I'm in the minority — you know, that clique of freaks who don't mind advertising. At least, I don't mind advertising when it's smart. I'm not wearing the foil hat: if you're going to advertise to me, I want you to target me for my location, my age group, and my interests. Make it relevant. I'd guess that I click on an ad (or investigate the advertised product / service through separate web searches) at least once every other week, which is probably the best that even the most intelligently-targeted advertising in the world can hope for.
But I'm not stupid: even if it's good, you still can't advertise to me for free. I'm sure the fact that I work in an ad-supported industry plays into this, but I like to think that I've got a healthy respect for the balance between ads and the services they subsidize. (That's why I'll never use an ad blocker — I'd sooner stop visiting a site that over-advertises for the amount of quality content it's delivering.) I also think I've got a decent sixth sense for when that balance is significantly off.
Of course, it doesn't take much intelligence or insight into Amazon's business dealings to know that something's not right about the new Kindles "with special offers." Both the Wi-FI and 3G versions are $25 off the standard models' retail prices... and that's it. There's exactly zero ongoing incentivization. Sure, Amazon will tell you that these ads are indeed "special offers," which are ongoing incentives in and of themselves: get a $10 gift cart with $10 in Kindle book purchases, for example. But that's like Comcast telling me that access to Groupon is a perk of my internet service — it's fundamentally insane. And I still need to shell out additional cash to unlock those perks. (Never mind the fact that the Visa screen server pictured in Amazon's product page doesn't look much like a special offer to me... it's just an ad.)
Let's say you own your Kindle for two years: Amazon's kicking you a measly dollar a month to advertise to you. Even if you like the ads (which I'll admit that I might), it's still insulting... and considering the broad, non-techie appeal of the Kindle, I'd be willing to bet a lot of these folks will own their Kindles for far longer than two years.
Now, I could make the obvious arguments about how these new Kindles can be brought in line, how they can be made to make sense. I want to like them. In fact, I'll go ahead and make those arguments in a moment anyway — but first I'd like to point out that I think Amazon has no intention of turning these devices (or their successors) into compelling symbiotic relationships with the consumers who own them. Instead, I think that they're Trojan horses, previews of the future of the Kindle platform. Amazon, like any business, is seeking to eke any revenue stream it can, right up to the hairy edge of your dissatisfaction. They're testing you, seeing what you'll tolerate. I've complained for years that Amazon has banner ads on its site — I believe that retailers advertising unrelated companies are placing consumers in some sort of disgusting "double jeopardy" of commercialism — and Kindle looks poised to go the same way. You can forget that $25 discount: long term, that revenue won't be passed onto the consumer at all. There'll be one Kindle model, and you'll get advertised to whether you like it or not.
But anyhow, let's descend back into the fantasy zone for a moment and explore how Amazon could fix this business model if it actually had any intention on doing so. I've heard a lot of arguments that these devices should be free. I don't think we're there yet — that would literally mean giving a Kindle to anyone that requested one, which isn't tenable considering that Amazon would need to eat a big subsidy upfront and get reimbursed through advertising over time. Never mind the manufacturing issues stemming from 100 million Americans requesting their free Kindle. People love free stuff.
What buyers do need, though, is an ongoing reminder of the pact they've agreed to with Amazon. I think it's simple: owners earn free books, subscriptions, or Kindle book store credits over time. If that kickback is less than one whole book per month, fine — heck, you could even do some sort of point system. I really don't think it needs to be much and it doesn't need to break Amazon's bank, it just needs to be an ongoing benefit for the life of the Kindle. And speaking of the life of the Kindle, screw these separate SKUs — let owners of all Kindles turn special offers on and off. Charge the same price upfront. If there's some sort of capitalization concern, that's fine, restrict how frequently the option can be toggled — once every month or three months, whatever.
Again, I don't think any of this is going to happen — as with most industries, advertising is here to stay, and consumers like us aren't a part of the cash flow. If you want $200 for an ad-supported color E Ink Kindle that looks like the new Nook and gives me free books over time, Amazon, I'm there... but that's another editorial altogether.