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December 9, 2007

Hinterland Diary: Can the Kindle save newspapers?

John Stoehr

kindle2_wideweb__470×3760.jpg

From Crosscut, a web-based news publication in Seattle, analyzing how newspapers could make money again given the emergence of a new kind of technology called the Kindle. Made by Amazon, the device would allow newspapers to continue doing what they have always done -- that is, sell advertising in the traditional way, alongside editorial content. With Kindle, newspapers wouldn't need to reinvent the wheel trying to figure how to sell ads online in the form of banners and Google links. Instead, it could just do as it has been doing, because in a digitized form the newspaper, as viewed on a Kindle, would appear exactly like it does in print.

Moreover, if Kindle, and its like, were to catch on, like iPods have, newspapers might be able to do away with print altogether, saving, as this analysis suggests, as much as 38 percent of operating costs -- print, press, maintenance, production, etc. This would allow publications to reinvest in their newsroom and advertising departments. The potential for spectacular daily newspapers is tantalizing, but sadly unlikely. Newspapers, owned as they are by corporate behemoths, aren't known for doing the smart thing, just the profitable thing. --J.S.

How an electronic newspaper could become profitable
Papers like The Seattle Times are in a tough spot: Online advertising revenue is a long way from covering expenses. Meanwhile, print advertising is vanishing. So why not ditch the presses and trucks and go electronic? It just might pencil out.

By Bill Richards

The tech gadget of the moment, this moment anyway, is Amazon's new wireless electronic book-reader, Kindle. The wireless device can deliver any one of more than 88,000 books, including bestsellers, which Amazon sells for under $10 each. The text appears on Kindle with the same crisp clarity as print on paper, and the battery that runs the device will go a week before it needs a two-hour recharge. Amazon hopes Kindle will tear up the book business just like iPod tore up the music business.

But there is another business, newspapers, that ought to be closely following Amazon's bet on Kindle. Newspaper owners these days routinely issue gloom-and-doom financial forecasts, usually accompanied by announcements of layoffs and other cost-cutting measures. Draconian steps are necessary, they declare sadly, because newspaper revenues keep falling.

In these scenarios the Internet is usually portrayed as the villain, siphoning off print readers and ad money, but not adding online revenue fast enough to make up the difference. Last year, the Project for Excellence in Journalism, a Washington, D.C.-based research group, estimated that if online ad revenue kept growing at 33 percent annually, it would still take a decade to break even with much larger print-ad revenues, which were growing at 4 percent.

In fact, during the most recent quarter, newspapers' online revenue rose only 21 percent, year-over-year, and print ad revenue dropped by nine percent. By such metrics, the continuing gap between online and print revenue appears to make the Internet a poor bet to replace print any time soon.

Or maybe not.


Full story . . .

(photo above: Amazon founder Jeff Bezos holds a Kindle, courtesy of the Associated Press)

Cross-posted on the Charleston City Paper's Unscripted

Posted by John Stoehr at December 9, 2007 9:31 AM