Why the Kindle HD Can't Save Newspapers

Updated with my interview on Yahoo Tech Ticker. Amazon (s AMZN) 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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