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August 2009
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Rupert Murdoch is Threatening to Leave the Kindle

Rupert Murdoch

Rupert Murdoch

Rupert Murdoch, as the head of the crazy huge News Corporation, has threatened to take his publications off of the Kindle.  Since News Corporation owns many major newspapers, such as the Wall Street Journal and The Times, this could have a devastating effect on the Kindle, especially as it moves into more countries.

The disagreement seems to be over revenue.  It looks like Amazon takes a higher percentage of the sales than Murdoch would like. But it also seems like Murdoch just isn’t happy with the general business model.  He’s angry that Amazon won’t release the customers’ names because “Kindle treats them as their subscribers, not as ours.”  News Corporation is also currently negotiating with Sony to put their content on the Sony Reader.

To me, this just seems as if it’s Murdoch simply trying to show some muscle.  Right now, News Corporation’s main asset on the Kindle is the Wall Street Journal: a publication that is essential to many involved in business.  Threatening to put the Wall Street Journal exclusively on the Sony Reader is the same thing as threatening to take away a large demographic with tons of disposable income.  Apparently, Murdoch wants to bully Amazon until they agree to distribute content on exactly his terms.

Amazon may be forced to bow to News Corporation on this issue.  But if they decide to create a special agreement specifically for this publisher, it could open up the floodgates.  I could see other major media conglomerates trying to negotiate their individual revenue cuts, and threatening to take away vast swaths of content if they don’t get their way.

8 comments to Rupert Murdoch is Threatening to Leave the Kindle

  • Jeff

    Doesn’t anyone remember the big record labels trying to do the same thing with Apple? I love my Kindle, but this type of thing was bound to happen. Old media wants to resist change as much as possible because developing new business models is a risk. As far as I’m concerned, this shows how WELL the Kindle is doing. News Corp didn’t negotiate these terms initially because they weren’t that worried. Now they are.

    Kindle has created the successful model for the ebook industry. Now the only challenge will be keeping content.

  • David Gray

    As much as I dislike the amount of control Amazon exercises over Kindle content (particularly their control over pricing), this move by News Corporation seems foolish to me. In a time when news in particular is struggling to find ways to adapt to new media and electronic delivery methods of doing business, here is a company trying franticly to cling to “the old ways” of content delivery.

  • Call me crazy, but I think it seems perfectly reasonable that News Corp would want to be able to have information about their subscribers. If I sell a product through Handango, I get information (not billing information) about the customer.

    The way it *should* be is that Amazon should allow any content provider to create and sell their content to Kindle owners. Amazon could and should have standards that determine who will be listed in the Kindle store, but for subscriptions (which are different than one-time purchases) I would expect that News Corp should know who I am and I should be able to deal with them directly if I want.

  • GregJ

    Mr Murdoch, please don’t let the door hit you in the butt on the way out. I can get the WSJ delivered, in print form to my door, for $99.00 a year but I’m asked to pay $179.88 a year to have it downloaded to me, which should be a MUCH lower cost point, and you gonna cry about that? Please.

  • Jason

    Let me tell you, as a professional magazine and web publisher, Amazon’s terms are terrible. They are vastly unfavorable compared to other platforms such as iTunes, Amazon exerts vast control over pricing, and as Murdoch says the customers are Amazon’s, not yours.

    Right now Amazon has publishers over a barrel. If Murdoch can use his clout to make the terms more favorable to publishers, I’m all for it. I think you’d see more publishers embrace Kindle if that was the case.

  • I think it’s hilariously senile of Mr. Murdoch to first want us all to pay to read the .com editions of his newspapers and then threaten to pull from service the only digital editions that people are paying for.

    Someone needs to ask him to retire soon, he more than the internet is killing the future of newspapers and media.

  • As Jason says, the standard terms are awful.

    Compare it to the iTunes music store: Apple takes 30% and leaves 70% for the publisher. Amazon takes 70% and leaves 30% for the publisher. That makes it a pretty lousy business for the publisher.

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