This is a replay of a conversation with my father who spent most of his life as a media executive (though not with any company that I've ever worked for).
Dad: Oh, you have the Kindle?
Me: Yes. It's pretty neat. Raises a lot of interesting questions though
Dad: Based on what I've read, it sounds like a catalyst that's really going to change things in the publishing industry.
Me: True. But bear in mind that it's not the first ebook reader.
Dad: But you can get the newspaper with it.
Me: Yes. For example, the New York Times.
Dad: When you read the New York Times on the Kindle, does it have advertising?
Leave it to an ex-media exec who hasn't even touched a Kindle -- my father no less -- to ask one of the most incredibly obvious questions that the Kindle raises; a question that completely escaped me until last night's phone call. It's a brilliant question because of the answer's implications and for anybody who's involved in the media industry or who likes to watch it (like me), it's a real conversation starter.
Looking at a typical New York Times story on the Kindle -- which I did today (see image, right) -- the answer is no. What could that mean?
Before the blogosphere, RSS, and even the Web rolled around, the established media had most of its business model questions answered. To get the New York Times, you had to pay a nominal fee. But the majority of the Times' revenues came from advertising.
When the Web came around, you didn't have to pay to get your "copy" of the Times (and you still don't) and that convenience of reading it online, for free, is brought to you, courtesy of the Times' online advertisers. Along come blogs and RSS and the business model gets a little dicier. The Times' runs a great many RSS feeds (as we do here at ZDNet) but they don't carry the full text of the story. They don't have ads in them either. It's a pain point for any media company: could the nugget of information you pass for free, through your RSS feed, be enough to satisfy your readers' informational need and might they stop visiting your Web site as frequently as they were before? What's the remedy if RSS is doing more harm than good? Perhaps you do like InfoWorld: you send the full text of the story down the RSS pipe with an advertisement. It's more convenient for the end-user (no additional clicks necessary to get the entire story) and the advertising is embedded.
Finally, every established media company (and even the newer ones) has at one point or another fancied the idea of charging a subscription fee for access to online content. Some have stratified it: this new stuff is free, but the old stuff (if you're researching) isn't. Like I said, they've fancied the idea. Most media companies have been paralyzed to come up with a way to wrangle a subscription fee out of audience members for the digital version of what they have to offer. The same goes (or is going) for the non-digital versions.
I remember when the Village Voice in New York City once charged money for its newspaper. Now its free (this change happened in the mid 90s). Like other papers in its genre, the Village Voice is an ad-supported venture, both online and in print. This, if you ask me, is where most newspapers (and probably most media companies) will end up. And if you also ask me, Amazon's release of the Kindle could be the watershed event that pushes them there.
Maybe not right away, but eventually.
That's because no reader is going to put up with ad-bearing content on the Kindle. The screen is just big enough (and the range of user-selectable typefaces for displayed text is just wide enough) to support very easy reading. Any bigger and Amazon would have missed the sweet spot it targeted: the basic size of a paperback. Any smaller and, especially at the larger typeface sizes, the display would have been too small. Users would have been aggravated by the number of times the Next Page button had to be pressed to read anything (today, they're just aggravated because of how the Next Page button is too easy to press -- which it is). There's really no room for ads. And besides, there are plenty of other opportunities in the Kindle (some being taken advantage of already, others not) to pimp something off on Kindle users. Amazon already sells books through it. There's no reason Amazon can't sell everything else that's available via Amazon.com through the Kindle as well.
So, where are we?
Thanks to the Kindle, you can now read the New York Times without any advertising. Let me repeat that. Thanks to the Kindle, you can now read the New York Times without any advertising. The same goes for the Wall Street Journal and other newspapers. The user interface for finding stories of interest is still a bit Neanderthal. But, the Kindle's size and form factor make it just right for consuming the digital versions of a newspapers. Given how convenient it is (subscribed-to newspapers just show up in my Kindle now matter where I am) and how ad free it is, the Kindle version of the New York Times and Wall Street Journal represent the first time in more than a decade that I'm seriously considering paying for a subscription to both (NYT: $14.99 per month, WSJ: $9.99 per month).
Now let's put the shoe on the other foot.
It took Amazon to do it (and the Kindle's convenience is the enabler). But finally, media companies have a way to charge subscription fees for the digital versions of their content -- fees that given the convenience and ad-free environment, I'm guessing many people will be willing to pay. Amazon, of course, gets a cut. But when I look at this and realize how CNET as a media company (ZDNet's parent) has at times struggled with that same question of how to offer existing or premium content to our audience members on a paid subscription basis, Amazon is showing us the way. It just took a client device like the Kindle -- with all that networking and commerce infrastructure so transparently tucked behind it -- to make it happen.
So, where do things net out?
For starters, the Kindle makes it very clear that, provided the convenience factor is right and the usability is good, content consumers will very likely trade their money for non-ad-bearing content. On the other hand, you don't need to read many newspaper stories on the Kindle before arriving at another important question: "Now that I can do this with the Kindle, why would I ever pay for ad bearing content again?" In other words, why would you ever pay for a printed newspaper or magazine that's full of ads when you can have the same exact content in your Kindle for less money?
As scary as that may sound to anyone relying on ad bearing content to make a living (newspapers, magazines, bloggers, podcasters, etc.), the Kindle really makes the business model question simple: There's a paid version of the content with no ads and there's a free version of the content with ads. When a Web browser was the only choice for consuming a potentially ad-free digital version of some media outlet's content, the end-user devices (PCs or PDAs/Smartphones) simply weren't compelling enough to break the business model into these two separate approaches. PCs (even portables ones) aren't really designed with reading in mind and such reading is nearly impossible on PDAs and smartphones. Perhaps Nokia's N810 wireless tablet comes close to being such a device. But even that is more a general purpose device than one designed with reading in mind.
The Kindle (along with the accompanying infrastructure) really breaks that mold. And to be fair, the Kindle won't be alone. There will be other devices like it, some from Amazon, others not. As a result, content consumers will very likely be inspired to accept nothing but the two alternative approaches. As it turns out, that might not be so bad for publishers either since finally, there's a consumption device out there that's compelling enough to motivate audience members to actually pay to get the content.
<sidebar> One question I have asked Amazon is, if I'm a content publisher (big or small) and someone subscribes to my content on a paid basis (for consumption on the Kindle), what if any information do I get about that new subscriber. When I get the answer, I'll publish it here. </sidebar>
Finally, the Holy Grail would be if this model rubs off on application providers as well. Today, when I see a new Web app that's ad-supported, one of my first questions is "Can I get the non ad-supported version by paying a fee?" Today, the official public relations handbook instructs most execs to respond with the boilerplate "That's something we're considering." We'll maybe now that the Kindle might be setting the expectations of end-users, they'll consider the idea a little more seriously.