Wednesday, May 13, 2009

CJR Does the Math: Kindle Doesn't Add Up

The Columbia Journalism Review did the math and demonstrated that there's no way that Amazon's Kindle DX is going to save the newspaper industry -- corroborating our previous thoughts on the subject.

Then CJR re-did the math the next day, taking into account the previously overlooked fact that a whopping seventy percent of revenues will go to Amazon and also to the wireless service that powers the whole concept ... and found that the results were even more dire than they had calculated. If a reader pays $14/month, the newspaper pockets only $4.20 of that.

CJR also factored in a Bloomberg report about a visionary Knight Ridder experiment conducted in 1992, designed to culminate in its own portable newspaper-reading device intended to boost readership and revenues. After three years, the project fizzled and the 10-person lab was shut down.

A key flaw in the Kindle plan is the absence of any way to display full-color non-text advertising -- a necessary source of revenue. But others are undeterred.

Gannett Co., which stopped home delivery of its Detroit Free Press four days a week, said it will distribute the newspaper on another e-reader being developed by Plastic Logic Ltd. ... Hearst Corp., which owns the Houston Chronicle, also invested in a company developing a reader.

[But] the Kindle just looks like another way for newspapers to turn profitable customers into unprofitable ones.

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