Scribd, after dabbling for a long time in the pdf sharing arena, has changed for a model just like this some time ago. One of the founders has even come here at HN recently to talk about it (I can't find the post right now).

I wonder how will they react to this announcement. If they try to compete directly, not only will it be an uphill battle, but Amazon has a hell of firepower with the Kindle and Fire ecosystems.