Can Amazon's Kindle DX Save Newspapers?

Amazon's Kindle electronic reader has done wonders for the book business. But can it revive the sagging newspaper industry? That's the tough assignment facing the new Kindle DX, a $489 large-screen model that Amazon unveiled today in New York and will go on sale this summer. The device has a 9.7-inch (diagonal) screen that Amazon says is two and a half times bigger than that of the Kindle 2, making the new device better for reading magazines and newspapers.

The question is whether those extra inches can save newspapers like The New York Times and The Washington Post (the parent company of NEWSWEEK). It would be nice to think so, and kind of appropriate, since technology is largely responsible for the sorry state of the newspaper business today. That is why Arthur Sulzberger Jr., publisher of the Times, appeared onstage with Amazon CEO Jeff Bezos for the Kindle DX announcement. At this point, the newspaper guys will take any help they can get.

The challenge that newspapers face is simple but terrifying: How do you get people to pay for something that you've been giving away free on the Internet? Sounds impossible, but remember that when Apple launched its iTunes Music Store in 2003 skeptics wondered the same thing. Why would anyone pay 99 cents per song when everything was already available out there on the Web? By the start of this year Apple had sold more than 6 billion songs on its site and had become the largest music retailer in the United States.

Thing is, you're not really paying for the songs. You're paying for convenience. You're paying for the fact that you know the system will work right, that you won't get only part of a song, as you often did on the free download sites. You won't get spyware and malware, as you often did when you used the free download sites. And you get a great piece of software, iTunes, that lets you manage your music collection, make playlists and so forth. Suddenly you could do more with your music. That's what you're paying for. The real money for Apple came not in sales of music but in sales of iPod devices.

That's what newspaper guys are hoping to replicate. Information is free, but maybe you can charge money for it by yoking the information to a device. That's why publishers love the Kindle, and why News Corp. and Hearst are reported to be working on their own news readers. The idea seems to be that while you can get your news free on the Internet, maybe you'd pay for the convenience of having it delivered to your handheld rather than on your doorstep. The device, then, serves as a kind of tollbooth—the gateway where the creator of the content collects a fee from the consumer.

It's not a bad idea. It could be even better if someone develops software that lets you do more than just read the morning paper—if you could, for example, manage and archive and customize your news the way iTunes lets you manage and customize your music collection. One big drawback of the newspaper today, for example, is that the document you pick up this morning is completely unaware of the publications you got yesterday, and the day before. And it's completely ignorant of the other documents around it and of those published by rivals. It also has no idea who you are or what you're interested in. These are limitations of the print medium. But they can be addressed when you deliver the news as bits and bytes. Combine that with the benefit of not having to buy paper and run printing presses—a huge part of a newspaper's cost structure—and maybe, just maybe, these companies can turn news reporting into a profitable business again.

The big shoe that's yet to drop in this space is Apple. The consumer-electronics giant is rumored to be working on its own electronic reading device. And expectations are high, since when it comes to making devices that are beautiful, well thought out and easy to use, these days Apple stands head and shoulders above everyone else. That's the good news. The bad news, for publishers, is that they shouldn't expect an Apple reader to be much of a boon for their bottom lines, since in most cases Apple tends to keep most of the value to itself. Ask AT&T, Apple's carrier partner on the iPhone. Or the music companies who went along with iTunes only to find themselves turned into slaves to Apple.

Also, with so many new devices coming into the market, we may just end up with a different kind of mess. We'll have a period of chaos and confusion as the tech guys making the readers strike distribution deals with the content guys. Which device will be most popular? Which papers will be available on which devices? How long before any device can deliver any newspaper or magazine? That's going to take some time. Sadly, time is not something newspapers have on their side right now.