HackingCough

Against the shiny, glowing iPad, the latest iteration of the Amazon Kindle is not much to look at. But the price, look at the price. $140 for the basic model. The device is now within spitting distance of where it needs to become a near-disposable piece of electronics hardware, much like a digital watch or a pocket calculator.

Criticisms of the Kindle tend to revolve around the idea that it’s no iPad. But Amazon doesn’t need it to be an iPad. The Kindle app runs happily enough on iOS, so why compete head-on. The Kindle is all about increasing the number of people who can buy ebooks from Amazon’s store. At $140 or so, the Kindle is still a bit on the high side.

But the Kindle is now only a couple of years away from the price point where people can view it as an impulse purchase. Almost five years ago, I reckoned $50 was the point ebook readers need to reach for them to displace conventional books – at least those that people don’t really want to show off on shelves. But anything south of $100 is getting close to good enough.

It’s at that point you can stick them in airport shops. You can offer three preloaded bonkbusters and expect holidaymakers to pick one up, knowing that it will last all holiday and be a lot lighter than packing a bunch of thick paperbacks.

Once below a shop price of $100, the opportunities grow for personalising Kindles or lookalikes – for that kind of price, the bill of materials is so low and the volume economics large enough for manufacturers to consider doing special, branded editions. And Amazon can consider licensing the design to other manufacturers to do designer versions that will sell for more than the base device but which don’t carry much extra manufacturing cost.

I honestly can’t see publishers getting into that, other than an operation such as Penguin, which can use its old orange and white styling to good effect on the case of a Kindlealike. But, as with netbooks, it’s not a big leap of imagination to see some design houses deciding to take the core unit and wrap their own styled case around it.

Two ex-Nokia executives have given their verdict on what ails the Finnish phone maker in its failure to make any headway not only in the US market but against the onslaught from Apple and the clones the iPhone has spawned.

Juhani Risku’s analysis has only been published in full in Finnish so far but The Register’s Andrew Orlowski has boiled down three hours of interviews on the contents of Uusi Nokia to get a flavour of what’s wrong in Helsinki. Risku’s analysis concentrates firmly on the problems within - and you get a strong sense that if you changed the names, you’d get a good insight of the sorry mess that Microsoft and other companies have worked themselves into. The stories are not all that different from those you find published by Mini-Microsoft.

Tomi Ahonen’s analysis is probably easier on you if you work at Nokia. Because, basically, it’s all Apple’s fault. And Apple’s band of tame analysts who have turned the financial community against poor old Nokia.

However, anyone who describes the N93 as a ‘superphone’ has to be a bit deluded. I used to use one. It was a perfectly good phone. But, frankly, saddled with Symbian with S60 layered on top, it was a usability nightmare. Yes, you could surf the web with it, send emails and download applications. But it was all so much trouble. The iPhone environment may be more restrictive and lack the proper multitasking of Symbian - but that didn’t matter when I found the iPhone to have simply better utility.

What Ahonen does do well is at least point out that while Nokia may have lost its image as a top phone maker, it’s still making a shedload of them and should outsell Apple by a large margin for some time to come even if it doesn’t get its house in order. But, like Microsoft, the indicators are currently pointing down. Turning that juggernaught around is going to be just as difficult. Maybe it’s time for the recipe that Sony used for the Playstation - create an internal startup to think the unthinkable. Or at least do that until the corporate bureaucracy does its best to kill it off.

Tom Whitwell, assistant editor at The Times and responsible for developing the newspaper’s paywalled online site, did not hide his irritation at some of the helpful advice dished up by internet observers since the decision to ask people for money to read the news.

“How it’s been reported: it’s like we haven’t noticed [the problems],” said Whitwell in a session on paid-for sites at the News Rewired conference yesterday. “We have been watching Twitter and the blogs saying this is going to be difficult: ‘Don’t they realise that their audience is going to drop?’

