Poynter's Damon Kiesow presented some convincing arguments why the publishing industry should consider following Amazon's example and look into selling subsidised tablet devices. Amazon announced this week that it would start selling a new version of Kindle for $114, which is $25 less than the cheapest Kindle currently available. (There is no word when the new version will arrive in Europe or what its price will be.) The catch is that the new Kindle displays ads as screensavers and as banners on the home screen.
The general opinion seems to be that the $25 reduction is not enough to justify the ads, as CNN reported, but Kiesow believes that the model of selling subsidised tablets could nevertheless work for newspapers. He argued that the average newspaper gets its profit from advertising revenues anyway, as production and circulation costs are usually higher than the subscription revenues. Thus, selling tablet devices below costs with long-term subscriptions would not differ considerably from the current revenue model of most newspapers.
Kiesow wrote that if a newspaper could sell two-year subscriptions with a tablet, for example, the deal would benefit both the paper and the client: the newspaper would get committed subscribers with names and demographic information to sell advertising against while customers would get quality tablets, along with subscription to the newspaper.
What would be the best-suited tablet device for the purpose? The iPad would certainly be the most appealing from the consumer's perspective, but Kieslow noted that Apple's opposition to price discounts makes it an unlikely partner for such a venture. Instead, publishers would do better to look into the Motorola Xoom, or some other Android tablet in the market.
Such a move would not be the first time newspapers turned to using portable reading devices as part of marketing. In 2009, The New York Times, Boston Globe and Washington Post all offered subsidised Kindles in return for long-term subscriptions. According to Kieslow, all of the newspapers have since ended their subsidy programmes. Today, as newspapers are using more and more video and other multimedia content, Android tablets would seem better suited for the purpose than Kindle and other e-ink readers, which cannot properly display videos.
As the news industry is increasingly embracing portable media devices and the multimedia opportunities they offer, could selling tablets with long-term subscriptions prove to be a profitable model?