions for less. Would you buy a Kindle with ads – or really any gadget with ads – if it were cheaper? And how much cheaper would it need to be? Let us know in the comments section!

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