Sunday, May 10, 2009

Costs of delivering a newspaper on the Kindle

While reading an article by John Tartakoff the other day and responding re Kindle DX vs The Plastic Logic eReader, an interesting comparison, I saw the link to Mark Glaser's Mediashift and his account of the recent "Digital Publishing Alliance" meeeting at U of Missouri's journalism school.   Very timely.  He writes a summary on what each speaker had to say that day.

  In addition to his report on a talk by Plastic Logic's Sarah Geata, which reminded me that the Plastic Logic won't have email or a web browser, he listed some details from the talk by Guy Tasaka from LibreDigital, formerly NewsStand, who gave a breakdown of costs for delivering a newspaper on the Kindle:
> Avg. file size = 1.2MB
> Bandwidth cost = .12 cents MB
> Selling price = $13.99 month
> Monthly bandwidth cost = $4.32

That eats into monthly cost of serving content into Kindle. So Amazon is probably losing money on some of the lower cost publications it sells. This cost doesn't even include advertising in the mix.
Amazon has just recently started charging 15c per megabyte (rounded up) to send a converted personal document direct to a Kindle via Whispernet, which includes also the cost of converting the file sent to them, so this was of interest in connection with the new charge and gives a vague idea of how much the bandwidth could cost in general per Amazon Kindle user on the average. Or not.

As mentioned the other day in the "Stats" entry here,
"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."
That does makes sense when you use the numbers by Tasaka above. Below are ways to Share this post if you'd like others to see it.
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  1. 12 cents/MB? That's a high price at the retail level. The actual cost of bandwidth is very likely considerably less - I would guess no more than 2-3 cents, if that. As a matter of fact, I'd be willing to bet the deal with Sprint works out to very close to 1 cent/MB.

  2. Elmo,
    I'd guess they could be tallying all kinds of hidden factors involved in bandwidth use for delivery...

    Maybe like the idea that Amazon's parts-cost on a Kindle is only $186 or whatever, and then calling it "the cost of building a Kindle" when that's another cost altogether - or saying that the Kindle is a 'cash cow' with anything over $186 for parts-alone a 'profit' ...

    I don't know what the situation is - was only reporting what was quoted at a journalism conference the other day by someone who one would think had some reason for giving that number but cha never know :-) If you find out anything more, let us know.


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