> why is putting ads on our reading devices worth $50 to advertisers? We can be proud and say that such ads have no effect on our behavior, but statistics say otherwise.
This does not actually have to be true. Think about Windows Home vs Professional; it actually takes Microsoft much more work to offer both rather than offer just Professional. The experience is strictly worse for the user, and Microsoft makes less per sale on Home.
So why do they even have a Home edition? It's because of market segmentation and pricing strategies. If it costs $70 marginal cost to manufacture a kindle, you will make some amount of money from each person that pays $79.
What if $9 * # of potential purchases at that price point is less than the flat R&D costs? Then you can't make money at that price point. Now imagine all the kindles cost $100; a lot less people might buy it at $100 than would at $79. It's actually often in the best interest of the company if they could get half the people to pay $100, and anyone who would refuse to pay that to still buy it at $79.
The only way to make that happen is to have to make some sort of differentiating factor that is minor enough so price sensitive people will still buy it, but that people who have the extra money will still pay the higher price. Windows professional is the same as basic for the vast majority of people, yet people still buy professional because to the people who are less price sensitive, it's worth it to not even hypothetically be missing features.
In that way, they could easily be making $0 from the ads, or even negative income by showing the ads and still have it be a good idea to make a version with ads that costs less than the version without ads. It sometimes makes sense for a company to spend more money making a deliberately inferior version.