The ads would be on the welcome screen, according to “an executive at an agency that Amazon has pitched.” The ad packages reportedly start at a not paltry $600,000.
The AdAge article suggests that ads might be added on to existing customers’ Kindle Fires, but I highly doubt that. I’m guessing Amazon would offer a separate ad-supported Kindle Fire.
Currently Amazon sells ad-supported Kindles and Kindle Touches. The advertisements appear as screensavers and also as a horizontal banner at the bottom of the home page. I used to have an ad-supported Kindle Touch and found the ads much less annoying than I thought they’d be. I think an add-supported Fire would be great because it would lower the already low price of a great product.