Last week, Hearst Newspapers made two big announcements: That Hearst intends to begin charging for some of its online news, and that it plans to soon launch its own e-reader device to rival Amazon’s Kindle 2.
Gawker cynically decries Hearst’s plan as The Last Stand of a Doomed Industry, but I think this is a step in the right direction — although I would encourage Hearst to think carefully whether it really wants to be in the device business.
We’ve seen how well grasping too tightly to the “paper” part of “newspaper” has worked out from a business perspective. I don’t think getting into the “e-reader” business is a better plan. When news companies get bogged down with manufacturing and owning the delivery vehicles for their content, they lose flexibility and start making backwards-focused business decisions.
It might make more sense for Hearst or other news publishers to partner with the maker of a popular, user-friendly e-reader to create a special-edition product for news. Here’s why…
CNET reports that currently price is stalling the growth of the e-reader market. (I know — I just paid $359 for my Kindle 2.) Yet, this technology is finally getting to the point that these devices are increasingly appealing and user-friendly. Look at how the iPod revolutionized how people interact with music — and the music business. Look at how the iTunes store is faring compared to, say Tower Records.
That’s a compelling precedent: The right kind of tool can change the media game, quickly.
Subsidizing the cost of e-readers could help this market grow quickly in a way that supports more modern and adaptable business models for news. Silicon Alley Insider recently offered their reasoning — and math — about why Printing the NYT costs twice as much as sending every subscriber a free Kindle. They note: “As a technology for delivering the news, newsprint isn’t just expensive and inefficient; it’s laughably so.”
In the current sour economy — plus the pitiable financial circumstances into which many (perhaps most) mainstream news organizations have cornered themselves thanks to backwards, insular thinking — there is no excuse for such laughable inefficiency.
After all, the core business of a news organization is to create content and deliver advertising. Technology and manufacturing has never been their strength. Delivery vehicles (from regular paper to the internet to e-readers and beyond) are fluid and will continue to evolve. This means that, in order to focus on their core business, it probably makes more sense for news organizations to create partnerships for delivery vehicles — so they can adapt quickly to changing technologies, needs, and opportunities.
WHAT HEARST IS DOING
Fortune reported (via CNN Money): “Given the evolving state of the technology, the Hearst reader is likely to debut in black and white and later transition to high-resolution color with the option for video as those displays, now in testing phases, get commercialized. Downloading content from participating newspapers and magazines will occur wirelessly. For durability, the device is likely to have a flexible core, perhaps even foldable, rather than the brittle glass substrates used in readers on the market today.
“What Hearst and its partners plan to do is sell the e-readers to publishers and to take a cut of the revenue derived from selling magazines and newspapers on these devices. The company will, however, leave it to the publishers to develop their own branding and payment models. ‘That’s something you will never see Amazon do,’ someone familiar with the Hearst project said. ‘They aren’t going to give up control of the devices.’”
CNET noted: “It’s unclear if the device Hearst has been working on has anything to do with the eReader that Plastic Logic unveiled recently, but its principle seems the same. It’s a handheld device used to read digital content, much like the Kindle. The main difference would be that Hearst’s e-reader has a much larger size to accommodate the format of newspapers and magazines.”
I think Hearst’s plan is bold, but I’m skeptical of it for the same reason cited by Priya Ganapati in Wired.com “Hearst doesn’t have the tech credibility or relationships to make this a successful venture.”
Ganapati also wrote: “Hearst Interactive director Kenneth Bronfin sits on the board of directors for E Ink, the company whose screens power both the Kindle and Sony Reader. That means an E Ink screen is a near certainty for the Hearst e-reader. However, if Hearst plans to launch an e-reader this year it is likely the screen will be black and white, rather than color.
Ganapati’s story quoted Forrester analyst James McQuivey, who thinks a device that debuts with a black and white screen would be a deal killer for many of the company’s subscribers. “Periodicals are just not effective in black and white. People who buy Esquire or Harper’s Bazaar buy them because they want to see the magazine in color,” he told Wired.com.
WHERE PRINT MIGHT STILL MAKE SENSE
OK, I’m ready for the print-fetishist chorus: “But we love our newspapers! We adore the rustle and feel of the paper, the ink on our fingers, the pretty glossy big magazine photographs… No! No! We’ll never give up print!”
Fine. You can have your print — via smarter technology and business models, like small and nimble print on demand operations, or Dan Pacheco’s Printcasting project. Really. Print retains significant appeal and utility in some market segments, so it can and should continue there.
But as the core daily mass-market product for a news organization, print is a financial black hole.
Tradition is lovely, but unless you’re in the antique, museum, or theme park business, nostalgia makes for a poor business model.
NOTE: This is an expanded and much more opinionated version of an article I posted yesterday on Poynter’s E-Media Tidbits.