Amazon.com (NASDAQ:AMZN) is negotiating with magazine and newspaper publishers over subscription- and single-copy periodical pricing, and noodling over a streaming book service with book publishers--all to fortify its content fortress for its forthcoming tablet.
The e-commerce giant is expected to launch the Kindle Tablet, a 7-inch, Android-based tablet this November. The slate would cost less than $300, priced to challenge Apple's (NASDAQ:AAPL) popular iPad tablet.
The Wall Street Journal, citing industry sources familiar with the company's plans, said Amazon and content publishers are brokering terms similar to those Apple offered for the iPad.
Apple launched its content subscription service to provide a way for publishers of digital magazines, newspapers, music and other applications to make money from their work.
When customers subscribe to an application via Apple's iTunes App Store, Apple collects 30 percent of the fee. Publishers who opt to use Apple's platform must also make content available for sale through applications at the App Store for the same price.
From its dominant tablet market share of 80 percent, Apple has strong-armed most publishers into accepting this model, with publishing powerhouses such as The New York Times and Conde Nast agreeing to Apple's terms.
Just as it plans to undercut the iPad by offering a tablet that costs at least $200 less than the $500 iPad 2, it is likely Amazon would undercut Apple's iPad subscription pricing to entice content providers to make their newspapers and magazine available on the Kindle Tablet.
Amazon is also toying with the notion of offering consumers big content library of older books on a subscription basis via the company's Amazon Prime service, the Wall Street Journal said.
Customers currently pay $79 a year for the service, which now includes unlimited two-day shipping and access to some TV shows and movies from Amazon's Instant Video streaming service. Adding books to that service is a natural media extension.
However, bringing books to Prime may be a longer shot than the newspaper and magazine subscriptions. According to the Journal, publishing executives aren't cozy with the notion "because they believe it could lower the value of books and because it could strain their relationships with other retailers that sell their books."
Amazon declined to comment on either its magazine and periodical subscription plans or the book subscription service. However, it's easy to see why Amazon would want to play there.
Media content is king on tablets. Apple is making a killing off serving media over the iPad, from subscriptions to The New York Times app to book titles from its iBookstore.
Publishers from all genres recognize consumers take their tablets with them to access their media content, making them a natural new screen through which to reach new and existing customers.
If Amazon can provide a credible, alternative tablet and broad, rich content ecosystem, it could challenge the iPad, which enjoys sales of more than 30 million units to date.