Finding the New Media Business, Part 3: I want my Plastic Logic

The only thing that is preventing me from buying a Kindle 2 is the promise of Plastic Logic due out later this year. But first, I want to know that media companies will still be in business in order to give me content for my new e-reader.

Right: Plastic Logic = coolness. Left: Total loser.

The trouble with news is that it is hard to make money with it. Understatement of the century, yes, but this fact nonetheless has profound implications. Newspapers, magazines, broadcasters and blogs do not make money on their writers’ words. That subscribers will not read every single word of, say, Newsweek bears this out.

In order for the news business to make any sense, you have to charge for something other than the reporters’ actual words. News stories, a commodity produced at private expense, becomes a “public good” which benefits everyone but profits no one.

Media companies post ads, charge subscribers for the promise of regular delivery, sell products tied to their content, or address a narrow niche audience.

Business models keep struggling: subscriptions, advertising, pay-only websites, or free-plus-paid content. The fundamental problem is that information wants to be free. As soon as it is published in a paid format – whether the Wall Street Journal or a DRM-protected iTunes song – it is too easily be copied to another, free, medium: another website, paper photocopies, or peer-to-peer filesharing.

Amazon's Kindle 2

Kindle and Plastic Logic are the latest effort to corral information and make money off it. This effort is doomed.

However, they are still really cool pieces of hardware. Plastic Logic, with its super-thin, hip design could outpace Kindle’s strong showing in e-readers. Amazon’s Kindle 2, also a great-looking product, does not come cheap. In addition to its $349 price tag, Amazon charges $9.99 for some ebooks, but more than $20 for others – the same amount that I might pay for, you know, an actual book. Kindle also charges varying monthly fees for magazine and newspaper subscriptions.

Plastic Logic has yet to debut, so questions remain about price, launch date, and available content. They are building a clever buzz around their device even if it seems (to me at least) that they are facing unexpected launch delays.

So how will the e-reader market look if, by the fourth quarter of 2009, Plastic Logic and Kindle 2 are the two strongest players followed by Sony’s Reader Digital Book while others trail farther behind? If I am going to pay what promises to be a high price for Plastic Logic, I would need full compatibility for HTML, PDF, XML, Javascript, Doc, and other files. Plus a decent browser. Plus ebooks I can buy from any purveyor, not just Amazon.

This is not rocket science. However, what must give Plastic Logic’s (and Kindle’s) marketing executives heartburn is that this extra compatibility I want is what could kill their profitability – that is, it makes information free again, even though the coolness factor never goes away.

Next: Standards in Journalistic Ethics, or how doing the right thing can be doing the profitable thing.