According to James Moroney, President and CEO of the Dallas Morning News, Amazon demands a ludicrous cut of newspaper sales for distribution on the Kindle. From his talk with the Senate:
The Kindle, which I think is a marvelous device, the best deal Amazon will give the Dallas Morning News-and we’ve negotiated this up to the last two weeks-they want 70 percent of the subscriptions revenue. I get 30 percent, they get 70 percent. On top of that they have said we get the right to republish your intellectual property to any portable device. Now is that a business model that is going to work for newspapers?
You’d think that Amazon would be smarter, taking a cue from Apple’s iTunes and just skimming enough off the top of subscriptions to sell more Kindle hardware. But then again, Amazon is in a tricky situation. They’re a retailer at heart, not a hardware manufacturer. And they’re attempting to make money on both sides of the print business.
Surely, the NYT didn’t agree to such a one-sided Kindle distribution model. But Amazon seems ready to milk smaller papers like the Dallas Morning News for all they’re worth…which I’m doubting is very much to begin with. [paidContent via CrunchGear and Image]
UPDATE: Maybe the NYT doesn’t have a better deal than the Dallas Morning News. According to a reliable source in the know, The New Yorker’s Kindle split is divided 33% New Yorker, 33% Amazon, and 33% wireless carrier. Without ad subsidies, it’s hard to view this model as sustainable.