It's interesting that some products make the most sense to subsidize when they are very expensive, and other products make the most sense to subsidize when they are almost free. It's not really clear to me that subscriptions & eReaders interact in such a way that they fall neatly into either category. For example, as eReaders approach free are you really going to want a separate crappy eReader for each subscription your have, or would you rather have a really nice eReader for all your subscriptions? And if it's the latter, which I think it clearly is, then does it really make sense to tie one subscription into the initial purchase? The only way it makes sense is if you make something that's like the iPad of eReaders, so that it is the expensive option in a sea of other cheaper options. So even though eReaders will be almost free in three years, it seems like it could be another 6 years before we have the technology to make a luxury version of an eInk product. So in short I guess I would expect some sort of subsidized version in the three years, but I don't see it being done really well for another 6.
> which I think it clearly is, then does it really make sense to tie one subscription into the initial purchase?
Unless you're Amazon, Apple, Facebook, Google, etc. and want to be THE platform and have all subscriptions go through you and onto your awesome device. Apple's iOS AppStore is very successful example of this.
People still have to buy it though. Apple isn't going to make crappy eReader so I don't see them getting into the game more seriously until the technology is better, and I don't see everyone carrying around a Kindle either. The Kindle has done enormously well so far, but the fact is that the average American buys only 1 book a year and 70% of them don't even read it[1], so I don't really see how it's going to go from a few million sales to a few hundred million sales. Sure Amazon sells an enormous number of books, but that's because almost all books are read by the same 2% of people or whatever. So let's say Amazon does make some move to ensure that it continues to control eBook sales, what exactly would that look like? Almost everyone who reads daily newspapers already owns a kindle or is on track to within the next couple years, and I don't think people who read magazines would replace them with a kindle. And the student market is just an enormous mess that I don't think Amazon is currently prepared to deal with. So what other captive population would they really be able to capture via a subscription subsidy?
