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E-reader makers are dancing as fast as they can

RandallSmithMugRandall Smith

Get ready for a big retail push to convince you to buy an electronic reader.

They’ll be lining the aisles at major stores this Christmas alongside the latest Xbox, Game Boy and Wii. You’ll even have the chance to try an e-reader out in the store much like children do their favorite electronic games.

The reason for the onslaught is that the Kindle, which is Amazon’s revolutionary reading package, has finally woken up the sleeping technology giants in Japan and Europe to the reality that there’s lots of potential gold and marketing data to be mined.

Almost 900,000 e-readers are expected to find their ways to homes this holiday season, dramatically jumping the penetration in the U.S. to about 3 million.

The question is how much these electronic devices will change the face of what we read. Most important, can they breathe new life into a newspaper and publishing industry that is desperately searching for new revenue streams.

To dig deeper, I spoke to Roger Fidler, who is the Reynolds Journalism Institute director of digital publishing at Missouri University; and Sean Patrick Reily, who is a senior editor at the Los Angeles Times and currently a fellow at RJI specializing in the future of these new reading devices.

Fidler, who has focused on the subject for much of his career, said there are a couple of obstacles ahead. The first is whether the industry can get the price down below $200, which will make them widely accessible. The second, and more complex issue, is marketing and privacy concerns.

At the moment, explained Fidler, Amazon has a closed system. In other words, you purchase a book from Amazon and its downloaded on your e-reader. Amazon knows about your book tastes, but there are no third parties who are gathering marketing data on you, the customer.

That may change in the future. If other large marketers start doing e-reader business, they’ll most likely start building customer profiles for other business opportunities. That’s an area of interest to newspaper publishers.

It’s an opportunity, but also a hurdle.

Already, there’s an amazing array of personal information available on the web.  Reily just returned from a conference where one presenter put together a self profile from Google maps, Facebook, MySpace, Linked-in, public tax and real-estate data bases that shared amazing facts.

With only a few identifying facts, the presenter was able to produce a picture of her home from Google maps, the debt on her house, a list of close friends, several up-to-date photos, her hobbies, a list of past jobs and her leaning in politics. And that was just for starters.

In other words, Fidler says, a big privacy debate may be on our horizon.

From a newspaper publisher’s point of view, Fidler says, software isn’t available yet to build a newspaper for an e-reader that’ll capture what is one of the industry’s leading sources of revenue, display advertising.

But that does not mean that e-reader companies have given up.

They’re fast at work on solving this problem as well as another topic that came up recently in a Yale University study. Students said they didn’t like the new devices because they couldn’t take notes in the margins.

With current backpacks approaching 40-pounds for some students, there’s betting by e-reader developers that they’ll like carrying all of their books in a package that weighs less than a few pounds. Additionally, they’ll like the easier accessibility (through downloading) and the substantial cost-savings over traditional books. An average best-seller on the Kindle now sells for about $9.99 through Amazon, which is about two-thirds of the cost in the store.

One sure thing will push newspapers in this direction. The cost of operating a printing plant and purchasing paper is one of the industry’s largest expenses. The opportunity to eliminate these expenses and focus totally on advertising and news is simply too large.

Combine that with a national push to be more environmentally responsible, says Fidler, and the only question is how fast the transition will occur.

The biggest question, say Fidler and Reily, is whether Apple will decide to join the battle.

If that happens, it will be a game changer. An electronic newspaper may be here much sooner than we think.

Randall Smith is the Reynolds Endowed Chair in Business Journalism at the University of Missouri School of Journalism in Columbia.

In Basics, Technology.

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