TUAW on the release of an ad-supported Kindle from Amazon:
“Still, the $114 price point seems a little silly; $99 would be a much better psychological buy-in point.”
I think that $25 is a fair reflection of the value of the ads. Remember, these ads are home-screen only, and not in the books. Pundits constantly over-estimate the amount of revenue that ads can bring in, and the expectation that Amazon could price a Kindle at $99 based on these kinds of ads is wrong.
No one in the world knows more than Amazon about pricing for a profit.