Wireless Reading Devices vs. Newspapers

The big news this week in the newspaper industry was not Google‘s Marissa Mayer speaking before a Senate subcommittee on communications, technology, and the Internet at a hearing on the future of journalism. The big news was Amazon‘s newer (and bigger) Kindle, the Kindle DX.

First off, the lowdown on the Kindle DX: The size is 9.7" diagonal e-ink versus the traditional Kindle at 6". It is just over 1/3 of an inch thick ("as thin as most magazines") and it can hold up to 3500 books. It has a great battery life, fast boot-up and looks very slick and cool.

It looks like a magazine or tabloid newspaper.

Many of the initial discussion online and speculation about the Amazon Kindle DX was around the fact that this would be Amazon’s first strike at the heart of the newspaper and magazine industry by creating a reader (or as Amazon calls it, a "wireless reading device") that is closer in size to a newspaper/magazine. Others think that this form factor is geared more towards the business user as the page size would enable us to view documents as if it were a standard 8 1/2" x 11" page.

There’s no doubt that the Amazon Kindle DX does look more like a device that will replicate the magazine and newspaper experience.

Here’s what’s interesting: newspapers and magazines continue to report record losses in terms of advertising revenue. They continue to report a loss of subscribers and readership (so, it’s not just serious debt load that is sinking many of these publishing institutions). There’s additional complaints from traditional publishers that their revenue models need to revisited because consumers no longer see the value in paying for content when much of the news is available – in one form or another – online for free.

Where does Amazon get off charging $489.00 for the device, and a monthly subscription to The New York Times kindle edition will run you $167.88 for the year in a world where no one is willing to pay $0.75 for a daily newspaper or pay a cent for newspaper content that is online?

Does anyone really think that Amazon developed this new piece of hardware and built business models around the content without truly understanding the marketplace? I don’t. I think Amazon knows the Kindle DX is going to sell well, and I also believe that they know which type of content will work and how much people are willing to pay for it.

The bigger question might be this: If Amazon can charge that much for the device and content, why are traditional media companies unable to sell their product or – at the very least – be able to monetize their digital properties in a more efficient way?