by Christopher Mims, Technology Review
Amazon makes so much on Prime that digital media has become the perfect loss leader for the company. Amazon’s new “Kindle Owner’s Library” allows any Kindle owner who is a member of Amazon Prime to check out one book a month and keep it as long as they want. It joins Amazon’s video streaming service as one of the perks of Prime membership, which, at $80 a year, also grants members free 2-day shipping on anything to come out of Amazon’s warehouses. But how can Amazon afford to give away all this free (albeit digital) media? As Slate Technology columnist Farhad Manjoo pointed out, Amazon customers who join Prime increase their spending on the site on average $500 a year, presumably because of the free shipping.
http://www.technologyreview.com/blog/mimssbits/27313/?p1=blogs
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