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Tuesday, May 04, 2010, 04:00 pm PT (07:00 pm ET)

Apple's iPad beating Kindle for news, but hurt by Amazon contracts

Newspaper executives are reporting early success for iPad subscriptions, although their previous contracts related to Amazon's Kindle are affecting the price and content they are able to offer, reportedly leaving Steve Jobs angry.

News Corp's Rupert Murdoch reported in an earnings call that the company's Wall Street Journal app already has more than 64,000 active iPad users. The iPad app, like the newspaper's website, is free to access, while some content requires a new $18 subscription or an existing subscription to the print edition.

Amazon's Kindle has also been working to sign up digital subscribers to major newspapers, but insists on taking a cut of the subscription revenue, which Apple does not do. "Unlike the Kindle," Murdoch said, "we keep 100 percent of the revenue from the iPad."

Murdoch also announced, “We’re in final discussions with a number of publishers, device makers and technology companies. We will soon develop an innovative subscription model to deliver digital content to consumers wherever and whenever they want it.” He later admitted that the new plan, which will be announced in about a month, will compete with Apple's iTunes store.

Steve Jobs not happy with New York Times iPad app

Meanwhile, a report by Gawker Media's Valleywag blog says Apple's chief executive is not impressed with the limited content available in the New York Times iPad app.

The app, named "NYT Editors' Choice," is also being panned in reviews by users because it only offers a limited subset of the Times content, excluding even free content available on the paper's website.

Valleywag reported, "we hear it's related to the newspaper's existing agreement for the Amazon Kindle, which apparently precludes the paper from releasing a cheaper, comparable e-edition on a competing tablet. Hence the non-comparable Editors' Choice app. The Times isn't alone on this; a number of other newspaper and book publishers are grappling with the same Kindle licensing issue."

Within the Times, executives are said to be grappling with how to price digital content, with people on the print side pushing for $20 to $30 digital subscriptions to avoid cannibalization of existing print revenues. On the digital side, there's an effort to keep the iPad subscription closer to $10.

That presents a problem related to the existing Kindle contract, which was hiked from $15 to $20 as the iPad arrived. Charging more than the current price of the Amazon Kindle could inhibit the new potential for real digital revenues, while attempts to undercut Amazon's pricing model would require further limiting of the iPad app's content as specified in Amazon's contracts.

The fact that the Times delivered an anemic version of its iPad app is said to have prompted Jobs to personally report his displeasure with the paper's senior executives. Apple has not profiled the "NYT Editor's Choice" app within its "noteworthy" or "favorite" app sections, nor added it to any featured listings of apps nor highlighted it as an app of the week.

Valleywag said Apple even omitted the app from iTunes' "News" section for weeks after the iPad launch until recently adding it without any special attention being accorded to it.

The app was originally hailed by Jobs as one of the first iPad apps during the device's original unveiling, but after it appeared lacking even some of the free content available on the paper's website, Apple has been giving it the cold shoulder, hoping the Times will act to bring it up to speed with the content in the simple Kindle version, while still offering news subscriptions at an attractive price to users.