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.