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A New Business Model to Solve the Pay-Per-Read Newsprint Decline?

by Phil Marks, 6th December 2009

The newsprint paradigm is dying on its feet (or should that be 'on the presses'), and traditional news publishers are trying to find ways of managing the decline. The younger generations rarely buy newspapers and get most of their news online. And for many of the younger ones, it's that old Simon and Garfunkel lyric - 'gather all the news I need from the weather report'.

Rupert Murdoch (News Corp) is talking about strategic partnership with Microsoft so that the provision of news can continue to be pay-per-read, one way or another. Many news channels are looking at paywalls around their product, but the basic problem is 'why should people pay for something they can get for free'. Value-add punditry and household-name columnists are not thought to provide enough perceived value to deliver the customers to the news corps. News consumers can easily get the punditry real-time via blogs, Twitter and other channel products.

Could it be that the e-reader is the way to go?

What's an e-reader? Simply, a paperback sized electronic tablet (maybe with an opening cover) which accesses, stores and makes available for reading a range of 'printed' material, typically but not exclusively 'books' - fiction and non fiction, news articles and so on. Lighter, smaller and simpler than netbooks or laptops.

Of course, 'printed' is an old term. As we move forward, there will be little in the way of hard-copy materialization of news, information and other formerly 'printed' material. E-readers will come into their own. Newspaper groups are already in trouble.

E-readers are on the cusp of an explosion.

In terms of format, they are a little smaller and lighter than a netbook, but optimised for reading, and of course saleable to consumers who are not interested in carrying a laptop or netbook (for some a matter of faith). I believe we will eventually see the convergence of the e-reader and the netbook, but it will be a subtle convergence from the e-reader side as more applications are built in. Navigation is by touch screen using your finger or a stylus or both - this is a point to satisfy yourself about before you buy.

Presentation is usually black text on white. Images are black and white. Screen resolution is typically 800x600 pixels. So, its' not quite your broadsheet newspaper size! Connectivity may be through a USB hard wired internet connection (or via your PC) or through a wireless link, enabling download of novels and the like, or digital newspaper material. Of course, the potential here is for live news feeds, but people can get those on their mobile phones now. Undoubtedly the larger format does make for a better and more sustained screen read than a mobile phone. Also, from the business model perspective, the ability to feed user-specific advertising content down the news pipe is attractive.

Storage is typically from 512Mb upward, some offering memory expansion with SD or other format memory cards, and MP3 player features are often included (but there goes your memory!).

Content is the nub of it and one of the big challenges to be faced. Catalogues of e-book material are often specific to the e-reader model, so it's a bit like going to a public library and being told you can only read books published by, say, Simon and Schuster. Many catalogues are digitally protected by copy-protection mechanisms, though there is a lot of free material available. And, what does it imply for authors? From the perspective of newspaper groups though, content is not a problem.

Some e-readers might come with an inbuilt subscription to media (such as newspaper publishing groups). I do wonder why newspaper groups are not offering free e-readers with a newsfeed subscription. This for me is how the news corporations could get a new handle on retaining their market. It seems to me that the economics are in their favour.

At current (late 2009) pricing levels, typically $250+ street price for an e-reader with wireless connectivity, you'd have to buy about 15-20 hardbacks a year for an e-reader to be economic (even if they were royalty free books, and they are not). When you add in the cost of a quality broadsheet, say just $5 a week, then the economic equation tips rapdily towards e-readers. And again, the ability to pipe dynamic  user-relevant ads down the newsfeed strengthens that profitability prospect.

So much about these gadgets revolves around style and being an early-adopter. Therein lies the rub - early adoption of e-readers is currently perceived as risky. Whilst Sony have a range of models out, there is talk about Apple producing a larger format iPhone/ touch screen tablet PC convergence product. So, the technology platform has not yet stabilised or standardised in market terms. However, the smart city-based early adopters are exactly the people who buy the quality broadsheets.

Who knows what it means for the lower level higher volume newprint market. I'm not sure that it offers them a solution.

So, are you really an early adopter, ready to bet your money on a particular technology, with echoes of Betamax video recorders? Well, maybe not, but e-readers could be the saviour of the more fleet-of-foot news corporations.