Kindle DX: Will It Save Newspapers?

Sarah-Rotman-Epps [Posted by Sarah Rotman Epps]

As part of the Kindle DX announcement this morning, Amazon revealed that they're working with three newspapers--the New York Times, The Boston Globe, and the Washington Post--on a pilot program this summer where the publishers will offer the Kindle DX at a reduced price to subscribers in exchange for a long-term contract. The Detroit Free Press and Detroit News are launching a similar program with Plastic Logic devices.

I advocated that newspapers do something like this at a speech I gave last month for the Newspaper Association of America. Why? Because if they do nothing and wait for the eReader market to evolve organically, newspapers will at best see modest incremental revenue from eReaders. We estimate that just over 1 million consumers have bought Kindles and Sony Readers so far--impressive, but not enough to drive mass adoption of eReader newspaper subscriptions. Publishers need to catalyze adoption of the devices to get as many subscribers as possible buying content if they want to see real revenue and real cost savings from cutting print.

Will the Kindle program work? I don't know--it depends on how deep the discounts are for subscribers. For a device that retails for $489, the discounts will need to be mighty steep to convince those that weren't otherwise considering buying Kindles to take them up on the offer.

The other unknown element is advertising: The Kindle DX has better image display than earlier Kindles, but Bezos didn't mention anything about an ad model. Newspapers rely on advertising for a significant portion of their revenue, and they need partners that support this model. Luckily for newspapers, they're about to have a lot more choice as more competitors come on the market in the coming year.

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re: Kindle DX: Will It Save Newspapers?

Paid Content quotes Dallas Morning News publisher Steve Moroney suggesting Amazon are demanding 70% of the subscription revenue on Kindle (c/w the 30% Apple take from the iPhone App Store). Rupert Murdoch is equally unimpressed by this hardball tactic, and knows from his Sky business the importance of controlling the platform as much as the content. The battle could get interesting here, though the danger is that a stand-off could kill the chances of Kindle building the scaleable audience both Amazon and its would-be content partners need.Guardian editor Alan Rusbridger is also among those reluctant to see the e-reader subscription model as the saviour of the newspaper business. He points instead to a new kind of news, seeded by paid journalists but enhanced by community feedback, citing The Guardian's recent coverage of the G20 summit in London.My take is that e-readers are part of a portfolio of new products and services - including new ways of reporting the news - that newspapers need to roll out to remain viable. But offering a new way of delivering the same old product won't be enough on its own to save the industry.

re: Kindle DX: Will It Save Newspapers?

Mr Sulzberger of The New York Times at the DX launch said the subsidized appliance would not be available in any areas with home delivery.The Kindles rely not on the Internet but high-speed Sprint EVDO wireless service, which is not available in many areas of the country that lack home delivery of these papers.The Wall Street Journal noted there were no ads on the sample newspaper pages shown at the launch.Newspapers have not had much of a problem with subscriptions and have even been able to increase prices for them. However, in many areas advertising has fallen drastically recently. The problem of lower ad revenue will not be lessened by foregoing the revenue on the DX.Newspaper publishers should look at their failed business models not technology. If they want to take advantage of computers and the Internet, the Kindle DX is the wrong way to go. News Corp knows this quite well.Also, note that small, community newspapers are not in the same situation as the big city newspapers.