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Magazine Publishers Reach Deals With Amazon's Kindle Fire - WSJ
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Magazines Join With New Tablet Challenger

Magazine publishers have been anxious to find a true rival to Apple Inc. 's iPad. Some say they may have finally found it with Amazon.com Inc. 's new Kindle Fire.

Magazine publishers have been anxious to find a true rival to Apple Inc.'s iPad. Some say they may have finally found it with Amazon.com Inc.'s new Kindle Fire. Suzanne Vranica reports.

Amazon has struck accords with several large publishers including Conde Nast, Hearst Corp. and Meredith Corp. , a move that allows magazine titles such as Esquire, Elle, Better Homes, Cosmopolitan, GQ, Martha Stewart Living and Glamour to be available on its newest device.

Discussions between publishers and Amazon went more smoothly than they did with Apple in part because Amazon from the get-go agreed to share more customer data, including customers' names and addresses, according to executives familiar with the talks.

Apple had been criticized for controlling subscriber lists for magazines on the iPad, although that tension has eased now that subscribers can agree to share their information with the publication and Apple has been more open with giving some data, publishers say.

With the Kindle Fire priced at $199, Amazon is entering the market at an "attractive price," which means there will be tablets in more hands, said Bob Sauerberg, president of Conde Nast, which will have will have 17 brands available on the Fire.

"The challenge is that we have a big segment of the mass market in middle America, who are not early adopters and are price sensitive," said Liz Schimel, chief digital officer at Meredith. "This device breaks that barrier."

Tablets are seen as a critical component of the publishing industry's efforts to find ways to charge consumers for digital access, something it has struggled to do online.

Moreover, publishers are eager to grab some of the ad dollars shifting to digital marketing. Advertisers are increasingly spending more of their advertising budget on digital initiatives at the expense of print.

Amazon began negotiating with publishers about three months ago and hammered out deals that call for publishers to keep roughly 70% of all Amazon sales, according to people familiar with the matter.

Amazon declined to comment.

While those deal terms are similar to Apple's pact with publishers, these people say, magazine executives believe that the competition could eventually lead to more favorable terms.

Deal-making with Amazon "was a very smooth process," says John Loughlin, executive vice president, general manager of Hearst Magazines. "I think that Amazon had the benefit of listening to the broader market discussion during the last 18 months and came to publishers with a compelling story."

Still, the talks with Amazon weren't without some tension. Some executives are still a little worried about pricing of their magazines on the device, since Amazon will control pricing of subscriptions, according to executives familiar with the matter.

Time Warner Inc. 's Time Inc, the country's largest magazine company and owner of titles such as People and Sports Illustrated, hasn't completed its deal with Amazon, according to a person familiar with the matter.

While an agreement is expected to be reached by the end of the year, the person says, one of the sticking points in the deal is Amazon's control of the pricing of subscriptions.

One publisher said that while pricing is a worry, Amazon has been very fair and has indicated that publishers will have more say on pricing in time. Conde Nast says its subscription prices will be consistent across all tablet platforms.

Publishers applauded the Kindle Fire Newsstand, where readers can find and buy favorite titles, and hope Amazon's marketing prowess will help them sell more magazines. In one early initiative, Amazon said Kindle Fire customers will receive a free trial of Conde Nast magazines.

Despite the publishing industry's desire to embrace tablets, many of the new devices powered by Google 's Inc.'s Android software haven't caught on. Products such as Motorola Mobility Holding Inc.'s Xoom, Research In Motion 's Playbook, Samsung Electronic Co. Ltd's Galaxy Tab and Hewlett-Packard Co. 's TouchPad have failed to attract the masses.

With each new tablet comes a long and expensive process for publishers, which have to retrofit their content for each device. It's a challenge they face again with Amazon, since their content has to be retrofitted for a seven-inch screen.

Amazon's relationship with magazine publishers seems cozier out the gate, however. During Amazon's presentation, many magazine titles including Vanity Fair, Wired, Popular Mechanics and Town & Country, were featured. A commercial for the new tablet, shown at the event, also showed several magazine titles.

Magazines weren't a big part of Apple's event when the iPad was unveiled in 2010.

Write to Suzanne Vranica at suzanne.vranica@wsj.com

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