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Barnes & Noble Beats Amazon Down to Zero

Rick Aristotle Munarriz
January 9, 2012

"The days of the subsidized Kindle -- perhaps even down to zero -- may be on the way," I wrote two years ago. "If The New York Times were to offer two years of prepaid service with a free Kindle included, wouldn't it take e-readers to a whole new level?"

Well, I was early and got the wrong e-reader, but we've finally hit the age of publisher-subsidized e-readers.

Barnes & Noble (NYSE: BKS  ) is offering its $99 Nook Simple Touch for free to bibliophiles willing to pay $19.99 a month for a year's subscription to New York Times' (NYSE: NYT  ) namesake digital paper.

I know what you're thinking. Paying $240 for a year of a digital newspaper sounds like an expensive way to get a $99 e-reader for free.

It can even get more costly.

"After the initial year, your New York Times subscription will automatically continue at the then current price, which you can cancel at anytime, without penalty."

Yes, if you forget to cancel after those first 12 months, the digital reads and monthly bills will keep coming. How many deal seekers will forget their Nook anniversaries a year from now? However, what about the folks that will actually want to keep paying? New York Times is going to hook a lot of digital readers who have told their paperboys to get off their lawn.

Subsidization station
There are no official details on who is picking up the tab here. New York Times would normally be expected to pick up most -- if not all -- of the tab for the Nook, but the bookseller is also rightfully motivated to give the newspaper giant some kind of break here. Just last week Barnes & Noble blamed sluggish sales of its entry-level e-reader as a reason for hosing down its guidance.

In other words, it's a convenient deal. New York Times wants to pump its online circulation, and Barnes & Noble has e-readers collecting dust. The offer is also available as a $100 discount for those seeking to buy the $199 Nook Color.

Buyers angling for the richer features of the $249 Nook Tablet are also in luck if they're into paparazzi and celebrity news. A deal with Time Warner's (NYSE: TWX  ) People magazine slashes $50 off that price -- essentially matching's (Nasdaq: AMZN  ) Kindle Fire -- for buyers willing to pay $9.99 a month for a full year of that magazine's digital edition.

"The only way to make a dent in Amazon -- or Sony for that matter -- is to create ta