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Last August, we wrote this postscript to a post about the Kindle's holiday sales prospects: "I didn't want to write a separate post, but if I were doing marketing at a newspaper, I'd start figuring out if bundling a 2-year subscription and a bulk Kindle buy would knock down the price enough to horn in on some of this Xmas shopping action. Not only would the newspaper subscriber get a Kindle, but it would actually come with something to read every day."
Brendan Kiley's post just tipped us off that someone has been doing that figuring. The Silicon Alley Insider's Nicholas Carlson estimates that the New York Times could send its 830,000 two-year subscriber base a free Kindle and that it would still cost half what it costs to print and distribute the paper.
He closes with this capper: "And here's the thing: a source with knowledge of the real numbers tells us we're so low in our estimate of the Times's printing costs that we're not even in the ballpark."
The math is very back-of-the-envelope, but it's eye-opening to compare costs. (And yes, doing away with 830,000 newspapers' worth of print advertising tomorrow would sink the New York Times.) Why? Because, as Slate's Jack Shafer argues, the Kindle's subscription service illustrates that people will pay for online "delivery," and given the price disparity between print and online advertising, another stable revenue stream had better appear from somewhere.
If that gives the media formerly known as newspapers the chance to ride the emerging wave of e-reader adoption, so much the better.
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But, as one of the commenters on Carlson's post points out, his calculations leave out the LOSS of print ad revenue in this model. So yes, people are willing to pay for E-delivery, but I bet it wouldn't be enough to cover costs still.
Yes, it wouldn't be likely to make up the difference--but it would reduce the difference that needed to be made up substantially. I am more excited by it as a legitimate revenue stream that gives e-news sources a relationship with subscribers that will open up new revenue streams. Once it's implemented, I'm betting people will think of all sorts of new things to "deliver" to subscribers via the new platform. Also, an e-reader platform gives you an emerging market to sell to, rather than a print audience that's in decline.
So why not include ads in the kindle version? Likely fewer than the print edition, and likely at a reduced cost, but enough to make this whole think feasible.
Yes, and I think you can remonetize (if that's a word) the ads for the platform--i.e., ads on a Kindle, because fewer; shown only to qualified, regular readers (subscribers); and targetable on a very interactive daily basis, would cost more than typical online ads.
That makes much more sense to me though it may be a hard sell. People are less likely to want to see ads if they are paying a subscription, I imagine. This is pure conjecture, I'll admit. But it seems intuitive. So someone would have to study that.
But, I think you're right MvB in your original reply to me: This model closes the gap that needs to be made up and people will become smart about other things to offer. BUT, I question if this can be a savior for the PI because A) It is losing so much money now. Does it have breathing room that will allow it to wait? B) Is the Kindle ubiquitous enough to make the numbers work for the PI the way they seem to for The Times?
Also, and this is something we who write are not talking much about as we look around our newsrooms and wonder who's next on the chopping block, but this model still results in massive job cuts: the people who work the printing machines, deliver the papers and whatnot. I'm not saying we need to save print in order to save their jobs. There are a whole host of reasons why that shouldn't be done. But those jobs and those people DO need to be thought about.
Just sayin'.
I think it's going to be evolutionary, Charles. I am old enough to remember when the appeal of cable TV was that it didn't have ads. And of course I subscribe to the print P-I and its ads currently. I think the key will be to develop advertising that makes the most of the new platform, rather than just slap banner ads onto the Kindle.
As for "saving" the P-I, I am pessimistic--it seems more likely to follow a seed log model: the mighty tree will finally fall, and feed groups of seedling journalism ventures, hopefully some of which will take root. It sounds like PlasticLogic's reader is close to ready, but it hasn't sounded like Hearst is. That's a mistake, I think, because the first mover here has a chance to operate as a news gateway (in the way that Amazon became a gateway to online shopping before that became mainstream). I'd stay platform agnostic--offer subscribers a variety of devices--but brand "24X7 local news delivery."
On the print side, I still think there's a business model there--a significant proportion of readers really like print, even need that solution because online access isn't as easy and reliable. But I'm not familiar enough with the cost structure to say when it ceases to make sense as a niche product.