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Nov. 25, 2008, 12:34 p.m.

NYT’s 10K subscribers on Kindle: The start of something bigger?

One other important note from that internal New York Times memo my colleague Zach got a hold of: The company reports it has “more than 10,000 paid subscribers” to an electronic edition of the newspaper on Amazon’s Kindle ebook reader. To my knowledge (please correct me if I’m wrong), that’s the first time a major newspaper has released numbers on how it’s doing on Kindle — a platform lots of newspaper execs are eager to see turn into a saving grace for their industry.

Given that the electronic Times costs $13.99 a month, that would mean the NYT Kindle edition is generating in the neighborhood of $1.68 million a year. How much of that goes to NYT Co. and how much stays with Amazon is unclear.

Amazon has been tightlipped about how many of the devices it has sold, which has led some (including me) to think it might be a smaller success than some had hoped. (TechCrunch claimed in August it knew the number: 240,000.) If we do some highly crude back-of-the-envelope calculation, that would mean The New York Times has a penetration rate on the Kindle of around four percent.

Not bad, considering the Kindle is the first incarnation of that dreamy aspirational future of newspapers: no physical distribution costs, plus a steady revenue stream that comes from news consumers, not advertisers.

This also provides some guidance in how other newspapers might be doing on the Kindle. Amazon publishes rankings of its newspapers’ sales: The NYT comes in second behind The Wall Street Journal, but ahead of the papers you might imagine (The Washington Post, Financial Times, Chicago Tribune, Los Angeles Times, International Herald Tribune). Amazon’s sales-ranking systems are famously inscrutable — just ask any author who tries to track how his book fares hour to hour — but I’d guess the Journal is generating Kindle revenue numbers similar to the Times’, since they sell their edition for only $9.99 but have more subscribers. My suspicion is that there’s a pretty steep dropoff in Kindle sales numbers after the NYT, then a much steeper one after the FT — I’d be curious to see numbers from a major metro like The Boston Globe or The Denver Post. The early-adopter crowd that is currently buying Kindles is, I suspect, more interested in a national news product than their local daily.

I’ve been at a number of conferences recently where newspaper people point to the Kindle (or at least Kindle-like devices) as a major source of industry salvation — arguing that the Kindle will have an adoption slope similar to the iPod’s, and that they’ll soon be seen in every park and subway around America. And since Kindle users pay money for content, there may be a business model for newspapers after all.

I’m not yet sold on that vision. I think for the Kindle to reach mainstream success, it’ll have to shift its focus from being an ebook reader with a junky mobile web browser to being a great mobile web browser with an ebook reader attached. It’ll have to become something more like the iPhone with a bigger screen and better battery life. (There are signs the iPhone might already have the ebook-reader lead over the Kindle, although without the business model attached.)

And when that shift happens, it’ll become trivially easy to read newspapers’ (free) web sites on the device — which I suspect will undercut Kindle newspaper subscriptions just as it undercuts print newspaper subscriptions. But the NYT’s numbers are among the first public signs that people — at least some people — are willing to pay to get news in the electronic format of their choice, even when they can get it on the web or their phone for free.

POSTED     Nov. 25, 2008, 12:34 p.m.
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