“My favourite was one that said if we believed all our free customers would convert to paid, we would make £2bn.” Whitwell let us into a secret: “We are not expecting to make £2bn.”

Whitwell stressed: “We are not underestimating the scale of this challenge. Eighteen months ago we felt we were at a fork in the road. We could carry on as we were or we could look at something different. The free option looks a lot less appealing that we had thought at first. We were making money but not an enormous amount of money [from having a free site].

“We looked at how we could expand the site. We looked at how much money that expansion would bring in and it would not be a lot more. And a lot would be drive-by, often overseas traffic.”

The push to serve a large, drive-by audience was forcing The Times and other newspapers into a race to the bottom. “We looked at how people were doing pile-high news. They were writing 20 different versions of a story during the day just to stay at the top of Google News. And we saw how far they were getting away from their brand.

“We wanted to do what The Times stood for,” he said rather than watching starlets getting out of cars to see if they had any underwear on. In the drive-by news world, stories were about celebrity and gruesome accidents, he said.

The need to get all the money from advertising had other problems: “The barrier between commercial and journalism was getting very thin.”

So there were clear reasons for moving towards the paywall. And one reason for not going there: “The other path was terrifying. It’s a real leap into the dark. We understood immediately that this would change our relationship with the audience. So we looked at what we can do on a site where we have a real relationship with the audience.

“We could have a site with the reader at its heart. With a free site, it’s all about trying to push up the pageviews to push lots and lots of ads. At Times Online we were getting five thousand comments a day. But we didn’t feel it was a real community.”

Whitwell was not going to discuss numbers at the session although he claimed that the “figures we are seeing are very encouraging”.

Alastair Bruce from Microsoft said paywalls could work but agreed with Barry Diller’s pronouncements that “it will take some time. There are enough large corporations going after them that they will work at some time”.

Bruce showed a table of the large media organisations that either have some sort of paywall or are about to launch them, which showed that there is a large range of charging options being tried while the market settles down.

If you factor in what is happening in the trade sector, the range of options multiplies again. Karl Schneider, editorial development director at RBI, talked about the four paid-for operations that the large, Sutton-based publisher, not including the paywall that New Scientist operates.

News is a part of a number of these but it’s often data-driven news that is provided along with the raw data itself. “It’s hard to come up with a powerful offering that is only about news,” said Schneider.

A prime example is ICIS, which is a site that provides price information for industrial chemicals. The news is often aligned with that pricing information. Schneider explained that it’s not enough to simply write a story about a plant catching fire in Osaka. You have to describe its capacity versus world supply and what that will do to prices, so that companies can use it in pricing negotiations.

“It’s news that you can use. News that you can act on. You have to write it in such a way that the user can pick it up and use it,” said Schneider.

The XpertHR site for humans resources people has less data but more about employment legislation. So it provides content such as model relocation policies that these people can download and use as templates for their own policies and ‘living features’ that are online equivalents of the old loose-leaf publishing business to cover updates in legislation. This avoids the traditional problem in trade publishing where you write a feature that covers the changes but you force people to go and dig around for the details. “You can find for free the information presented on XpertHR but it’s not packaged like this,” said Schneider.

The introduction of a paywall changes the relationship with advertisers as well, as newspapers like The Times found 40 years ago when they changed their approach to cover pricing. Bruce remarked on the irony that “as soon as you become a subscriber, you suddenly become more valuable to advertisers”.

Schneider said, because advertisers can treat a small but highly relevant audience as being more valuable, the ad rates per reader can vary wildly. “At one extreme you can easily charge less than £1 per thousand on a CPM model. But you can get £50 per person in some areas. The range of prices is absolutely huge.”

The trouble is that publishers have only just started to realise how different advertising models can bring much better returns. “Content is where we have done very well. But we have been a miserable failure in ads. Look at what we have been selling to the advertisers: stuff we sold in the magazines just stuffed on the web. That is where I am optimistic about the future, because of the range of opportunities that we have,” said Schneider.