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Summary:

Amazon will reportedly introduce a new Kindle later this week, one with a big screen. And because it’s got a big screen and because it counts The New York Times among its launch partners, many of my fellow bloggers have decided that it will be the product that digitally delivers newspapers and in the process, saves the industry. (Updated with my interview on Yahoo Tech Ticker.)

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Updated with my interview on Yahoo Tech Ticker. Amazon will reportedly introduce a new Kindle later this week, one with a big screen. Let’s give it a cute name, like the Kindle HD. And because it’s got a big screen and because it counts The New York Times among its launch partners, many of my fellow bloggers have decided that it will be the product that digitally delivers newspapers and in the process, saves the industry. Thankfully ZDNet’s Larry Dignan is keeping his wits about him, and instead of buying into the hype, proposes this much more plausible theory: Amazon may be targeting the Kindle HD at the higher education sector.

The eagerness with which people are assuming that Kindle HD will be a savior for the media business is striking. Comparisons are being made to the iPod, which came at a desperate time for the music industry. But while after eight years, the iPod is a megabillion-dollar business, the music industry is still in the toilet, with digital sales failing to grow fast enough to cover the drop in sales of physical CDs. The most recent reminder of that for me came last week, when I went to the Apple store to pick up an accessory and saw that the Virgin Megastore across the street in San Francisco had closed.

When it comes to the media business, why would things be any different? I’ve spent my entire working life in media — writing for newspapers, news agencies, magazines and web publications. Without a doubt, it can be painful to watch the slow and steady decay of the newspaper and media industry.

What’s more painful to watch is how unwilling so many people in this business are to come to terms with the shift the Internet has brought by wresting control of the distribution of content. The result has been the rise of blogs, Twitter, Facebook and other publishing platforms that are creating micro-brands for what I like to call the Me Media. But the Internet is not solely responsible for the demise of the core media business model; it contains critical flaws. Clay Shirky did a good job of laying out its problems earlier this year, saying: “Society doesn’t need newspapers. What we need is journalism.” Spot on. And new business models will emerge. My ex-boss Josh Quittner of Time magazine thinks one of these models will be “appgazines — that act more like computer programs than Web or printed pages.”

James Kendrick over on jkOnTheRun captures my feelings when he writes, “This has desperation written all over this. A large Kindle is not going to stop the death spiral that newspapers are firmly in the grasp of, no matter how cool.” Indeed, Amazon would have to sell millions of these devices to even come close to racking up enough subscriptions to make up for the loss of advertising revenues. The Wall Street Journal in its report on different e-reader initiatives by news companies has this revealing paragraph:

The Wall Street Journal — the second-most-popular newspaper for the Kindle after the New York Times — has more than 15,000 subscribers, according to a spokeswoman for the paper, compared to its paid circulation of more than two million daily. Fortune magazine has roughly 5,000 subscribers, according a person familiar with the matter, while the magazine has an average print circulation of nearly 866,000. Subscription prices vary, and are set by Amazon. In general, newspaper subscriptions range from about $5.99 to $14.99 a month, and magazines range from $1.25 to $7.99 a month.

But how does that expression go? Ah yes — a drowning man will clutch at a straw.

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    1. I guess the one good thing is that Newspaper companies are atleast looking at all sorts of new technologies (right from applications fro Ipod Touch to Amazon Kindle) to reach out to as many subscribers as possible. However, with the dirth of excellent quality news available for free, I am just not sure how successful newspapers will be if they keep on relying on paid subscriptions.

      To survive, they need to move away from loss making businesses asap, & then focus on writing good articles & then find innovative ways to include advertisements ( pay per click etc..) even on devices like kindle & Ipod Touch. Even with that, I am just not sure how they can return to profitability ( or continue to be) with their giant size!

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    2. I rarely agree with Om, though I read him daily, but here we meet minds.

      The newspapers don’t understand that their printing presses are obsolete. They don’t realize that its no longer expensive to distribute written content. They don’t realize that that monopoly is gone.

      There is absolutely nothing that they can ever do that will make it come back. Its gonna be painful (for me too as a former newspaper tech writer) to watch as the venerable institutions shutter. To watch magazines fold, to see journalists try to make a go of it blogging. Its a whole generation that are going into forced retirement or career change.

      And the TV industry is not far behind. Just watch as the cost of internet distribution drops. Already I never watch anything in its scheduled time-slot.

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      1. “And the TV industry is not far behind. Just watch as the cost of internet distribution drops. Already I never watch anything in its scheduled time-slot.”

        But the difference with the TV industry is that even though it took them a long time to figure it out, they’re embracing and progressing with that shift. The reason many people no longer stick to the time-slot is their DVR, but also increasingly sites like Hulu, Joost, Fancast, CBS, NBC, etc. all of which are run by (or have deals with) the content owners. So they’re not sitting on the sidelines as their industry and viewers evolve.

