Electronic Reading Devices : E-Readers’ Effect on Print

IN THE beginning, there was the Amazon Kindle and the Sony Reader heading the field of electronic reading devices. In 2009, Barnes & Noble made a splash with its critically acclaimed "nook" e-book device.

Then there was the 2010 Consumer Electronics Show (CES) in Las Vegas last month, which may prove to be the seminal moment that triggered the e-reader explosion. According to the CES Website, there were 23 companies showcasing their wares in the eBook TechZone. There is now a multitude of e-readers for book, magazine and newspaper digital content, ranging in price from $199 to $800 and above.

You can't keep track of the offerings without an e-scorecard: the Skiff reader, Samsung e6, QUE proReader, Entourage eDge, iRiver Story and Aluratek Libre Pro, not to mention the new Sony Daily Edition. The Sony Daily Edition allows users to access content, including the Wall Street Journal and New York Post (a partnership with Rupert Murdoch) from the Sony store via wireless connectivity. And these offerings are only the tip of the e-reader iceberg.

It's not just technology mavens who are courting the new media outlet. In December, the five families of publishing, so to speak—Time Inc., Condé Nast, Hearst, News Corp. and Meredith—formed an independent venture to develop open standards for a new digital storefront and related technology, allowing consumers to access media content from these heavyweights via digital devices. Time Inc. also unveiled a prototype of its Sports Illustrated title on a tablet device, complete with video clips and other multimedia functions.

A One-Two Punch

For printers and many ink-on-paper publishers of catalogs, magazines and books, the trend is troubling. Advertising pages were dwindling long before the onslaught of e-readers as advertisers curtailed their spending in the traditional hard copy medium because: a) they were dialing back on spending due to the economy and b) they were interested in pursuing electronic alternatives. Newspapers were the biggest victims of the electronic age, as free content burned a hole through their tenuous business models.

Printing industry guru Frank Romano, professor emeritus at the Rochester Institute of Technology, estimates that electronic versions have cannibalized about 15 percent of all printing of books and magazines. He also quoted a statistic that 80 percent of all the e-books that have been downloaded are free, from the public domain.

Romano says it is a mistake to assume that electronic content will eventually replace books. The long-term preservation and accessibility of printed works will depend on the endurance of paper, whereas electronic dissemination standards have yet to become similar and open. Protection of works, rather than sharing, has become the norm.

"I don't think there will be standardization, because every publisher wants to protect its little part of the world," Romano says. "Kindle will use its method, Barnes & Noble its method and, in some cases, it may be that you can use the same file in both. Digital rights management becomes the biggest problem. If I buy that (paper) book, I now own that book and can resell it. But, if I buy an e-book, I have only bought a license for that book.

"It's going to be chaos. You'll have all different e-book readers, all different file formats, people who want to read paper and those who don't mind reading electronic books. And, there will be people who will go back and forth between paper and electronic," he adds. "It's going to be an uneasy alliance between the two."

The magazine side is a different beast, and the same can be said for its business model. The erosion of the advertising base has encouraged publishers to look at digital avenues to cut costs and create new revenue streams, according to Romano. Trackable digital ads also provide a more concise measure for advertisers.

"Within the next five years, we will lose half of the magazine pages in America to electronic versions," he predicts. "It doesn't mean (publishers) won't publish a printed version. We may see an entirely new model where, although Printing Impressions is free now, I might pay a small amount to get the printed version of it. The electronic version would be free and the paper version becomes the premium."

Proving Print's Value

While Romano sees value in tangible, hard-copy printed products, it's the advertisers that need to be convinced in order to stave off the downward trend in ad pages. It is reasonable to presume that some level of paid pages will be recaptured as the economy returns to more sound footing. But, for half of that loss (or more) to be recouped over the next 18 months—during which period publishers beneath the level of the "five families" will struggle to reconcile costs or redefine their business models—the onus will be on publishers to reaffirm the value proposition of the printed product as a viable advertising vehicle.

In short, it is the battle of the click-through ad versus reader service. Is the click-through ad an empirical measuring stick of proof, more effective than the printed ad? Or is the advertisement, in any manifestation, just part of the overall process that guides consumer A to the checkout line with product B? It's a debate central to the overall question of how e-readers will impact the future of printed publications.

Romano, for one, feels printers should avail themselves of other opportunities. "Printers need to look at other printed products that are not affected by the electronic reading change," he says. "For example, I know packaging will remain on paper or plastic; you won't send a box of Wheaties through the Internet. Look for those things and change the mix of products that you print. RR Donnelley has done a good job of this, looking at the magazine market, the catalog market and now the direct mail market. They've gotten into the in-house printing market and specialty printing. Some printers have planned for the future by developing new capabilities and moving into markets less susceptible to electronic communications."

Although a number of magazine sectors have been hard hit by the economy and redirected ad dollars, the overall health of publications remain surprisingly strong. Just ask Dr. Samir Husni, a journalism professor at the University of Mississippi and director of the Magazine Innovation Center there, as well as author of the annual Samir Husni's Guide to New Magazines and the head of his own magazine consulting firm. He notes that on the strength of the consumer space, more than 700 new titles debuted in 2009, an increase over the previous year.

Magazines have been down this road before, according to Husni. Staples such as Life, Look and The Saturday Evening Post boasted circulations in the seven to eight million range, only to be wiped out by television. The wise publishers adapted, stopped competing with TV and developed their own niches. Others have leveraged the strength of cable television, as evidenced by newcomer titles Food Network Magazine and Every Day with Rachel Ray, both of which claim circulations in excess of one million readers.

"Magazines are more than just reading material, they're an experience," he points out. "And, that experience can't be duplicated by any of the electronic gadgets now available. The smart publisher is not leaving a single stone unturned in trying to be everywhere—giving readers what they want, at the time they want it, in the way they want it.

"The sad part is, some of our major publishers are in comas," Husni adds. "They want to do the same thing over and over, and they expect the same results. That's just not going to happen."

The key for publishers is creating an experience unique to the magazine. He believes the answer is in convincing subscribers to pay for the experience of the magazine and its online companion. Free and semi-free content available in both channels has created what Husni terms "a welfare state, a sense of entitlement."

As an example, Husni recently asked his students if they would pay $19.95 a month to access the content on ESPN.com. Without exception, the students said they would seek free information elsewhere. It's a phenomenon unique to this country, he says, and it is a habit difficult to break. Now, it's incumbent on publishers to establish their content as a paid product after giving it away for far too long.

Magazines cannot compete with electronic alternatives in terms of delivery speed and the news. Celebrity gossip magazines like People still thrive despite online access to information, Husni says, and it's not just a function of paid advertising.

"In my view, what everybody is missing is that magazines are more than reading material; they're an experience," Husni stresses. "If we boil this experience down to reading, then we have no future. Why do people pick up 1.7 million copies of Cosmopolitan every month? Just to read about sex? There's plenty about sex on the Internet." PI

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