A new version of the Kindle, Amazon’s “wireless reading device,” will be available for sale this summer, but you can reserve one starting today. It’s called the Kindle DX, and it’s bigger — size-wise and storage space-wise — than the original Kindle.

Kindle DX has a viewing screen the same size as a standard piece of paper. It targets readers who want to see newspapers and magazines on their screens as well as life-size versions of other documents.

Pretty pricey

Though you won’t have a Kindle DX in your hands for a couple of months, if you reserve one you have to pay for it now. So unless you have $489 at your disposal at the moment, you might need a cash advance to pay for it. Of course, my advice is to start saving your money and get one when you can afford it. I doubt Amazon.com will run out before then.

So what does Kindle DX mean for the newspaper industry? As is always the case with predicting the future, it’s tough to say.

Newspapers on shaky ground

The homepage at Amazon.com currently displays a photo of the Kindle DX with a copy of the New York Times displayed on the screen. This further proves the theory, mostly present among print journalists, that Kindle DX aims to help keep newspapers alive.

The newspaper industry, I think it’s safe to say, is teetering on the edge of financial ruin. Already several newspapers across the country have gone out of business, and the ones that survived have completed massive layoffs.

Anticipating the wireless reader

Taking college journalism classes years ago, I remember a “special guest speaker” talking about a magical device that would someday change the way people read newspapers. That special guest went on to describe what is now the Kindle.

So far, special guest is right. This wireless reading device, which has a screen that looks a lot like real paper, exists. But is special guest right about his prediction that this will bring in more business for newspapers?

Bye bye subscription sales

According to Amazon, “People who swore they would never read books on computers are reading books on Kindle in numbers far greater than we ever expected.” So perhaps people who currently read hard-copy newspapers will switch to Kindle to save trees. And cancel their subscriptions.

People might be more willing to read a Kindle DX screen, but that does not mean they will be more willing to pay for an online subscription. I am afraid the day when it was possible to convince people that paying for an online newspaper subscription is worth it has passed. There is already way too much free news online.

If Kindle DX does draw more newspaper readers, the papers could potentially pull in more advertising revenue. Newspapers should focus on this as they rewrite their business plans.

Affiliate marketing is about paying for performance. In short, it is a type of marketing in which one merchant induces others to place banners and buttons on their Web sites in return for a commission on purchases made by their customers.

Amazon.com

Amazon.com is the pioneer of affiliate marketing. It allows other Web sites to publish information of their own choices of books. When people click through to Amazon and buy these books, the Web site in question gets a commission. Affiliate marketing can open up new channels to market for the affiliate sponsor, and be a source of extra revenue for the affiliate Web site. When investigating affiliate marketing, consider:

• affiliate marketing is more suited to products than services;
• you’ll need to work hard with your affiliates if you want it all to work;
• a well-designed compensation package will be critical to success.

Is your business suited to affiliate marketing?

• There needs to be a substantial number of Web sites that are attracting your target market. These Web sites need to show a willingness to join an affiliate program. You might be selling medical supplies but that doesn’t mean that hospital Web sites will become affiliates.
• Affiliate marketing is better suited to products than to services. It is much harder to track whether another Web site sent you visitors who, after prolonged negotiation, decide to pay you for your services.
• Is the market already saturated with affiliate programs? It would be difficult to set up an affiliate program today that offered commission on book sales.

Have a strong value proposition

As with all good ideas, there are a huge number of merchants offering affiliate programs. How is your program going to attract new members? The level of compensation/commission you will offer will be important. However, on its own it will rarely be enough. You will need to work hard with your members by organizing regular competitions, special offers, and other incentives that make for an attractive value proposition both for your affiliate members and the end customer.

Keep in touch regularly with your affiliates

Keeping in regular communication with your affiliates is essential in order to build their enthusiasm and trust. You should plan for an e-mail affiliate newsletter. Your affiliate members are your partners, and unless you treat them as such by working closely with them, they will drift away.

Agree on a compensation approach

Critical to the success of your program will be how the affiliate is compensated. There are various compensation approaches:

• you might pay commission only; for smaller-price items such as books and music, commission is a popular option;
• for more expensive items such as cars, compensation may be based on paying for qualified leads;
• if brand building is also an important objective, then you also may offer compensation every time a visitor clicks through from an affiliate.

When making payments you will need to decide how often you do it. A problem you may face with partners is that some of them will have achieved very little revenue for a particular period, and it will not be cost-effective to send them a check. So you need to inform partners that there is a certain threshold before payment is made, and that commission earned in one period, if below the threshold, will be added to the commission for the next period. You will need an affiliate agreement that will cover these and other relevant issues.

Innovate, analyze, test and adapt

There is a need to innovate constantly so as to find the best approach. Affiliate software delivers substantial data and this needs to be carefully analyzed. New initiatives need to be properly tested and you need to be willing to keep adapting and refining your offer until you find something that works for both you and your affiliates.

Decide whether to outsource or buy software

Organizations can have the choice of outsourcing much of the running of the affiliate program or purchasing software and designing it in-house. It is better to outsource, as it allows you to focus on what you do best selling and marketing your products and services.

That figure is based on Standard & Poor’s 500 Retailing Index. Interestingly, the index does not include Wal-Mart.

First, the good news

Amazon.com reported its best-ever holiday season this year. Amazon is the world’s largest Internet retailer. Its stock rose nearly 5 percent on Nasdaq. Overall sales among online retailers dropped along with holiday sales nationwide, but Amazon reported selling more than 6.3 million items on its peak day, Dec. 15.

Market analysts attribute Amazon’s success to its variety of products and user-friendly format. Amazon has built a reputation as a one-stop online shop, offering everything from bubble bath to power tools. Plus, for cash-conscious customers, it sells use items at deep discounts.

Online payday loans are another example of consumers using the Internet instead of going to a store.

Now for the bad news

For most other retailers, things were more bleak. Stores such as Macy’s and Ann Taylor offered discounts of up to 70 percent and still saw decreases in sales. Electronics stores such as Circuit City, which usually see higher sales than anyone during the holidays, have sought bankruptcy protection this year.

Unemployment is the highest it’s been in 15 years. As consumers face tightening credit and a recession, spending is being reduced to necessities rather than luxuries.

What took the biggest hit?

Women’s clothing sales from Nov. 1 to Dec. 24 dropped 24 percent compared to last year. Electronics and appliances saw even deeper cuts, falling 27 percent. Luxury items such as jewelry dropped 35 percent, a clear sign that average American consumers are saving their extra cash, if they have any, for necessities.

Overall online sales saw a 2.3 percent decrease, a very small drop compared to the above mentioned retail sales. However, since the inception of online shopping, Internet retail companies have seen year-over-year increases of 15 to 20 percent.

Bringing it home

Online spending at U.S. retailers decreased 1 percent. In 2007, the  nation’s online retail sales rose 19 percent. The U.S. economy shrank .5 percent between July and the first of October, the biggest drop since 2001. Consumer spending during that period was lower than it has been for three decades. Analysts expect more economic declines to end the year.

Now what?

Today, in what many are calling “Black Friday: The Sequel,” many stores are offering discounts of up to 90 percent to try to make up for the dismal holiday sales. Stores including Macy’s, JCPenney’s and Fry’s Electronics opened early today and offered the biggest discounts of the year.

It remains to be seen whether this strategy will help retailers. More Americans are losing their jobs, and more still don’t have credit to rely on any more. It looks like even with the option of online payday loans it’ll be a while before consumers have extra cash to spend on non-essentials.