The quest for the Holy eGrail

Current developments in e-books and e-readers may end up having dramatic effects on the mainstream newspaper industry, about whose future I’ve been musing in recent days.

A significant part of the problems being experienced by old media companies generally, especially Fairfax in Australia and to a lesser extent Murdoch worldwide, is that we’re in a transitional phase between the old world of print media and the new wholly online world.  During this phase, old media companies are forced to maintain their existing expensive, labour-intensive print infrastructure and physical distribution networks while simultaneously developing new and even more expensive state-of-the-art online platforms to deliver the same content and advertising.

They can’t avoid either element because a large though progressively falling proportion of their audience still relies predominantly on print for news and information, but more and more of their young audience especially is migrating to the web as their major source of news, information, entertainment and social interaction.  If old media fails to develop adequate web platforms their audience and customer base will be stolen by leaner, meaner web-only competitors not laboring under the additional overhead burden of a print and physical distribution infrastructure.  For example, eBay and similar smaller operators have liberated a significant amount of what would previously have been newspapers’ classified advertising “rivers of gold”.

However, the time is fast approaching when the old media corporations like Fairfax and Murdoch will be in a position to jettison their print operations and move to a wholly online model.  The key to timing of any radical business decision of that sort will lie in how rapidly their customers adopt e-reader or tablet technologies as their primary delivery platforms for reading material and entertainment.

Google’s announcement this week of its new eBookstore may mark a decisive stage in that shift:

There are several things going for Google with this new offering. The first is they are representing smaller book distributors in their store which the larger ones have bypassed. They are offering a large selection of free books which will encourage many to participate. The biggest item going for them is they are device independent. …

Google is offering the ability to read an electronic book on any device which can connect to the web. That includes you mobile phone, your laptop, your desktop computer and most importantly is your tablet. This is where things are going to shift away from how eBooks are read today. Tablets will turn into devices people carry with them everywhere they go during the next year. We are in the early stages of tablets and will see many released next year along with the iPad 2 in the 2nd quarter.

With two of the world’s largest tech-related corporations in Google and Apple now competing with the longer-established Amazon for the e-book and e-reader market, both price and availability of product and delivery platform are likely to plummet quite quickly.  Moreover, unlike Amazon and Apple, both of whom are notorious for using every trick in the e-book to create or maintain a closed shop monopoly, Google is pursuing a more open source cross-platform approach which is far more likely to grow the market much faster.  It’s similar to the model they’ve been pursuing with their Android mobile phone platform.

The other barrier to wholesale adoption of e-readers to date has been inherent limitations of the available technologies.   To date there have only been two real options, backlit tablet computers like the iPad or e-ink e-readers like the Amazon Kindle. Tablets like the Apple iPad have the advantage of full colour display and rapid screen refresh rates, which means they’re excellent platforms in many conditions for the full range of web browsing including reading books or magazines and watching video content.  However they’re hopeless in outdoor high light, high reflection conditions, and some people experience eye-strain from using them for reading for a long period.((Not a problem I personally experience.  I read from a computer screen for many hours every single day without any problem at all ~ KP)) Moreover, battery recharge times can be a problem for people on long journeys wanting to rely on an electronic device for reading to while away the hours.  They’re also too bulky for users to put in their pocket or handbag as you can (at a pinch) with a paperback book.  You can’t do that with a newspaper, but they’re an instantly disposable item unlike a tablet reading device costing several hundred dollars.

The other major e-reader platform, namely e-ink devices like the Kindle, avoids most of the problems with tablets in that it only draws on its batteries when refreshing the screen (which is only necessary when moving to a new page), is just about as good as paper for reading in high glare conditions outdoors, and doesn’t create the eye-strain problems associated with backlit computer screens.  However, the current generation of e-ink e-readers can only display in black and white and have very slow screen refresh rates, which makes them totally unsuitable for general web browsing and especially watching video content.  Given that the modern online newspaper contains a great deal of video content and lots of colour, a platform like the current generation Kindle is sub-optimal, certainly not the salvation of Fairfax or Murdoch.

The Holy eGrail of e-readers would have a non-backlit screen easily readable in high glare conditions; full colour display; fast screen refresh rates; long recharge times; touchscreen operation; and ideally be flexible enough to be folded or rolled for easy carrying.

