Hearst to launch a wireless e-reader
The publisher plans to introduce a large-format device this year based on electronic-ink technology.
NEW YORK (Fortune) -- Against a backdrop of plummeting ad revenue for newspapers and magazines, and rising costs for paper and delivery, Hearst Corp., is getting set to launch an electronic reader that it hopes can do for periodicals what Amazon's Kindle is doing for books.
According to industry insiders, Hearst, which publishes magazines ranging from Cosmopolitan to Esquire and newspapers including the financially imperiled San Francisco Chronicle, has developed a wireless e-reader with a large-format screen suited to the reading and advertising requirements of newspapers and magazines. The device and underlying technology, which other publishers will be allowed to adapt, is likely to debut this year.
So-called e-readers like Kindle and the Sony Reader are hand-held gadgets that use electronic "ink" displayed on a crisp, low-power screen to deliver an experience that approximates reading on paper - without the cost of paper, printing and delivery, which can account for as much as 50% of the cost of putting out a periodical.
Hearst executives declined to provide specifics about the forthcoming e-reader, but Kenneth Bronfin, who heads up the interactive media group for Hearst, told Fortune in an interview for a forthcoming magazine story that the publishing company has a deep expertise in the technology. "I can't tell you the details of what we are doing, but I can say we are keenly interested in this, and expect these devices will be a big part of our future," Bronfin told Fortune.
Bronfin led an investment by Hearst more than a decade ago in E Ink, a Cambridge, Mass.-based startup spun out of research at MIT, that supplies the electronic-ink technology used in the vast majority of e-readers on the market today, including Amazon's (AMZN, Fortune 500) Kindle, devices from Sony (SNY), and a crop of next-generation products set to launch in the next 12 to 18 months.
With print revenue in decline and online revenue unable to fill the gap, the $300 billion global publishing industry is increasingly looking to devices like e-readers to lower costs while preserving the business model that has sustained newspapers and magazines.
Insiders familiar with the Hearst device say it has been designed with the needs of publishers in mind. That includes its form, which will approximate the size of a standard sheet of paper, rather than the six-inch diagonal screen found on Kindle, for example. The larger screen better approximates the reading experience of print periodicals, as well as giving advertisers the space and attention they require.
Given the evolving state of the technology, the Hearst reader is likely to debut in black and white and later transition to high-resolution color with the option for video as those displays, now in testing phases, get commercialized. Downloading content from participating newspapers and magazines will occur wirelessly. For durability, the device is likely to have a flexible core, perhaps even foldable, rather than the brittle glass substrates used in readers on the market today.
What Hearst and its partners plan to do is sell the e-readers to publishers and to take a cut of the revenue derived from selling magazines and newspapers on these devices. The company will, however, leave it to the publishers to develop their own branding and payment models. "That's something you will never see Amazon do," someone familiar with the Hearst project said. "They aren't going to give up control of the devices."