Saturday, February 28, 2009

How e-readers can save the magazine (and newspaper) publishing industry

Publishers: You want to unburden yourself from paying the printer, the post office, the paper company? You want to sell an ad for half its price and be just as profitable? How many more advertisers do you think you could get if you could slice your prices in half? If this interests you, read on.

I've resisted the digital e-book readers for years after I caved and bought the Rocket eBook around the turn of the century (sounds so quaint phrasing it that way!). That damn thing was heavy, clunky, twice as thick as my MacBook, and had a dim, gray LCD screen that lit up to an electric blue. Plus the number of available books was tiny at best. There was no "software". So it sat in a drawer unused, until it went up on ebay to die in someone else's drawer.

Fast forward to 2009, and now we have the Amazon Kindle 2, with 240,000 books to choose from. Being an avid non-fiction reader, I finally broke down and bought one, since the reviews to the first Kindle were so rave.

I can see how the device is well suited to books. But what I wanted to try was newspapers and magazines. I downloaded an issue of the New York Times and paged through it. The interface was clunky and poor. The e-ink technology has an annoying delay every time it refreshes, which greatly diminishes the user interface. Frankly, it's faster to turn physical pages of paper.

Also, the screen feels ridiculoulsy tiny compared to the printed page. And on my Kindle 2, the contrast was so poor that I felt like I was reading on an Etch-a-Sketch. So I returned it. Reading books on the device? Once you get past the contrast issues, fine for some people. But reading magazines? Forget it.

But this concept of an electronic reader DOES hold promise for the magazine industry, which is struggling to survive in its print-based format. E-readers can actually SAVE our industry. We're just not going about it the right way.

Here's what needs to happen:

1. We need much bigger screens. From a display perspective, we need a device built from the ground up for magazines. Books have a MUCH LOWER display requirement than magazines. Think about it. From a display perspective, books are for the most part monochromatic words on a page. Amazon's device is well-suited for this requirement, which makes sense, because books are what Amazon's trying to sell. Not magazines. To make reading magazines a pleasurable experience on an electronic reader, what we need is an e-reader that's got a BIG, high-contrast display that's as big as a sheet of paper. I'm talking 8.5 x 11 inches here. Nothing less. And for true magazine experience, it should be DOUBLE that. Enough to fit a two-page spread. It should not have a keyboard. At least 90% of the surface area of the device must be given over to the display. The entire screen has to have a touch (or ideally, multi-touch) interface. And I'm sorry, it HAS to be color. I'm not sure why everyone is hung up on the e-ink technology. My iPod touch (and your iPhone) would be a great reader if you just blew it up in size. And also, today's LCD technology, which I think is up to around 96 dpi (someone can correct me if I'm wrong), is totally sufficient. In other words: the display technology already exists. Apple has long been rumored to come out with a "tablet" device with a 7 or 8 inch screen. While that may be pleasing to many people, it is not enough for magazines. And why include a physical keyboard on the device? This is a ridiculous waste of real estate that should be devoted to the screen instead. Apple's iPhone has proven we can pop-up a keyboard on a touchscreen, and get by. Remember, we're not tapping out novels here. We're reading. I can go into Best Buy and see an entire wall of LCD televisions large enough to spread out a tablecloth on; why can't the industry understand that for MAGAZINES, we need something that is the SIZE OF A MAGAZINE! Hello? Is anyone listening? I've got my eyes on Plastic Logic, which seems to be the most promising contender so far.

2. We need better software. The Kindle's interface is adequate for books. But it sucks for newspapers and is a non-starter for magazines. We need a way to flip through pages, either one or two at a time, or big swaths at a time. We need a way to get to the table of contents and back. Fortunately, this software exists. The digital magazine industry has quietly been toiling for years, improving their software. Have you looked lately? It's gotten quite good. Now anyone who knows me knows I am NOT a fan of digital magazines. I know they have their fans, but they will never become mainstream on personal computers. I'm sorry, but NO ONE wants to read a 110-page magazine with zooming and scrolling in their email inbox. Who has time? And when you receive a digital magazine on your computer, you're in work mode. Not in reading mode. It works at cross purposes with what you're trying to get done. However, take those advances that the digital magazine industry has achieved, and put their software on the proper e-reader hardware, and suddenly you've laid the groundwork for true mass adoption.

3. We need a page description language specific to high-fidelity publishing. In short, the display format can and should be much closer to PDF than HTML. We need something that allows print designers to design in their native tools, not force them to become web designers and learn a whole new series of design constraints. And we must have tools that allow designers to elegantly weave rich media such as video clips into the design, rather than slapped on top of it gratuitously.

4. Devices must have wireless access. Amazon's Whispernet is a clever idea, but it's overkill. Wi fi (802.11g) is fine. Or you should be able to buy a chip from your cell phone carrier and insert it into the device and get wireless data access for an $15 per month on your wireless phone bill.

5. Devices must be vertically integrated into a click-to-purchase content store. Without this, we're dead in the water. Think iTunes but for magazines (and newspapers). Browsing and purchasing content should be easy enough for your grandmother to do it. Apple and Amazon have achieved that. They also have the clout to aggregate publishers, by the way.

6. We need a new ad model to track performance. We need some standardized way that advertisers can tell both impressions, clicks, lead-gen, even click-to-purchase. The good news is that it will breathe new life into ad buying because we'll be able to finally provide true numbers that can finally justify ROI in many ad buyers' minds. The bad news is it will change the psychology and economics of ad buying. Today, you buy a 90,000 or 2.5-million circ magazine, you assume 90,000 or 2.5-million impressions. But we all know that's not true. A digital reader will cause the industry to have to drop its drawers and reveal this. Ad buyers will be reluctant to pony up big ad bucks when its tracking system shows only 2,000 people saw their ad in that 90,000 or 2.5-million-strong magazine. On the other hand, there's no printing, paper, and postage. So our costs as publishers go down. We need to obviously pass that savings on to the advertiser. So the entire ad model will need to change. That's disruptive and painful, but it needs to happen. Let's at least try to control it.

