Will E-readers Help Save the Newspaper Industry?

By: Mike Shields/Mediaweek E-readers will save the publishing industry. E-readers will become the mobile equivalent to the eight track tape.

The answer, of course, likely lies somewhere in between these two extremes. But if you?re a newspaper publisher facing a struggling ? some would say dying ? industry, it?s hard not to get caught up in wishful thinking. And if you?re a gadget fetishist, it?s hard not to work yourself into a lather. At least two major e-readers launched in the past month (one just last week), and secret plans for e-readers from Microsoft and Apple have been leaking on blogs left and right. By early next year, we may be looking at a dozen entries in a category that was once a geeky cul de sac.

So are we all going to ditch paper and read everything on some sort of digital device?

Probably not in 2010, but there?s reason to believe that the audience for e-readers will grow significantly in coming years. Predicting an iPhone-like breakout is perilous (and probably as likely as predicting the iPhone?s huge success five years ago). Thus, few inside the publishing world realistically see e-readers as a lifeline; most view it as a promising alternative distribution channel ? and one for which they might actually get paid. Most also recognize that e-readers present numerous challenges. ?There is an optimism among publishers,? says Roger Fidler, program director for digital publishing at Donald W. Reynolds Journalism Institute at the University of Missouri. ?But nobody is seriously saying this is going to save the industry.?

Fidler is leading a digital publishing alliance and has conducted research on e-reader usage. He says most publishers are looking at e-readers as simply a fourth platform for delivering content?besides print, Web and mobile.

Much of the general optimism about these devices comes from the flood of new entries hitting the market. Only last week, Barnes & Noble rolled out its ?nook,? while the week prior paper upstart Plastic Logic announced the ?Que.? Those join the Sony Reader and Amazon?s Kindle, which have enjoyed modest success. Stirring up even more buzz are heated rumors that tech giants Apple and Microsoft are set to produce competing reader/mini computing devices that will take the category to another level.

?Apple could be a real game changer if they come out with a really cool device,? says Fidler.

And, perhaps surprisingly, bloggers are gaga over Microsoft?s rumored Courier. Gizmodo recently called it ?astonishing.?

While new tech lust may drive some early adopters, Fidler believes that two more powerful, institutional forces could spur adoption in coming years: colleges and business. ?I wouldn?t be surprised to see schools require e-readers at some point,? he says?particularly if they can replace heavy textbooks. That would help draw in younger demographics to e-readers; to date, the average Kindle user is around 40.

Plus, Fidler predicts that cost and green-conscious companies may encourage employees to start using e-readers as document readers. That?s one of Plastic Logic?s targets with the Que.

Yet even if e-readers take off, publishers aren?t counting on them as absolute saviours. ?It?s important to remember that print is still the lion?s share of our revenue,? says Raymond Pearce, vp, circulation at The New York Times. ?I don?t see that changing in the near term. I get very skeptical about people saying that these readers will save the newspaper business. I don?t view it as a print replacement.?

Indeed, it?s hard to see e-readers as a substitute for the printed page, since most of the current products in the marketplace have not been built with newspapers and magazines necessarily in mind. Both the Kindle and Sony Reader are first and foremost about reading books. Of course, that could change, if companies like Apple consult with publishers as they design new generations.

For the past few years, Kindle users have been able to subscribe to various newspapers, magazines and blogs. Amazon doesn?t release any subscription numbers, but publishers say interest has been on the modest side.

According to Gordon McLeod, president of The Wall Street Journal Digital Network, when it comes to his company?s Kindle partnership, he has some likes and dislikes. For one, the device helps the Journal reach a potentially new audience. Plus, the Kindle ?teaches people to pay for content, which is not happening in other platforms.?

On the downside, the Kindle doesn?t carry any advertising, something that McLeod and others would like to see change. The early adopter, highly literate e-reader audience would surely attract advertisers, once it hits a critical mass. ?Advertisers will be there. I have no doubt,? says Fidler. ?But until these companies can say, We?ve got 100,000 readers [on digital devices], advertisers are unlikely to test.?

A more immediate concern of McLeod?s is the fact that Amazon ? not the Journal?owns the relationship with its subscribers on the Kindle and decides what to charge them. ?For our Kindle subscribers, we don?t know who they are or where they live,? gripes McLeod. ?I would not do the same deal [again.]?

McLeod?s attitude is shared by others in the business, a potential sticking point with Apple. Many speculate that when Apple re-leases its Tablet device, it may look to centrally control all books and subscriptions sold through the device, like it does with iTunes. ?That?s not attractive for publishers,? notes Pearce.

Apple?s Tablet, and probably Microsoft?s Courier, also present another challenge for publishers looking to replicate the print subscription model digitally?depending on what form they actually take. Currently, both the Kindle and Sony readers are designed for reading and reading only.

If this new wave of devices end up being mini-computers that offer easy, compelling Web surfing?won?t that inhibit true e-reading of newspapers and magazines? In other words, why subscribe to a digital version of The New York Times if you can simply log onto NYTimes.com via your Apple Tablet and read the site on a portable, yet paper-sized screen? It?s just another reason many newspaper and magazine publishers are weighing whether to charge subscriptions for their online content.

?Publishers need to think holistically about e-readers,? says Pearce. ?Consumers will bounce around. If e-readers are more print-like, with no Web browsing, we have pricing leverage. In the other case, our leverage is different. The bigger question is what happens with the convergence of screens over time.?

-- Nielsen Business Media


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