IFRA

Amazon is cranking out e-reading devices at a rapid pace – three devices in the past 17 months – and it all makes good business sense: The company has the cash, so why not invest to take market share now when everyone else is cutting costs on innovation and marketing.

Does this strategy sound familiar? Yahoo did it in the early dot-com years, and Google followed suit during the financial downturn around the millennium.

But now the battle begins – around business models, players in the value chain, and the push for future standards.

DX drama

First, let me take you through the recent releases. Now the Kindle is a family of three. The latest release, the Kindle DX, focuses on a larger size (9.7 inches), native PDF support and auto-rotate, compared to the previous two models. As usual, Amazon CEO Jeff Bezos chose a suitable venue to launch the DX – Pace University in lower Manhattan. For one, he could twist the ears of the students and professionals on hand about how convenient reading and carrying books can be with the DX – six universities will pilot the DX as a textbook reader including Pace. And two, the campus is fittingly located on the site of the 19th-century headquarters of The New York Times, which will partner with Amazon to distribute its content.

Under the radar

Two other releases have been less talked about but to me are equally important: First the launch of an iPhone application that will allow you to continue to read your books on the iPhone if you don’t have your Kindle around. It’s not nearly as good as reading on the Kindle but good enough for reading snippets and your favourite book for a few minutes instead of (meaningless) browsing of different applications.

The second release is not an iPhone application but an optimised mobile website for the Safari browser. So what is so interesting about this? It’s simple to use the nice interactivity of the iPhone and Touch platform to swiftly browse the Amazon web store to look up recommendations or search for your titles in an efficient way – then use one-click shopping. When you are done shopping, you simply turn on your Kindle and in 30 seconds your books, magazines or whatever you bought are downloaded. It’s a short-term, efficient solution until you have a speedy, colour e-reader to also do the shopping on one device.

But for the media and especially the newspaper industry, there are two very important issues to be addressed – business models and standards (openness).

Let me start with standards and the importance of open platforms. To me, this is far more important than the form factor and tech specs of e-readers: Colour, size, high-level interactivity, a multitude of choices WILL happen in due time. The evolution in the labs of Japanese, Taiwanese, Korean, European, and American suppliers in this sector are very promising. And all of this will happen sooner than you think.

So what about standards?

This is trickier; no one is really pushing for one standard as W3C did for the web. It is crucial that the industry joins forces and pushes for one standard, or a set of standards. Why? It is established that mass-market acceptance is never achieved until doubts are erased that one device can indeed handle many sources of information.

So how is Amazon piling up impressive sales figures with a closed propriety DRM (digital rights management) format? Simple, because it can offer such a vast number of titles that consumers are likely to feel reassured. However, to reach millions of global users, this must change.

A recent example is the high-definition DVD battle that ended last year when blue-ray became the single standard for watching HD movies at home. Now you see a global uptake in that market because people feel secure about their content and technology investment.

It is only fitting that IFRA encourages a global call for action in this matter, so we hope you will join us. While we are working on more long-term standards, there is still no better time than today to kick off your own e-reading business and strategy.

Business models

Because Amazon has this huge selection of titles, it is in the driver’s seat to control the bigger part of the value chain, have closed standards, and, thus, dictate revenue share. In the short term, this works because consumers buy into it. But Amazon’s greed of taking the rumoured bigger part of the revenues will hurt market growth.

Let’s take Japan as a role model: From the start in 1999, mobile operators established a revenue share whereby content providers received 91 percent of revenues. This led to incredible growth in content availability and market mass. The operators reasoned that if they and the “kiosk” only took a small part of the revenue, this would stimulate strong growth and they where right.

I sincerely hope that Amazon and others will follow this model as the only solution for long-term growth. I again encourage all players to open their eyes to see the benefits of taking this direction for this whole new market.