The need for the Kindle Fire was obvious: As soon as the first version of the iPad arrived, the Kindle looked more than a little antiquated, with its black-and-white screen, no touch interface, etc. That’s not to say there isn’t still a market for dedicated reading devices, for people who don’t like the distractions or the reflective screen of the iPad — and Amazon will no doubt continue to sell plenty of Kindles with touchscreens and other features added. But the sweet spot of the market is a device that can do many different things: stream video, stream audio, display magazines and newspapers and books in full color, and so on.
The benefit for content publishers and media companies like Conde Nast and News Corp. is more or less the same as it is with Apple: namely, they get access to the users who choose that device as a way to consume media, and Amazon handles the logistics of the relationship — the billing, the processing, and to a certain extent the marketing and promotions as well. They also get to put their content on a device that (in some cases, at least) seems to make users more likely to pay for things, which is something media companies have been wrestling with virtually since the internet was invented — although they have to give the platform owner 30 percent of the proceeds, of course.
At least in Apple’s case, however, the hardware maker appears to have no real interest in becoming a media or content producer, since all it wants is content that makes people want more devices. In theory at least, it doesn’t particularly care where that content comes from, as long as it gets its 30 percent. Amazon is in a different boat: it has already indicated that it is happy to compete with its former publishing partners when it comes to books, its core business, by pressuring them to accept lower prices and also by signing up authors like Tim Ferriss — in effect, becoming a publisher.
There’s no question that working with Amazon and a new platform like the Kindle Fire makes a lot of sense for publishers and media companies — it’s a win-win for both sides. And so long as Amazon’s interests align with those of its media partners, then everything should go swimmingly. But what about when they diverge?