It appears that the Holy eGrail is about to materialise, with technologies like the Mirasol e-reader (although its refresh rate at 12 frames per second isn’t really fast enough to permit video viewing),  and the Bridgestone QR-LPD (Quick Response Liquid Power Display).

Of course it will take time for this new generation of e-readers to become sufficiently ubiquitous for it to be a viable business model for corporations like Murdoch or Fairfax to abandon their print infrastructure and distribution networks and rely wholly on online delivery.  Even though Australians are said to be earlier adopters of new technology than many other countries, the majority of older Australians will certainly remain figuratively glued to paper for some years yet.

Nevertheless it might prove feasible for a corporation like Fairfax to reduce its “legacy” print operations to a single plant in either Sydney or Melbourne in the next 5 years or so.  Once that occurs,  the cost structure for “newspapers” will change dramatically for the better, especially for media companies which embrace new paradigms like the “pro-am” journalism concept I discussed in a recent post.  The trick in the meantime will be to sustain financial viability even if profit margins continue to erode, especially by maintaining and preferably improving the quality and quantity of content, delivering it in a more intelligently discriminating way to different audience demographics, and protecting as far as possible the residual “rivers of gold” from classified and display (cars, houses etc) advertising.  Fairfax and to a slightly lesser extent Murdoch still have a substantial asset to protect in that regard even though they haven’t until now been as nimble or imaginative as they might have been.

I’m nowhere near as negative as many about the medium term future of the existing big media corporations.  Mind you, it isn’t my money on the line so I can afford to make fearless crystal ball-gazing predictions without any anxiety at all.

About Ken Parish

Ken Parish is a legal academic, with research areas in public law (constitutional and administrative law), civil procedure and teaching & learning theory and practice. He has been a legal academic for almost 20 years. Before that he ran a legal practice in Darwin for 15 years and was a Member of the NT Legislative Assembly for almost 4 years in the early 1990s.
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10 years ago

I never understood why they wouldn’t ramp up the price of the tree version while charging considerably less for the web version. I think that will be the direction going forward though.

Moreover, unlike Amazon and Apple, both of whom are notorious for using every trick in the e-book to create or maintain a closed shop monopoly, Google is pursuing a more open source cross-platform approach which is far more likely to grow the market much faster.

How do you mean? Amazon accepts the Ipad and set up a kindle application for it. I don’t know about if Apple have as I haven’t bought an Ebook from them. Do you means something else perhaps?

Also Amazon has gone into E-retailing in a huge way and if there’s one group that will pay the price in the process of creative destruction it will be the Malls and large store type set ups. Harvey Norman’s whining, demanding protection recently was only the beginning. You can now go into a Harvey Norman select the TV you want and get a competitive price from an E-retailer using a smart phone. Amazon provides competitive pricing right now in the US. E-sales were up hugely after their recent Thanksgiving start of the shopping season.

But getting back to newspapers there’s no huge concern for those papers that provide the reading quality people want. I know you don’t like Murdoch however he is a genius when it comes to this stuff. The London Times just recently crossed past it’s 100,000th subscriber. If you sell what people want at a good price they will buy it.

I also know you dislike the Oz, but look at what they were able to achieve this week. They scooped the competition in being able to publish Assange’s opinion piece. That’s good old fashion newpaperiing. It won’t matter if it’s done on a tree version or the web. People will buy it if you’re adding value.

Fairfax has too many head winds. The stock price is $1.45 and the asset value on a break up could potentially be worth $2.25 by some analysts estimates. They are worth more dead than alive. Dead in the sense of being broken up and perhaps someone with patience and money can help the two mastheads make a new life for themselves.

10 years ago

oops should proof read sometimes.

Nicholas Gruen
Nicholas Gruen(@nicholas-gruen)
10 years ago

“The Holy eGrail of e-readers would have a non-backlit screen easily readable in high glare conditions; full colour display; fast screen refresh rates; long recharge times; touchscreen operation; and ideally be flexible enough to be folded or rolled for easy carrying.”

With optional backlighting if desired!

10 years ago

When the French started shipping out minitel terminals, the deal was that you could get the minitel for free but then you didn’t get any more phonebooks. You could search for phone numbers on minitel and do a bunch of other stuff (like their version of email, etc) and it tended to charge small amounts for the various services (the phone company already had billing infrastructure for micro-fee services).

All things considered: the terminals were mass produced, and they saved in printing costs and made money in service fees — giving them away free made excellent sense, thirty years ago in 1980.