The Ad-Filled Vision Of Jeff Bezos

New Kindle Fires to Come With Ads

We all discovered that yesterday after the big Bezos pitch. What we find out this morning is something even worse:

What’s more, according to the product page for the Kindle Fire HD there will also be ads on the lower left hand corner of the home screen. So the entire time you use this tablet you will be bombarded with ads.

Boldfaced emphasis added by me.

Everyone has been thinking, “Oh, we can just remove the ads” by some technical method.

I wouldn’t count on that.

It’s clear now that the Vision of Jeff Bezos is advertising.

His long-term goal is ad-subsidized hardware and software.

Somewhere deep in the bowels of Amazon is an algorithm and chart that shows the future intersection of advertising profits versus profits of hardware and software. Ad profits zoom up while those from hardware and software level out or even decrease. So it’s advertising where the money can be made, not in the sale of hardware and software.

The chart probably looks something like this, in fact, with the red line representing income from advertising (instead of eBooks):

And if you think that’s a screwy idea, you probably thought selling books online was a screwy idea too that couldn’t possibly lead to anything bigger than that.

Dig what Bezos said in his presentation yesterday:

Bezos, to use a cliché, says what he means and means what he says.

He didn’t say when customers enjoy their devices — he said when customers use them.

Because every use will deliver an ad.

That is how Amazon makes money.

If you went and bought an eInk Kindle in a brick and mortar store, you would have discovered that all the new Kindles — the Basic and the Touch — all came with Special Offers by default. You couldn’t buy one that didn’t have ads.

That was deliberate.

Bezos knew that inertia would keep people from removing the ads. Or that even if they were motivated to get rid of them, they’d balk at paying the extra thirty dollars to do so. They’d no longer feel as if they’d gotten a bargain.

As the saying goes, Never give a sucker an even break.

And there was no even break on the new eInk Kindles. Buyers were snookered into thinking they were getting a steal — when it was actually Bezos who was slipping his hand into their wallet for the score.

Stop and think of how much Google has been making off of crappy AdWords and other minor display ads. You don’t think Bezos hasn’t seen that and thought, “Wow. We could deliver even better ads and so we can charge more — and make more!”

And what completes the circle of this racket?

Amazon getting ads that point to products Amazon sells!

It’s ingenious!

Bezos: “Hey guys! Why don’t you pay us to advertise the goods you make so we can sell them and make money from you twice?”

I don’t think there has ever been a scheme so perfect in the history of merchandising. This goes beyond charging for endcaps in brick and mortar stores. Because Amazon serves hundreds of millions of people. You could say they nearly serve everybody. No brick and mortar store can ever do that and charge for advertising placements on that unprecedented scale!

And here’s another piece of that puzzle: Kindle Serials. Its goal is to crush the price of eBooks by anchoring their price at $1.99. Any writer who is foolish enough to do a serial is never going to be able to charge more than $1.99 for their work. They’ve already shown everyone they’ll settle for $1.99.

This is a perfect scam too. Readers who like a $1.99 serial will then demand the writer do all their work as serials — so they can pay no more than $1.99 for the work.

And what is so great for Bezos about this $1.99 price?

He gets to ask people: “How would you like a serial for free? The only catch is we put this full-screen ad at the end of each chapter.”

People will go berserk and demand that.

And what will be the cut to writers? You’ll never know if it’s square deal because Amazon will never tell you what they charged for those ads. They’ll dole out some pittance that will look good because of the volume of “sales” generated.

They’ve been testing this scheme — minus the ads — with the Kindle Owners Lending Library. That’s all been to see exactly what “free” means to people and how they can inch their way towards ad-sponsored free books.

Now here’s the kicker. All of you people who think you’ll just be able to “remove the ads” from these new devices?

I expect Amazon to do a major change in their Terms of Service.

There will be some retaliation in store for those who “remove the ads.” The service is the ads. Removing them would be a violation of the TOS.

What Amazon would do to those who violate the TOS, I have no idea and don’t care to speculate.

But do you really, really want to risk that?

We’ll see what the future brings.

But as far as the future Jeff Bezos sees and wants — it will be filled with ads.

Update Sunday September 9, 2012: That Bezos Vision for the future will be delayed a bit. Amazon caves in, will remove ads from Kindle Fire for $15 fee What’s remarkable about that:

1) It’s less than the $30 to ad-free a Kindle
2) I was sure it’d cost well over $50
3) So much for Amazon touting the big price difference ad support makes!

Previously here:

The Never Give A Sucker An Even Break Culture
Amazon’s Kindle Price Punking
It Always Seems So Innocent
Gruber Sees The First Step
The Seven Words That Will Kill Books
Ads In Books: 1884
Our Bleak Philip K. Dick Future
Kindle’s Serial Killer



Filed under Amazon Kindle, Digital Overthrow, Marketing, Pricing

3 responses to “The Ad-Filled Vision Of Jeff Bezos

  1. Books used to have ads as well. Used to have coupons at the back to mail order additional titles, and sometimes there were cards right down the middle that were glossy and sold perfume and such.

    These were most likely to be genre, but it was common.

    Also, until you’ve seen the device to rail against it for maybe having ads is silly. On the current models you can pay a bit more and have them removed. I’m fine with that model. I’d pay extra to get commercials dumped from Hulu. And at the end of the day if you don’t like the product don’t buy it. Get an iPad or Nook instead.

  2. I couldn’t agree more, Mike. It’s not a question of *if* advertising is going to creep into the ebook business, it’s *when*. Here’s the big question though: If Amazon is pushing publishers towards lower prices but is subsidizing that with advertising income, is Amazon obligated to share that ad revenue stream with publishers/authors? What if those ads are served up right inside the book? This point is not at all clear right now.

  3. Goeff

    The willingness of the American consumer to. freedom for a few bucks astonishes me. Daily give up

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