        On the other hand, much of the newspaper industry saw this coming but they haven’t done much to adapt to it. They should be using a competitive advantage in real journalism and investigative pieces, and distribution through alternate means but they’re moving too slowly and are too interested in fluff pieces to get where they should be.

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    3. “the Virgin Megastore across the street in San Francisco had closed”

      And the rest are following suit.
      http://latimesblogs.latimes.com/shopping_blog/2009/03/virgin-megastor.html

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    4. Maybe they need to give the devices away for free? First paper to do that will get a big market share?

      Rob.

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    5. What I haven’t seen one person mention about this electronic newspaper idea is the simple fact that not a single consumer has spoken out for one. Not one. Those who prefer to read the big format newspapers do so right now every day, and happily. They don’t need the electronics. Do not overlook the fact that it is the newspapers themselves that want this because their print business is dying.

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      1. Spot on. I brought up the same exact point when I was on Yahoo Tech Ticker this morning. I think it is pretty clear where the readers are and want to be – unfortunately the old business model can’t support the new distribution model.

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    6. Ericson, the NYTimes website is one of the most popular websites for news, people are constantly linking to their articles and multimedia pieces, a huge portion of their staff is online-only people, and they’re doing stuff like offering their content on new devices like the Kindle and iPhone. How are they not understanding that printing presses are obsolete? Their problem isn’t that people don’t want to read their content, it’s that the traditional ways of making money off of it aren’t working.

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      1. Hear Hear Bart. I think the big issue here is not the “ability” but desire to completely embrace new business models and let go of the past. Unfortunately it is a painful journey for all. Not just the Times, which remains one of the best reads on the web.

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      2. I don’t hear anyone stating the obvious reason that online news consumption has hammered the print newspaper business- online news sites are updated in almost real-time. Print news is old before it hits your hands. That won’t change with an electronic version as I can’t believe they’d be linked online all the time.

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        1. James

          I think that is pretty much figured into all discourse about media. The problem is not the speed — being a product of the old media, I can attest that things move fast in the old media’s web world as well. I think the problems are more systematic.

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    7. This debate about a device to “save” newspapers is fundamentally flawed because it assumes that the newspaper industry will remain cohesive with a single revenue and distribution model, as it did until about 5 years ago. I think e-readers like the Kindle are just one of many ways that news can be distributed and be profitable. What the past 15 years has taught us is that as technology improves, it also proliferates – spinning off new devices and applications. Each person forms his or her preferences for information distribution, be it Web site, listserv, RSS, iPhone, Kindle, etc. And each person has a different level of involvement with technology. Obviously some are incredibly tech savvy while others prefer to print every article they find interesting. What news organizations (newspapers, magazines, online only, TV, all of them) have to realize is that we are in an era of personalization and one paper does not fit all. I think the Kindle model will be great for some (I happen to love mine for reading the NYT and WSJ) and be rejected by many others. The challenge to news orgs is to create business models that incorporate multiple revenue streams to reach as many people as possible.

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      1. Michele

        I agree with you on almost all the points except I do want to note that these devices and the Internet are enabling extreme personalization and that makes it difficult for the old media model of front page-driven story lines to be relevant. Now I think over a period of time they will readjust and refocus but in the short term they are going to suffer. The money problem of these companies is going to make it difficult for them to innovate.

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    8. Omar Iftikhar Monday, May 4, 2009

      I agree that with Higher Education market being more of a target than newspapers. Large format ebooks vendors such as IREX and Plastic Logic have been talking to the Higher Education providers, and the arrival of the new Kindle will surely add to that momentum. The higher ed industry is ready for the right device and delivery mechanism, (it’s iPod for the lack of a better word) to achieve critical mass and really usher in the acceptance and wide-spread use of e-textbooks in the classrooms.

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    9. The newspapers will get it – at least the last ones left. As some have pointed out, the NY Times almost gets it with its online edition. I don’t know how much it costs to staff a newsroom with great writers, editors and support staff. But I know its a whole let less than the total cost of running a print distribution network with the associated ad sales. Those excellent writers and editors will find their distribution channels online once the old channels start to dry up. And once we, the consumers, have less choices in terms of the variety of content, the price will go back up – from free in many cases.

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    10. I believe most newspapers that are migrating to online, whether gradually a la the NYT or overnight like the Post-Intelligencer, are doing so with an axe in one hand cutting away large chunks of staff — reporters and editors as much as pressmen. It would be naive to think that time-consuming investigative reporting won’t be sacrificed in favor of more immediate “near real-time” updates of web-length stories. There are many drivers of the demise of the printed newspaper. I think diminishing attention spans is a major one.

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      1. Chris

        I think that is indeed very true. We are living in the age of diminished attention spans. I wrote about this in the past and if you are interested, you can read about Immediate Media here.

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        1. Thanks for the pointer. I find it all a bit depressing, frankly, but I suppose, in the immortal wailings of Howlin’ Wolf “I’m built for comfort, I ain’t built for speed”.

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