Amazon's latest Prime gambit: Kindle book lending

The Kindle lending program may just be one part of the kitchen sink Amazon plans to toss into its Prime subscription service.
Written by Larry Dignan, Contributor

Amazon keeps throwing the perks at its Amazon Prime subscription service. This go-round Amazon is adding a Kindle Owners' Lending Library to the mix just ahead of the Kindle Fire launch.

For the e-commerce giant, Prime subscriptions appear to be just about everything. Aside from free two-day shipping, Amazon has added unlimited streaming of shows and movies and now Kindle books. Why? Repeat after me: Lifetime value of the customer. Also see: Amazon's Kindle Fire economics: A focus on lifetime value of customer

Amazon hit that point on its most recent earnings call as analysts were freaking out over what a $199 Kindle Fire will do to margins. The company explained that it'll take a margin hit now for more revenue later. Kindle Fire has an Amazon Prime subscription bundled in for a month. If the bulk of those Fire buyers also become Prime subscribers, Amazon garners a nice recurring revenue stream---a subscription is $79 a year---and the promise of more loyal customers.

In other words, the Kindle lending program may just be one part of the kitchen sink Amazon plans to toss into Prime.

The Kindle lending library includes more than 100 current and former New York Times bestsellers. It's a handy library. Amazon bought access from publishers for a fixed fee and will also buy a title at wholesale terms. The aim of Amazon's purchase move is "to demonstrate to publishers the incremental growth and revenue opportunity that this new service presents." In other words, Amazon is offering a trial so folks buy more e-books.

Amazon has its template, but the goal is clear: Get as many Amazon Prime subscribers as possible even if there's a margin hit at first.

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