Does anyone really think a big-screen Kindle can save newspapers?

May 4, 2009 | Anthony Ha | Comments | |

Here comes another possible savior for the desperate newspaper industry. Amazon is set to announce a new version of its popular Kindle eBook reader with a larger screen customized for reading newspapers, magazines, and textbooks on Wednesday, according to The New York Times.

The argument about why these devices could be a boon for newspapers is a familiar one: They could provide an environment for richer, more lucrative advertising, as well as a way for publications to bring back the subscription model, all for much lower costs than printing physical copies. (Newspapers make most of their money from ads, not subscriptions, but they’re emphasizing the subscription model because they haven’t figured out how to make as much money from web ads. Plus, publishing articles for free hurts old media folks’ self-esteem.) The argument applies not just to Amazon’s new device, but also to competing offerings from startups like Plastic Logic (pictured above) and media companies like Hearst.

So will it work? Well, the current version of the Kindle already offers subscriptions to various newspapers and magazines, and both Amazon and publishers tell The Times they’re satisfied with the results — but they aren’t sharing any real numbers, and there could be a huge gap between satisfaction with early results and a sustainable, long-term business.

I’ve gone on at-length before about why the eBook approach sounds silly to me, and I don’t want to repeat all of my objections here. I’ve also come to accept that when it comes to many of my preferences — being perfectly happy doing most of my reading on an iPhone; having no reservations about paying for a newspaper website subscription — may not be representative of a larger audience.

Still, hopes for turning subscriptions on eBook readers into a long-term business model seem pretty flawed. For one thing, so much of the rhetoric revolves around presenting articles in a manner that’s similar to traditional newspapers. I can’t imagine that many readers seriously care about this, especially readers under 40 or so, any more than most music fans care that MP3 sound quality doesn’t match vinyl. And the fact that newspapers are fighting to preserve their old business models, rather than trying to think of new ones, is troubling — that approach hasn’t exactly worked out well for the other media industries, such as music.

Also, if newspapers are convinced that no one wants to read their print editions because there are free editions available online, as reported in The Times, I’m not sure how eBook subscriptions won’t face the same problem — especially since portable electronic devices such as the Kindle will have to add web connectivity if they want to sell, so that means they’ll connect to free newspaper websites anyway (plus Google Reader). The only way this approach might work is if newspapers take down their free websites (good luck with that) or come up with ways to present a much richer, deeper experience on these devices than is available online.

There’s no official confirmation about the device yet from Amazon, but MediaMemo’s Peter Kafka notes that Amazon’s last Kindle event — the unveiling of the Kindle 2.0 at the Morgan Library — was held at a historically significant location, so the spot chosen for the upcoming press conference is telling: Pace University, the 19th-century home of The New York Times. Meanwhile, ZDNet’s Larry Dignan argues that from a business perspective, Amazon may be more interested in the textbook business than the newspaper one.

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About the Author, Anthony Ha

Anthony is VentureBeat's assistant editor, as well as its reporter on enterprise technology, cloud computing, and tech policy. Before joining VentureBeat in 2008, Anthony worked at the Hollister Free Lance, where he won awards from the California Newspaper Publishers Association for breaking news coverage and writing. He attended Stanford University and now lives in San Francisco. Reach him at anthony@venturebeat.com. You can also follow Anthony on Twitter.

  • I don't know about Kindle specifically, but e-ink technology will save and transform the print media AND how we use the Internet.

    - Joel
  • Not sure if self-esteem really plays into this equation or not, but another compelling reason to charge admission for their content is that advertisers ten to pay higher CPM's for paid circulation.
  • Good point. (Obviously I was kidding about the self-esteem thing. Sort of.)
  • Miramon
    No, this product won't help the newspaper industry. Elimination of free high quality news feeds combined with a much superior cheaper product might help (e.g. readers so cheap they are actually disposable), but neither is happening any time soon.
  • Robert
    No again, this product will not help the newspaper industry. Cheap disposable readers? Hey, I have an idea, paper, sold at newstands. Just kidding really. There are countless reasons newspapers are dying but electronic readers are just another toy to have to carry around and if you have been living in a cave the average person is kind of low on cash these days and will be for some time. The money once used to purchase unneeded toys now goes for food and transportation.
  • The answer is clear and has been provided by 7-11.

    You don't have a brain freezing slushy delivered to your doorstep each morning.

    Newspapers need to become BigGulps and you pay by the drink -- fill up or use a disposable plastic/paper approach depending on your needs. On demand printing services have become extremely cheap. Kinkos could be the delivery agent for the same paper you have today.

    The printing presses need to be stopped for good just the same way we aren't cranking on a handle.

    Digital distribution and a business model to map to it is what is needed. It's isn't a horse race. Paper will always have incredible density for the reader that does not want to "learn more by clicking here".

    Count the number of printers you have in your paperless office.

    Okay... rant over :)
  • adam_hartung
    Will Kindle be a savior for newspapers? Maybe so. Kindle might be the product to finally get newspapers to realize they have to go digital. Read more at http://www.ThePhoenixPrinciple.com
  • dale_harrison
    This is looks like a desperate attempt to re-tweak the old media business models hoping to make them function again.

    The answer will not be found trying to salvage the old business models through clever gadgets, new forms of paper, new laws, lawsuits or pay-walls.

    A lesson worth remembering is that at the turn of the 20th century, people had a transportation problem...and the solution turned out not to be a faster horse...but a Ford. And one should note that the Ford didn't arise out of the "horse industry's" R&D efforts, nor the "Horse Industry Stabilization Act" nor the horse industry's attempts to experiment with new Business Models. I think the future of the media business will look as different as Ford and GM's operations look from horse traders and blacksmiths.


    -----------------------

    What's historically given value to editorial content is the relative scarcity of distribution versus readers (not the Kindle kind). Newspapers have historically had natural localized economic monopolies coupled with a finite number of column inches with which to distribute news and ads. That natural monopoly meant that each paper had total control over the amount of content they allowed into their local marketplace.

    Monopoly constraint of distribution and supply will always lead to prices (and profits) significantly above open market rates. These newspapers then built costly organizations commensurate with this stream of monopoly profits (think AT&T in the 1970's).

    The dynamics of content replication and distribution on the Internet destroys this artificial constraint of distribution and re-aligns ad (and subscription) prices back down to competitive open market rates. The often heard complaint of Internet ad revenue being "too low" is inverted...the real issue is that traditional ad rates have been artificially boosted for enough decades for participants to assume this represents the long-term norm.

    Unfortunately the Internet came along and changed all the rules!

    Any individual reader now has access to what is essentially an infinite amount of content on any given topic or story. All those silos of isolated editorial content have been dumped into the giant Internet bucket. Once there, any given piece of content can be infinitely replicated and re-distributed to thousands of sites at zero marginal costs. This breaks the back of old media's monopoly control of distribution and supply.


    The core problem for the newspapers is that in a world of infinite supply, the ability to monetize the value in any piece of editorial content, will be driven to zero...infinite supply pushes price levels to zero

    This isn't to imply that editorial content doesn't have real value to most of its readers...it just means that no one source can marshal enough market power to effectively monetize the value of their content in the face of infinite supply and massively fragmented distribution.

    There absolutely are answers to the question of how to create value with online news and to be able to monetize it...but I doubt that new kinds of paper will be any more successful than faster horses...

    dale.harrison@inforda.com