Will the New Supersized Kindle Save the Newspaper Industry?

May 5, 2009 by Thad McIlroy

The press is absolutely buzzing with scuttlebutt about the apparently now not very secret annoucement that Amazon plans for Wednesday in New York of a new supersized Kindle, roughly at the 8-1/2 ” by 11″ page size.

The first leak was in an article in the Sunday New York Times called “Looking to Big-Screen E-Readers to Help Save the Daily Press.” The article’s theme is best encapsulated by its second paragraph:

The iPod stemmed losses in the music industry. The Kindle gave beleaguered book publishers a reason for optimism.

Now the recession-ravaged newspaper and magazine industries are hoping for their own knight in shining digital armor, in the form of portable reading devices with big screens.

The article was a trifle vague as to the announcement date, with denials from Amazon and the New York Times, which admitted being a partner in the venture: “As early as this week, according to people briefed on the online retailer’s plans, Amazon will introduce a larger version of its Kindle wireless device tailored for displaying newspapers, magazines and perhaps textbooks.”

Take note of “perhaps textbooks” — I’ll return to that. The other theme to return to of course if Apple which the NYT article noted: “Then there is the looming presence of Apple, which seems likely to introduce a multipurpose tablet computer later this year, according to rumor and speculation by Apple observers. Such a device, with a screen that is said to be about three or four times as large as the iPhone’s, would have an LCD screen capable of showing rich color and video, and people could use it to browse the Web.” Will return to this also.

By Monday the news was everywhere, in a variety of flavors.

Monday The Wall Street Journal headlined its coverage with “Publishers Nurture Rivals to Kindle.” The richest feature of this article was revealing some of the Amazon-to-publisher economics:

Critics gripe that Kindles don’t allow for displaying ads and are poor substitutes for the look and feel of thumbing through pages. Magazine and newspaper executives also stew that Amazon won’t let them set subscription prices for their own publications. Publishers keep less than half of the revenue from sales of their subscriptions on the Kindle, according to publishers…

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.

The article also featured a significant observation from an industry analyst:

Van Baker, consumer electronics analyst for research firm Gartner Inc., said e-readers likely will appeal to only small numbers of people because of their cost, and he wonders whether a slew of devices will confuse consumers. “If the newspaper has one reader, and the book store has another reader and the magazine publisher has another reader, it just doesn’t make any sense,” he said.

The first hint that all was not well with the notion of the new Kindle being the salvation of all periodicals appears to have been from the Reuters article, “Bigger Kindle e-reader may not be a Newspaper fix”. Early in the article Alexandria Sage notes, “But a larger-format e-reader may not be a quick fix for a struggling newspaper business devastated by crumbling ad revenue and declining readership. Nor would it guarantee a big boost to Amazon’s bottom line anytime soon, analysts say.”

It’s late in the article where we start to get onto the path of the likely real agenda of the new Kindle:

Academia might be a good fit, because it could replace heavy, expensive textbooks, (Forrester Research analyst Sarah Rotman Epps) said. If Amazon could align with textbook publishers and drop the price of books delivered digitally, it “very quickly justifies the cost of the device,” she said.

In February, Scott Devitt, then an analyst at Stifel Nicolaus, told Reuters he considered the text book market “an eye-opening opportunity.”

The next reportage, although tremendously ill-informed, comes from a ZDNet blog titled “Amazon plans big screen Kindle: Textbook margins are the real aim not saving newspapers.” Larry Dignan trots out some very out-of-date stats that suggest that textbooks on a Kindle would be a big win. He’s obviously not read my article on “The Future of Educational Publishing,” which points out very clearly that the textbook publishing industry is far beyond requiring a Kindle to enable their future ventures. Take a look at Flat World Knowledge to get a sense of how far new startups are ahead of anything the Kindle could offer.

The Wall Street Journal tonight has fully caught onto this change in an article titled “Amazon to Launch Kindle for Textbooks.” The article largely ignores periodicals and concludes, “A larger-screen Kindle would enable textbook publishers to better display the charts and graphs that aren’t particularly well suited to the current device, which has a screen that measures just six inches diagonally…”

This is just foolish hype-inspired thinking. Who really believes that students are going to carry into their classes a notebook computer (or smaller) that allows them to surf the web, Twitter, provide online messaging, save their personal files and photos and a hundred other features — a device which they already own — and then purchase an additional black & white only device, albeit with a web browser, and be thankful they can leave books at home and read them instead on a device clearly inferior to their notebook or netbook (which can easily display the same material)?

The final word here goes to a very bright writer at Forbes.com, Brian Caufield, who finds the whole notion a travesty. Posting a large section of his column is required to gain the gist of it:

The (Kindle) device, along with a gizmo being developed by Hearst Media for launch next year, are being held out as the last, best hope for old media. Big mistake.

Apple’s iPhone makes it plain why this is so. Why else would Amazon be so eager to put the Kindle’s functionality on the iPhone? So far this year, Amazon has introduced software that allows you to read books you’ve purchased for the Kindle on the iPhone, and snapped up Stanza, whose software also puts books on the phone.

Maybe that’s because Amazon Chief Jeff Bezos knows that Apple is going in a more interesting direction with its slim little tablet than Amazon can. Apple has sold 37 million iPhones and iPod Touches. The Kindle isn’t even close.

The problem isn’t just that “people don’t read any more,” as Steve Jobs said last year of the Kindle. Nearly half of the Kindle’s users are over 50 years old, according to a survey of Amazon’s discussion boards by blog, Kindle Culture. That’s not because people under 50 don’t read. It’s because they read differently. After all, if no one read anymore, Google, which made text searchable, sortable and ultimately interactive, wouldn’t be worth $126.7 billion.

That’s because the real problem with newspapers isn’t that nobody reads. Or even that calling information painstakingly written, edited, stamped onto pulped trees and delivered a day later “news” is absurd. It’s that reading has changed. The New York Times Co. is worth a scant $814.8 million because it just presents information, rather than making it interactive and personal. The New York Times won’t host your e-mail, unless you work there. And you probably spend more time reading that than the national news section.

Which is exactly the problem with the Kindle. The iPhone and iPod touch are computers. They can browse video, suck up RSS feeds from tens of thousands of sources, and search and sort messages to you from your Mom. The Kindle, because it is a computer, has some flexibility, sure. But it really is purpose-built to present books, novels and other big blocks of text.

I’m with you Brian.

But now it’s time to wait for Wednesday’s announcement, in the perhaps vain hope that something closer to a business plan emerges. I’m not holding my breath.

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  • Christy Hart

    Thad – I manage a bookstore at a community college and recently purchased both a Kindle and a Sony Reader to learn more. I am over 50 and a devoted reader – so the Kindle has seemed really fantastic to me. I agree that students will not be buying a separate device for textbooks! After using the Kindle and an iPhone, my guess is that is the future of publishing anything – music, books, movies, news, tv. And we want it WITHOUT ADS! Unfortunately, being over 50, I am not the target audience – I don’t have the patience to deal with more technology.

    Great summary of the various issues!