Cheaper Kindle Will Have Ads

Amazon says it will release a cheaper version of its Kindle electronic reader. There's just one catch: it will have ads.

Amazon said the new device, called Kindle with Special Offers, will cost $114 -- $25 less than the cheapest Kindle currently available.

Initial advertisers include Buick, Visa and the Olay line of cosmetics. Ads won't pop up while you're reading. They'll be displayed only on the Kindle's home page and on the screen saver.

"Our goal is to display screensavers that customers want to see," Kindle CEO Jeff Bezos said. Customers can download an app called AdMash, which will display two prospective screensavers side-by-side, allowing the customer to pick the most attractive one.

"The ones preferred most by customers qualify to become sponsored screensavers," Bezos said.

The Kindle with Special Offers can be pre-ordered today, the company said.

Although Amazon is the first to offer an ebook reader with ads, it likely won't be the last. Barnes & Noble, which makes the Nook, and Apple, progenitor of the iPad, are both thought to be looking at advertising options.