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Summary:

Hearst filled in a few of the information gaps about its new e-reader, which we first reported on last April, but left other questions unans…

Hearst filled in a few of the information gaps about its new e-reader, which we first reported on last April, but left other questions unanswered. Hearst interactive head Kenneth Bronfin tells Fortune that the publisher plans to launch the device sometime this year. He doesn’t offer any details about how Hearst would begin to enter the e-reader business, but Bronfin is sure that marketing such devices will be a big part of Hearst’s business. He also doesn’t say how this would change Hearst’s relationship with other digital content services companies like LibreDigital, which already distributes the publisher’s newspapers.

A bigger Kindle: The design goals for the Hearst e-reader calls for a screen that’s roughly the same size of a large magazine, as opposed to the Kindle’s smaller the six-inch display. Hearst feels that the larger screen will appeal to mag readers who are still unsure about reading on increasingly cramped electronic pages, as well as marketers who are also being forced to shrink their ads to fit tiny devices. Like the Kindle, the Hearst e-reader will feature only black and white. When I spoke with an Amazon (NSDQ: AMZN) rep at the Kindle 2.0 launch a few weeks ago, the company feels that the technology for color readers hasn’t yet arrived. Still, given the cost of these devices — Amazon’s charging about $360 for the Kindle, which would buy a lot of print mag subscriptions — the prospects for a Hearst e-reader are certainly high, especially as the recession deepens. In any case, Hearst has been working to find a digital component for magazines for the past several months. Hearst Interactive has invested in both its e-book partner FirstPaper and in E-Ink, which helped create Hearst mag Esquire’s digital cover in September.

  1. Are they nuts? Who wants to carry around a device the size of a magazine? It seems totally implausible that they will erode any of Kindle's momentum or that they'll have anyone other than their executive team reading it. Odds?

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  2. If people can carry around magazines, why not a reader the size of a magazine if it can can 1000s of issues of different magazines, and books? If it's thin and light, it can work.

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  3. This model can and will work. I'm a newspaper editor who's been waiting for and predicting this for several years now.
    The greatest barrier to the Kindle business model is convincing individual consumers that the reader has value and is worth a major investment. You will have buyers — but will they number in the millions within the first year of fewer?
    By partnering with local and regional newspapers like mine and allowing us to purchase millions of the devices at a wholesale rate. In our case, I would then provide the units to my subscribers free of charge in exchange for two year commitment to their newspaper subscription — thus eliminating the bulk of our print and delivery cost. The U.S. newspaper industry is in dire straits in many cases and is grasping for any way to cut costs and improve future viability. You could not ask for a more opportune time to provide publishers with an elegant solution.
    Under the scenario I foresee Hearst or Plastic Logic or Apple gets paid for the devices up front at a negotiated rate (much like the cell phone model that allowed those devices to become world dominant in the 1990s). What's more, as a reseller of content the reader maker would have access to millions of eyeballs for other sellable content in a very short time. Local publishers who invested in the equipment up front could enjoy some small, but potentially lucrative, revenue share on such sales of other titles.
    I can even foresee a scenario that allows traditional newsstand single copy sales through a network of news racks equipped with credit card readers. Users would dispense units from the news rack/charging station with a hold against their credit card which would be released when the unit was returned or converted to a full subscription to the service if it is not. Again, as the local dealer for Hearst or others, the newspaper would bear the cost and the risk of operating such a dealer network and the manufacturer would be paid up front for the devices in our inventory.
    Much like the cell phone model referenced earlier, I would place my subscribers of a two-year replacement/upgrade cycle. This would ensure the product's place in the market long-term and allow upgraded models and new features to be rolled out in a consistent manner that guarantees the longevity of the business model.

    I can't wait to play a role in the advancement of a key new technology I believe will change the world for the better and be the salvation of my industry.

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  4. "And now Hearst, a media publisher apparently with more money to burn than hardware chops to show for, is out to demonstrate what happens when a company can't summarize its business model in 5,000 words. You thought 'synergy' was dead after it was brutally strangled by Sony after an intense, decade-long effort?"

    A publisher's excellent adventure in hardware business. Not.
    http://counternotions.com/2009/02/28/hearst/

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  5. must be some leftover koolaid from belo's cue cat concept floating around over at hearst.

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  6. David McDermott Sunday, March 1, 2009

    I think this is a great Idea, only because it will introduce the technology to a wider market and hopefully drive the price down. 360$ for kindle is an insane price. it should be closer to 70$. Black and white and DRM Locked content only, no thanks. look at the dev kits here,http://www.eink.com/kits/index.html
    To give you an idea of what it will be like.
    basically all the current e readers are based on this kit and the new A4 model will be the hearst reader. I am also assuming that it will only be available in the States, shame (us poor foreigners might have to wait.) When the generic reasonably priced drm free Korean model comes on the market 12 months later, that is when I will buy.

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  7. There is lots of room to compete with Kindle. Not only display size but price of content subscriptions. Some Kindle ebooks are priced higher than $10 each, and this is too much. Soon there will be foldable or flexible screens, which is probably more of an advantage for this market than color.

    But I share the concern of those who point out that Hearst has no experience in the hardware space. This business plan makes a lot of sense if Hearst can find a way to avoid doing this alone. For example, if Sony, Hearst and bunch of other publishers backed a viable hardware device at the same time… that would be attractive.

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