Outlets view e-readers as growth avenue

Media companies are betting that electronic reading devices can be a widespread and profitable channel for content delivery.

An electronic, handheld reading device, such as Amazon's Kindle, has yet to reach critical mass among consumers. But media companies, such as Hearst and News Corp., are betting that such a concept can be a widespread and profitable channel for content delivery.

Fortune reported in February that Hearst, publisher of magazines ranging from Esquire to Redbook and newspapers including the now online-only Seattle Post-Intelligencer, is developing a large-screen e-reader for debut this year. Media conglomerate News Corp., owner of newspapers including The Wall Street Journal and the New York Post, is also reportedly considering investing in a portable reading device. Even cash-strapped newspapers the Detroit Free Press and The Detroit News – both of which recently reduced delivery to thrice weekly – recently agreed to deliver content via the Plastic Logic Reader, due to hit the market next year.

It's easy to see why print-based media companies are interested. Consumers are more frequently getting their news on smartphones and Web-enabled cell phones. And delivering content directly to a device could allow publishers to cut printing and distribution costs while also charging periodic subscription fees for content, as The New York Times, the Journal, and Newsweek do on Kindle. Also, other companies would be able to advertise there.

Yet, before media companies can realize those benefits, a company has to do for publishers what the iPod did for digital music – give consumers both an easy-to-use and satisfying portable experience. To do so, the next generation of e-readers will likely have larger screens than the Kindle, closer to the size of a periodical, says Roger Fidler, program director for digital publishing at the Reynolds Journalism Institute, an organization that researches future journalism models at the University of Missouri.

“What we are looking at is developing formats that are more... magazine size that would involve scrolling and would provide a reading experience similar to reading a printed newspaper, but with hyperlinked navigation,” he says, adding that future devices must also attract advertising, which might never duplicate its print value online. “[Next-generation devices would have] a much more visually rich environment, and also having images and graphics, and... more graphic diversity.”

News Corp. did not immediately return calls for comment. In a statement to PRWeek, Hearst noted it “expects that new devices and media platforms will be a big part of its future.”

Publishers also realize that cooperation would be needed to make an e-reader successful since most consumers would likely ignore a device that only reproduces one publisher's content, Fidler says.

“The readers that companies are developing are not just for newspapers or one-newspaper groups; they're intended for reading any sort of document. They would be expected to read books and magazines and other forms of content,” he explains. “It's really not just an alternative to the laptop or the computer; it's an alternative to paper, and... it does require more than one publisher to make it successful.”

Portable readers will also face a challenge from iPhone applications – Amazon launched a Kindle iPhone app last month – or an emerging technology that would allow consumers to attach an adequately sized screen to their smartphones. Such technologies, like one under development by HP and Arizona State University, would cut down on the number of electronic devices that consumers would carry with them, notes Lloyd Trufelman, president and CEO of Trylon SMR.

“Everything is moving toward [inclusion on] one device... and the newspaper industry should be looking at that, [not] making competing, standalone devices,” he says.

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