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Updates: Kindle, Star Tribune profitability

A couple of Wednesday updates to Tuesday items:

The Star Tribune’s relative profitability. After yesterday’s flurry of press coverage, the Inland Press Association “reworked” its report on how much big newspapers make.

Instead of averaging 12 percent operating profit in 2008, that figure turns out to be the average big-paper profitability over a five-year period (2004-08). Given that the Strib made 12.6 percent last year, it almost certainly did better than average — even as it steamed toward bankruptcy — since yearly profit margins have undoubtedly fallen from 2004 to 2008.

Inland won’t release specific ’08 data unless you buy their report. But again, the lesson here is that profitable businesses shouldn’t take on the equivalent of a crushing mortgage.

The Strib’s Kindle move. After posting yesterday, I came across this paidContent story where the Dallas Morning News’ publisher revealed Amazon takes 70 percent of subscription fees his paper generates.

I don’t know what percentage the Strib gave up, but if it’s the same 70 percent, they’d reap $36 a year from a $10-a-month subscriber.

That doesn’t sound like a lot, but if all 300,000 weekday subscribers went the Kindle route, the Strib would gross about $11 million a year, almost all pure profit. That’s probably more than the Strib makes from the circ side now.

Of course, it’s not that simple.

I’m told Kindle editions currently have no ads, so if the Strib were crazy enough to go this route, they’d lose the bulk of their current revenue; game over. (Of course, ads can always be added later on — but what kind of a cut will Amazon demand then?)

On a related note, Kindle subscriptions are not yet counted by the Audit Bureau of Circulations — meaning that a paper that moves strong into the technology would see its verified circulation go down even if just as many folks were paying to read. That, too, would also hurt the advertising side.

Aside from the shocking revenue split, DMN publisher/CEO James Moroney said Amazon wanted the right to republish the paper’s intellectual property on any portable device. So good luck with that proprietary iPhone app or mobile site.

I can only hope the Strib avoided swimming with that particular species of shark.

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