Posted at 09:44 AM ET, 04/12/2011

Cheaper Kindle saves $25, comes with ads

Amazon is offering the new Kindle for $114, with ads, May 3. (Chris Ratcliffe - BLOOMBERG) Amazon announced Monday that it’s adding a cheaper Kindle to its lineup, for $114. That’s $25 cheaper than Amazon’s current low-price model.

The catch? It’s ad-supported.

The new e-reader will feature ads at the bottom of the home screen and sponsored screen savers, though not while the customer is reading. Amazon also plans to advertise special offers via the Kindle, such as $10 for a $20 Amazon gift card.

The company is also launching something called AdMash, which allows users to vote on their favorite screen saver ads.

The new model will go on sale on May 3 at Target, Best Buy and Amazon.com.

It makes sense that Amazon would cut the price of its Kindle to tap into the ad market, but the savings don’t seem like much. Most customers who really want a Kindle wouldn’t be put off by losing $25, if it meant they could avoid seeing advertisements. The discount barely makes up for the price of a couple of bestsellers.