Now, given all of the above, let's debunk some myths:

1. Information wants to be free; users won't pay for content. Apple's iTunes and Amazon's Kindle have disproved this. People WILL pay for electronic content if a) the transaction experience easy enough (think one-click), b) the price is low enough, and c) it can be "consumed" on a device that makes the experience highly usable (think iPod). If we provide a device that makes magazine reading highly usable, there's every reason to think readers would pay for content, assuming it met all three of these conditions. Micropayments have come a long way, but I still don't think we want to be asking people to make a purchasing decision every time they click a link, even if it's only five cents an article. But I DO think we can employ the latest micropayment ideas to ask them to engage in impulse purchases of entire magazines for, say, 99 cents or $1.49. Or a subscription for $9.99.

2. Reading screens is much harder than reading paper. Have you looked at a high-res laptop or iPhone screen lately? And I hate to be down on the e-ink folks, because the low-power, high-res e-ink concept is a neat idea, but Amazon's Kindle 2 did not have much higher resolution than my laptop, and to me, the high contrast and color display of my laptop screen hands down is better than the poor contrast and slow page refresh of e-ink screens.

3. People won't read more than a few Web pages on a screen. The key word in that sentence is "web". It's true, people won't read more than a few Web pages on a screen. There are two reasons for this. First, we are linear creatures. We like to flip through a linear reading experience. But the Web is hypertextual. The very nature of the Web precludes it from being linear. Am I going to click on every link in the nav bar to read every page of the NYTimes.com Web site each day? No way. But would I page through a 32-page premium edition formatted for a high-resolution, color e-reader of the sort described above? You betcha. And I'd pay for it too, by the way. The second thing that's going on in Web pages that prevents extended reading is the chock-a-block reading experience. As publishers, we're all cramming 100 pounds of crap into a five-pound sack. Ads, navigation, related articles, related sponsored links, related videos, comments, etc. It's too much noise. We can only take so much of it. It works at cross purposes with an extended reading experience. MAGAZINES, on the other hand (but not newspapers, sorry) are designed from the ground up for an extended reading experience. They are designed. And they are designed to provide an engaging reading experience over the course of 50 or 100 pages. By designers. Web pages, by contrast, on most web sites, are designed once, when the site is built (or rebuilt) and all articles flow into that one page template. We need to bring that multi-page design into the electronic realm. That's why I'm so keen on the digital magazine vendors. The Web has been a proving grounds for them. They've dealt with this challenge for 10 years now. They've learned a thing or two. Let's leverage their knowledge.

4. People won't pay $350 for the device. Well, that's not strictly true. Geeks like me would, but with that pricing model, these devices will never amount to more than a curiosity. However, there is a way to address the cost.

Publishing consortium to the rescue

Think about cell phones for a minute. The cost of the handset itself is wrapped into the monthly payment. Millions and millions--billions!--of $200 to $400 devices are being given out for "free" all the time-- with a two-year contract, of course. And look at worldwide cell phone penetration, as a result.

Now is the time for the publishing industry to step up and find a way to wrap the cost of the hardware into the cost of the content. Our pitch to our audiences: you want Time, People, Oprah, and Popular Electronics? Sign up for a two year subscription and your e-reader is $50. Or better, it's free. (The Silicon Alley Insider had a recent post that calculated it would actually be cheaper for the New York Times to simply give a Kindle 2 to all of its readers than to pay year's printing, paper and distribution costs.)

For B2B it's trickier since our magazines are already free, but there's no reason that both controlled and paid circ vendors can't form a consortium to get readers into as many hands as possible. Smarter people than me can and should speculate on how the pieces should come together, but it should involve publishers, digital magazine vendors, hardware makers, and aggregators. It should be a big solution involving many players. This is too big a problem for one company to solve on its own.

Plastic Logic is trying to be its own aggregator, but this will never gain critical mass, unless the hardware maker is Apple. Apple has a good chance to get this right, but not if they come out with a device with a 7" screen.

I don't think individual magazine publishers have the clout and financial muscle to develop their own hardware, despite what Hearst is trying. Plus, by definition, a single publisher would be loathe to create an aggregation portal with competing or non-related magazines.

Amazon COULD be an aggregator but I don't think it's likely for two reasons: 1) its business model is biased toward books and 2) it already has its own Kindle device. It's not likely to go back to the drawing board and start from scratch.

The dark horse candidate is us. The magazine industry. We could be the Hulu of magazines. Hulu is a Web site made by a consortium of television broadcasters that allows viewers to access branded broadcast content in one place online. We need to provide something similar: One place to sign up to get your free e-reader from any number of hardware companies, with any number of magazines from your favorite publishers, powered by software from any number of digital magazine vendors.

We could, by banding together in the manner described above, literally remake our own future by harnessing both the hardware and the software technology (that already exists, by the way) and funding our own non-print, non-post office, non-paper future. I'm not naive. As admirable as this sounds, in some ways, this is the least likely. There are so many financial, organizational, and technical hurdles to overcome. But if we could pull it off, this would be my personal favorite, and I would volunteer my time to participate in such an endeavor if it had the true backing of the industry.

Don't get me wrong, I think there is a future in Web-only publishing. The information technology publishers have already shown this is possible. But if we could find a way to transfer the linear reading experience to a non-Web, non-hypertextual, electronic reader environment, we would ALL have a new lease on life. Publishers could build thriving business that consist of equal parts Web sites and digital magazines on true e-reader devices.

Can we do it? Do we have the vision? Or the will? You tell me.