When I read about the proposed 70/30 split, I thought that it was quite generous of Amazon! Let's presume that the cost of printing and delivery is equal to current subscription revenue. Amazon just gave the newspapers a huge increase in profitability (presuming everyone switched to a Kindle tomorrow).
My sister-in-law is the business manager for a magazine with 250K subscribers. Their printing/distro costs exceed the average subscription price, so they'd be overjoyed if they could strike such a deal with Amazon and get their subscribers to convert over (unlikely).
But you're not taking into account advertising revenue. I'm not sure a Kindle-based newspaper could attract as much ad revenue as a print newspaper, because the medium just isn't as attractive to advertisers; ads on ebooks or the Web feel much more intrusive to readers than ads in newspapers or magazines.
I'm not sure either. Does Kindle allow for customized advertising? One problem this magazine has is that 40% of their subscriptions are outside of North America. It's a good thing overall, but they could increase ad revenue by printing two books -- one for NA and the other for "world" (mostly Western Europe in practice) and selling space in just one or the other.
My sister-in-law is the business manager for a magazine with 250K subscribers. Their printing/distro costs exceed the average subscription price, so they'd be overjoyed if they could strike such a deal with Amazon and get their subscribers to convert over (unlikely).