Industry leaders discuss the future of E-Readers in a series of interviews conducted during May and June 2009.
By Alecia Swasy
Inside The New York Times, teams of news and business side folks are figuring out how to charge for content.
For the print editions, the Sunday price recently went to $5 or $6 a copy, depending on your zip code. For digital content, they’re wrangling with so-called “metering,” where readers pay for as much as they read. Or there could be perks for subscribers who pony up for a longer deal.
“Could there at least be a tip jar?”
The dream response to price hikes would echo Jeffrey Alexander of Kenosha, Wisconsin, who told The Times Public Editor that he’s willing to pay more to keep reading The Times. So enamored with the content, he asked: “Could there at least be a tip jar?”
Discerning readers like him are about to face yet another choice in how they get – and pay for -- their newspapers: an avalanche of e-reader devices set to hit the market by 2010. Amazon’s Kindle is leading the way, but dozens of others are courting Times executives.
“This is moving so fast. In the last two to three months, I’ve met with new, potential players every other week,” says Ray Pearce, Times vice president of circulation. “We are exploring opportunities to build The New York Times product on as many e-reader devices as possible. We view this as having the potential to become a sizeable distribution platform.”
As manufacturers call on Pearce, he screens them with five criteria:
- Ubiquitous connectivity. The ability to download content, anytime and anywhere on to the device.
- Robust e-commerce. “It has to be a one-click purchase,” Pearce says. This includes recurring billing for subscriptions, which keeps the news content coming until consumers cancel the subscription.
- Ease of use. It must be designed for reading, be easy to navigate and have a good battery life.
- Scope of content. “To be really successful, it has to be one stop for newspapers, books, magazines, blogs,” Pearce says.
- Advertising potential. “Is this device thinking about an advertising ecosystem?” Pearce says. Near term, it will be fueled by subscription revenue, but ad revenues will eventually be part of the business model as publishers build volume.
The New York Times appears to be ahead of the pack on how to repackage content for the e-reading experience. One advantage: the scope of its domestic and international news coverage. “We can build this to scale because of the interest in our content,” Pearce says.
Consider Times Reader 2.0, which was recently unveiled to give readers the “lean back experience associated with the newspaper, rather than the lean forward experience of the web,” Pearce says.
Times Reader 2.0 allows you to read the paper, section by section, but also gives updated news, just like you find on the website. You can also search news by photos and access seven days of content so you can catch up missed days. The subscription rate is $3.45 a week. Print subscribers get it for free.
“One of the things we hear over and over again from readers is the serendipity of flipping through the paper and coming across an article they never would’ve thought of,” Pearce says.
Pearce believes the product is “ideally suited” for the new NetBooks, the two-pound laptops meant for surfing the net and word processing. Another possibility is future devices that perhaps merge the iPhones or Blackberry with an e-reader. “We want to play in all of those spaces.”
…it’s important to understand the “economics of migration” as readers move across platforms and price points…
Pearce cautions that it’s important to understand the “economics of migration,” as readers move across platforms and price points, before making deals with device makers. The Times has the Kindle experience and its own models to figure out pricing. “Many Kindle subscribers never had a home delivery account,” Pearce says. “The industry needs to think about how we maintain that unique relationship, the one-to-one with subscribers.”
He believes newspapers should ideally maintain the billing for its content instead of readers paying another company.
Regardless of billing arrangements, “we believe publishers should set the price, not the device manufacturer. We do it in print.” He likens it to the delivery pact The New York Times has with metro papers. “In Chicago, the Tribunedelivers the Times to you. But the Chicago Tribune doesn’t set the price.”
That’s one of the concerns that the industry has raised. To get The New York Times via Kindle, it’s $13.99 a month, a price set by Amazon.
That’s less than paying for the print edition. To be sure, The Times saves some costs when distributed via Kindle versus tossing bundles of papers from a truck. The Times is currently looking at price and market testing to come up with the appropriate price for future contracts. “We’ve been excited with our relationship with Amazon. They’ve shown there’s a market for news content on e-reader devices and we look forward to a long relationship, “Pearce says.
Indeed, The Times is partnering with Amazon to offer consumers a one-year subscription to The Times and the newer, larger Kindle DX for a significantly reduced price versus buying each separately.
Another issue is maintaining the market data on consumers and the ability to pitch products to them. “We view all these customers, regardless of platforms, as customers of The New York Times,” Pearce says.
