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Hearst bringing electronic reader to market sometime?

February 27, 2009

According to Fortune, Hearst Corp. has its eyes on launching an e-reader as a substitute for its print products.

This could either be the greatest idea ever hatched or it could go down in flames miserably. The Fortune article
compares the mystery device, which Hearst is expected to unveil later this year, to Amazon’s Kindle. The Kindle has helped move people toward using an e-reader instead of a printed product.

But that comparison got me thinking about how Hearst’s endeavor could be a massive flop (and hopefully someone who’s working on this project is either reading this or has thought of this already).

1) Cost: People are accustomed to paying anywhere from 50 cents to $2 for a newspaper off the rack each day and less to have the paper delivered to their home. You’re not going to pull $350 out of people’s pockets like the Amazon Kindle is right now because it’s not the same market. Amazon is drawing from a variety of publishers, Hearst will have…well for now Hearst publications.

1a) The subscription: On top of the cost of the device, you can’t expect to pull in the same price per day of a the print edition. It would be like having the customer buy the paper and ink to print their papers each day, and then charging the usual subscription rate. The value proposition to lure the customer to the device just isn’t there. Ideally a company would want to subsidize the cost of the device with a subscription like this:

Say an e-reader costs $200 normally. If a customer decides to subscribe to a newspaper and a couple of magazines for 6 months, then s/he would get the reader would get it for $99 instead. The newspapers and magazines get the recurring income from the subscriptions and the customer saves money on the hardware.

2) Ease of use: Think about how easy it is to use a newspaper. Pick it up, read, flip a page, read some more. Moving from a print edition to an e-reader would hopefully be this easy and believe it or not the transition actually depends on using the KISS method (Keep it Simple Stupid…nothing to do with Gene Simmons). The design needs to be simple to use and interact with. If I need a manual to find the sports page, I’m just going to the Internet instead of fumbling through a complicated menu.

3) Connection/Content delivery: This can make or break a device. Let’s look at a few examples of electronic devices and how the connection/content delivery is handled.

iPod: Most people have one or are at least familiar with how it works. You can supply your music or videos to it or buy from the iTunes Store. The problem is in order to put content on it for the most part, you need a computer to move it.

iPhone: This is a step up from the iPod in the sense you can access the Internet and read stories through it from anywhere with a cellular phone data connection, which is practically anywhere. The drawback is if you want to download anything above 10 MB (ouch) or use some video streaming applications, a Wi-Fi connection is needed. Great if you’re at home or at a Starbucks, not so great if you’re anywhere else. Oh and the data/phone plan starts around $70 a month

Amazon Kindle: This comes with a free EVDO connection, which if you want to blow out a few brain cells trying to understand it, here’s a link. It’s another form of a cell phone connection, but again, this is free. Users can download books freely to their Kindles, although Amazon does charge a small to convert documents like PDFs to a format the Kindle can read.

If the Hearst idea has any hope of working, it needs a connection like the Kindle so readers can pick up their papers on the fly. Docking any device to a computer will put a severe crimp in readers’ actually getting the paper that day. If it’s too difficult to pick up their paper, people will do the digital equivalent of letting their papers pile up on the porch. It’ll end the same way too: Canceled subscriptions.

4) Licensing: The 800-pound gorilla that can leave this device dead on arrival. As I mentioned before, if this is a Hearst device for Hearst publications, that’s all well and good — until Gannett, McClatchy and Freedom (the parent company of the Appeal-Democrat) want to come out with their own devices for their own publications. Nobody is going to carry around 4 different devices for 4 different publications and most likely they’ll decide just to read their news online or not at all. The best solution here is if Hearst decides to license the software out to other publishers in a way that they take a small fee off the top to allow other newspapers and magazines to use the same device.

It’s not going to be an easy road. If Hearst wants to succeed with this e-reader they need a device that can be subsidized down to around $50, that actually works and works simply, can connect to the Internet on its own for little to no cost and won’t strangle itself with a closed licensing system.

Oh and free coffee and donuts would be nice too.