The Dodge Retort

Marketer Lynn Kettelson sent me an insightful article arguing that Amazon CEO Jeff Bezos has the Kindle DX business model back asswards. The article claims Bezos wants a whopping 70% of newspaper subscription revenue generated by the Kindle DX. With that, he could the miss the huge opportunity that the Kindle DX has put within his grasp.

The author,  Dave Morgan, who sits on the board of newspaper concern A.H. Belo,  says Bezos has a wonderful opportunity to define  the market for portable readers and like many others think he’s on the road to success with technology piece of the equation. He could be on the verge of an iPhone-like franchise and in that vein, he should be investing in promoting the DX to several constituencies, not trying to grab the lion’s share of the revenue, Morgan writes.

I generally agree with Morgan’s assessment and have a call into Amazon to determine if the 70 per cent formula is the foundation of the business strategy. The New York Times, Washington Post and Boston Globe with is teetering on the brink have agreed to do DX trials.

Morgan’s criticism of the purported terms seems justified if for no other reason that most newspapers are flirting with extinction. What’s more, many if not most under forty somethings readers are unlikely to shell out the $489 for the DX given their disinterest in newspapers and in many cases, news.

Bezos’ message seems to be that it’s up to newspapers to figure out a more effective and efficient way to put the news and ads before reader eyeballs. The DX is simply another option beyond web sites. If newspapers can claim readers, but doesn’t have to print and deliver a newspaper to them, there is immense cost savings. Bezos clearly wants a piece of that savings. After all, this is a guy with legendary mechanical aptitude, according to his Wikipedia  profile which says as a toddler, he tried to dismantle his crib with a screwdriver. Now he wants to dismantle the presses albeit with a much more sophisticated tool.

But if he truly wants to save newspapers, he should buy or maybe start one that only distributes content on the Kindle DX. He wouldn’t even need the bother of a web site. He’s worth $8.2 billion and his ranking on Forbes World Billionaire List is number 110. What’s a bil or two for newspaper that could sorely use the investment (my favorite newspaper, the Boston Globe is for sale, I’m sure…). Of course, he’s hardly encouraged when billionaire Warren Buffet says he wouldn’t buy a newspaper at any price.

Morgan talks much more depth about what will persuade consumers to embrace the DX such as attracting developers to write applications for it, making nice nice with newspapers which can promote the DX and perhaps most important of all, devising an Internet ad model and taking on Google in the process. Forget subscription revenues which have never covered any more than a fraction of the cost of putting out a newspaper.

“Make the enemy of your enemy your friend,” Morgan writes. By that, he means now is an opportune time to on Google which is mistrusted by publishers and being scrutinized by regulators.

I’d like to offer one more word of advice: buy, er, rescue  a newspaper and deliver content exclusively by the DX (of course, you would have a web site…I was just kidding about that).  Don’t leave it just to newspapers to prove the DX’s worth. You do it, too.

For the past three days, the Boston Globe has failed to deliver my paper which I have sorely missed given my newspaper lifelong habit.  So I curled up with my netbook and morning cup of coffee to turn into the Globe’s web site, Boston.com to get the latest headlines. It didn’t quite have the scan-ability of the paper, but the netbook was readable and Boston.com more up to date than the dead tree edition.

Now I can use Amazon’s new Kindle DX which is geared for newspapers. Introduced today in New York the $489 DX is about $100 more than what it costs me for my annual seven day subscription to the Globe. The Globe, New York Times and Washington Post are doing DX trials and will offer to select subscribers at a reduced rate.

Kindle DX for newspaper, professional docs

Specs-wise, the DX appears very powerful with its 9.7 inch (2.5 times that of the current Kindle 2′s 6-inch display) and a 3.3 GB memory which can hold 3,500 books and presumably years of actual newspapers such as they will be in the future. UPDATE: An Amazon spokeswoman says it will hold “thousands of newspapers.”

No doubt, the presses are going away and the DX will help accelerate that trend. Once that happens, what is a newspaper exactly? Perhaps Amazon could help define them with the DX which also supports professional PDFs for consumption of professional documents.

Co-incidentally, the Boston Globe last holdout union today agreed to massive givebacks or faced the shutdown of the newspaper. That’s how bad it’s become for newspapers.

Is the Kindle DX the savior of newspapers? No. Many readers are gone for good and readership among under-40 somethings is low. And what can the DX give readers that a netbook and regular newspaper web sites can’t so well? Clearly, one thing is storage and archives. Another are six font sizes for codgers like me with tired eyes. Another thing is something resembling a newspaper in a digital format, but it’s unclear how many under-40 somethings really care about that. They’ve been weaned on web sites, after all.

One has to give Amazon founder and CEO Jeff Bezos credit. He has stuck with it and while sales numbers are hard to find, the Kindle 2 introduced in February sold strongly in the first quarter helping to boost Amazon revenues by 18%. But books are one thing and newspapers quite another. The DX will be a tougher sell given the permanent defections of readers and advertisers to other media.

Below are the DX’s features from the Amazon press release:

• Wirelessly send, receive, and read personal documents in a variety of formats such as Microsoft Word and PDF
• Look up words instantly using the built-in 250,000 word New Oxford American Dictionary
• Choose from six text sizes
• Add bookmarks, notes, and highlights
• Text-to-speech technology that converts words on a page to spoken word
• Search Web, Wikipedia.org, Kindle Store, and your library of purchased content
• No setup required—Kindle comes ready to use—no software to load or set up