But it’s neither too big of a catch (the ads don’t interrupt the reading experience), nor too big of a discount ($25 less than the currently least expensive Kindle).

So let’s look at this for a moment. It’s really not a bad deal. The ads are on the homepage and the screensaver, so instead of your favorite wallpaper when the Kindle goes idle, you’ll see a sponsor ad. Not an awful trade-off. No ads while you’re reading a book. So it’s not intrusive, and probably very easily ignored.

But the discount is only $25, bringing the price down to $115. That’s still really cheap, but I don’t think it’s cheap enough. I think Amazon should have gone for broke and priced it at $99, breaking the sub-$100 barrier. If nothing else, that would have a huge psychological impact in the market. Amazon’s all about gobbling up market share anyway. A $99 Kindle is better positioned to do that than a $115 Kindle.

The $99 (and lower) Kindle is definitely coming — it’s only a matter of when. I’m just surprised Amazon took this intermediate step rather than just going for broke and pricing this new ad-supported Kindle at $99 right from the start.

More info from TG Daily.

Barnes & Noble has been having some success recently selling their Nook e-reader. They’ve been promoting the device heavily in their stores and recently did a big push for Father’s Day. They’ve been pleased with the sales of the unit, though haven’t released any specific numbers sold. They even have an iPad app, which I have and is fine in its own right. Not as elegant as the iBook reader (the gaps between paragraphs in the B&N app are huge, and unfortunately not adjustable, which irks me), but the themes — various combinations of fonts and background colors — are a cool idea that also happen to be useful.

Some time ago I had this to say about the Kindle Reader after I got my iPad and played around with iBooks for the first time:

The Kindle Reader is dead after this. There’s no way in hell anyone is going to pay money for a device that does one thing only and does it in a completely shitty way compared to the iPad. Kindle Reader = extinct technology. The software may survive, but the hardware is toast.

I also had this to say:

True, the iPad is a multi-purpose device, which I’ve already argued is going to either kill the Kindle and Nook and their e-reader brethren or force them to (a) reduce price to an almost throwaway point or (b) incorporate additional functionality (i.e., iPad-ize them).

Point (a) above is already starting to happen. On Monday, June 21, Barnes & Noble dropped the price of the Nook by a sizable margin. They cut the price of its wi-fi and 3G Nook from $259 to $199, while at the same time introducing  a $149 wi-fi-only version. This is just the first salvo in what I predict is going to become an ongoing war between Amazon and B&N (and probably Sony at some point). This is a grab for market share in what is going to be a rapidly shrinking market of single function e-reader devices.

What about Apple? I hear you ask. (Yes, my hearing is very good.) Why aren’t you including them in this price war?

Because they’re not in it. They’re above it. Or beside it. Take your pick, but precisely because the iPad is a multi-function device makes them immune from this downward pricing trend. That may anger and irk fans of the Nook and Kindle, but I’m sorry, it’s true. When Apple launched the iPad the future of single function e-readers became very dark and grim, with the half-life of a soap bubble. Oh, they’ll be around for a few years more, with prices dropping faster than BP’s reputation, but the iPad chopped their heads off in one fell swoop.

They’re dead, they just don’t know it yet.

Larry Dignan at ZDNet had this to say about the Nook price drop:

The move is likely to put Amazon on the defensive and the e-commerce giant appears to have been either caught flat-footed or resting on its early Kindle lead. Many folks have noted that Apple’s iPad is a dedicated e-reader killer, but let’s exclude Steve Jobs & Co. from the picture. Even excluding Apple, Amazon looks a bit behind the curve on e-readers.

Amazon may have been caught flat-footed, but they didn’t stay that way for long. Later Monday afternoon they responded with their own price cut on the Kindle. They dropped the price from $259 to $189.

I’m really curious to see how low the prices of e-readers is going to get, and how fast. My money’s on one of the majors (Amazon, B&N, or Sony) dropping to a $99 price point by Christmas.

The key component of the dust-up between Amazon and book publisher Macmillan (who has since been joined by Hachette Books and HarperCollins) is the pricing model used to sell electronic books. Amazon wants to set a fixed price with a fixed dollar amount going to the publishers. Publishers don’t like this because it cannibalizes their hardcover sales and (they believe) over the long haul, devalues books in general, especially new releases.

Teresa Nielsen Hayden over at Making Light has posted a very informative post about the “agency model” that the publishers would like to use.

Here is a key point she’s trying to make:

The difference between the agency model and Amazon’s plan for world domination is that Amazon wants to license* the ebooks in its Kindle program, control their content, and set their prices. That is: it wants to be the publisher, not a distributor or seller. This might be doable if Amazon were out there negotiating to buy rights at market prices. It isn’t. Amazon expects to have the rights just handed over, as though it were doing the conventional publishers a favor.

In the long run, the Amazon model turns publishers into unfunded R&D labs that are obliged to turn over everything they develop to other companies at rock-bottom prices. It isn’t viable, and it’s not author-friendly in six different ways. Have you ever seen a discussion of how badly messed-up Kindle texts are? Amazon’s business isn’t about books and authors; it’s about selling units at a discount.

There’s a lot more, so I encourage you to head on over and check it out. (It’s a few days old but I’ve been incredibly under the weather and just stumbled over it today.)