Hearst Sails this Skiff Into the E-future

By: Jennifer Saba

For the past several months, speculation about the Hearst-backed FirstPaper e-reader took on a life of its own. While Amazon, Sony, QUE (nee Plastic Logic) and others were busy unveiling digital readers with the hopes of enticing holiday shoppers, Hearst sat quietly ? until Dec. 4, when the company that publishes the San Francisco Chronicle, the Houston Chronicle and several magazines announced the arrival of Skiff.

The company, which operates in true start-up style in spartan offices not far from Hearst’s glorious headquarters in midtown Manhattan, is about more than just digital readers.

Skiff’s full ambition is to render newspaper and magazine content (and books as well) and optimize it for e-readers, netbooks and smartphones through its e-reading service platform, which will also support advertising. Gilbert Fuchsberg, Skiff’s president, sums up the challenge and solution: “Publishers are looking to publish once and distribute broadly. That’s the problem we’re trying to solve.”

His company’s service platform is device-agnostic, because there are too many competitors fighting for dominance over a very small slice of consumers. Consider that Forrester Research estimated in a May research report that by 2012, only 12 million people will own e-reader devices.

Then take into account that many more people already access newspaper content through smartphones. The New York Times, for example, said in December during an investor conference in New York that two million people have downloaded its iPhone app. Compare that with the Times’ latest March 2009 Publisher’s Statement, in which its average daily circ for e-editions ? which includes Kindle subscriptions, the Times Reader and Newsstand.com ? was only 43,884.

A snappy netbook from Apple, should it ever surface, could upend the entire market. Skiff, smartly, doesn’t want to wed itself to one device.

The service platform promises to deliver high-resolution content along with interactive advertising capabilities. “It’s the impact of print with the magic and depth of an interactive ad,” says Fuchsberg.

He explains that advertising revenue is just as important as subscription revenue for the model to work. “If publishers are bringing their content and advertising they deserve the majority of the revenue,” he adds, declining to be specific on any split.

Skiff is also attempting to standardize advertising formats, providing marketers a cohesive way to reach consumers across several devices and publications. “The goal is to make this simpler across screen sizes and resolutions,” says Fuchsberg.

The company has partnered with Sprint to provide 3G connectivity, and will sell the e-readers in more than 1,000 Sprint retail locations.

Additionally, Skiff is working on a “system on a chip” with semiconductor company Marvell to encourage more digital device makers to come to market, making it easier for Skiff to broadly distribute content. “We’re not just building a service and praying that someone comes along,” says Chief Marketing Officer Kiliaen Van Rensselaer.

“We want to be flexible and nimble,” he adds. “We’re not betting on a piece of hardware.”

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