SAN FRANCISCO (KCBS) – Amazon has launched a digital library for Kindle users in which customers can check out free e-books, but with a catch.

CNET Editor-at-Large Brian Cooley said the library is only for Amazon Prime members.

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“This is becoming a key differentiator between Amazon and Apple. The Prime membership used to get you free shipping in two day form for most of your purchases. Then they added free streaming of a bunch of movies. Now, they’re adding free books you can use in the Kindle format,” said Cooley. “This is their way of building a “home-brew” iTunes and it’s their way of bolstering the Kindle Fire.”

CNET Editor-at-Large Brian Cooley:

The Kindle Owners’ Lending Library will allow Prime members to check out up to one e-book a month for free with no due date.

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Cooley said this is just the beginning of the competition for tablet users, as Barnes and Noble is also set to launch a new version of the Nook.

But he cautions that the devices are all very different and competing for separate audiences than the iPad from Apple.

You can hear his Tech Watch report Tuesdays and Thursdays at 1:50 P.M. on KCBS All News 740AM and 106.9FM.

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