• by Erik Sass  @eriksass1, November 9, 2010

With its Kindle service feeling the pressure from Apple's popular iPad and new competition from the Nook color e-reader produced by Barnes and Noble, Amazon is pushing back. Its new revenue-sharing arrangement for its publishing partners is a bid to build up superior content offerings.

Beginning Dec. 1, Amazon will give publishers 70% of the retail price for each magazine or newspaper purchased via the Kindle store, minus an average delivery fee of $0.15 per megabyte. That deal flips the current model, which gives Amazon 70% of the sale price. This includes magazines and newspapers delivered to other devices through a Kindle app. Significantly, this is the same revenue-split which Apple is offering publishers through its iBookstore.

While most publishers recognize Apple's technical achievement in the iPad, there is widespread dissatisfaction with Apple's tightfisted business model for newspapers and periodicals.

For starters, Apple refuses to share consumer data about iPad owners, which prevents publishers from targeting market segments. Apple also asks publishers not to charge for any content that is available free elsewhere.

Thus far, most publishers have limited themselves to single copy sales. (The Washington Post announced Monday that its new app includes a subscription option costing $3.99 per month for readers who don't subscribe to the print edition.)

Overall, Amazon sold an estimated 500,000 Kindle devices in 2007-2008, 3.3 million in 2009 and is on course to sell another 5 million in 2010, according to Barclay's. That's a total 8.8 million devices sold by the end of this year.

Conversely, Apple has shipped around 7.4 million iPads since the device went on sale in April, and analysts predict total sales of 10.7 million by year's-end. Estimates for 2011 iPad sales have ranged from 21 million to 40 million.

Both Amazon and Apple are clearly trying to differentiate between their devices on the basis of price and usage patterns. In September, Barclay's analyst Douglas Anmuth stated: "We believe a bifurcated market has clearly developed between more expensive, mult-function tablets and cheaper, dedicated eReaders."