More Bad News For Amazon's Kindle: Newspapers More Focused On Smartphones

Hearst Corp. is finally about to launch its e-reader service for newspapers and magazines.

We made some calls to newspaper and magazine execs this week to determine how they are approaching this market.  In short: They’re listening, but they’re sceptical.  One, at least, is more focused on smartphones than e-readers.

Here are the highlights from a senior executive from a big newspaper company:

  • In ongoing discussions, Amazon has said it understands the Kindle is bad at replicating the experience of reading a print newspaper (no colour, awful for pictures, no ads) but has not given any indication if they will address this with new Kindle editions.
  • Revenue is currently minuscule so for now most newspapers aren’t concerned with poor economic splits (currently 70/30 in favour of Amazon) even if it sets a bad precedent.  Generally they think they can negotiate better splits if the market grows enough to make it worthwhile. [Keep dreaming?]
  • Less than 1% of the paper’s print subscribers are buying the Kindle versions (another $6-$11/month).  The low conversion is not too surprising since there aren’t many e-readers out there, but we thought it would be more than 1% at this stage.
  • The company is sceptical that smaller, local newspapers (the majority of newspapers in circulation) will ever find a place in the e-reader market.  This is because Kindles are best suited for travellers who read national newspapers.  Local advertisers are very slow to catch on to new advertising methods (they are just now starting to see the potential in search).  Magazines don’t have this issue since most are national.
  • The newspaper sees a greater opportunity in other mobile gadgets, such as smartphones.  For now, they are focusing on a strategy of building rich applications on smartphones that draw people onto their mobile site.

As an aside, some people we have spoken to in the industry have said Hearst may shift its strategy and choose to just launch the service without the actual hardware.

This info reinforces our scepticism that the Kindle will be as big a hit for Amazon as most analysts expect:

Amazon Making No Headway In Talks With Publishers About Cutting Kindle Book Prices >

Kindle Fantasies Are Running Wild — But, For Now, Amazon Is Losing Its Shirt >

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