Hearst's Skiff plans e-reading service around content

The Hearst publishing company unveiled its long-awaited e-reader plan on Friday, describing an "e-reading service platform" coming next year that will distribute content from multiple publishers to a variety of wireless mobile devices.

The service is being built by Skiff, a startup formerly named FirstPaper that was incubated by the American media giant. Unlike other e-reader platforms, it will focus on newspaper and magazine content rather than e-books and plain text, Skiff said in a press release. The company will optimize that content for mobile platforms in a way that allows publishers to distinguish their products through design to attract readers and advertisers. Skiff said it will also help publishers sell advertising and maintain subscriber relationships.

Sprint Nextel will deliver the content wirelessly over its 3G (third-generation) mobile network under a multiyear agreement with Skiff. Rather than focusing on a single device, Skiff formed a partnership with chip maker Marvell to build a "system on a chip" for its service and is working with consumer electronics manufacturers to foster development of many different devices that carry its service, store and software. They will include multipurpose devices such as smartphones and netbooks. The first of those devices will be unveiled soon, Skiff said.

Devices that carry the Skiff service will be sold initially at Sprint retail stores and on the carrier's Web site, with other channels to be announced next year.

Newspaper and magazine publishers have been struggling to find the right business models to make up for precipitous drops in readership and ad sales for print periodicals. Hearst, one of the largest U.S. publishers of newspapers and magazines, as well as broadcasting and digital media properties, appears to be placing a big bet on portable electronic devices as the new platform for reaching readers profitably.

By signing up Sprint as its wireless delivery partner, Hearst may help to bring the struggling third-place carrier back into the e-reader game. Sprint was Amazon.com's original partner on the Kindle, delivering books and periodicals to the devices through an innovative system in which the cost of connectivity was built into the price of the content. But after Amazon rolled out its Kindle for the international market, it picked AT&T to perform the same role. That carrier's network is built on the GSM (Global System for Mobile Communications) family of standards, which is more widely used around the world than is the CDMA (Code-Division Multiple Access) system Sprint uses. Sprint still powers older Kindles and the large-format, U.S.-only Kindle DX.

Skiff hopes its service will "help publishers take control of their own destiny" by giving consumers a reading experience that they're willing to pay for and that advertisers want to be part of, said Kiliaen Van Rensselaer, Skiff's chief marketing officer.

"Our research tells us consumers are willing to pay for beautifully rendered content," Van Rensselaer said. They also like to see ads in periodicals, he added.

Though the service will be optimized for newspapers and magazines, it will also include a store for books. Consumers are willing to read some things on the Web, but there are readers who prefer to lean back and have a more engaging reading experience, he said.

Skiff and Sprint want to offer consumers a variety of purchase options, including subscriptions that represent a savings on the entire package, Van Rensselaer said. That could include device subsidies, he said.

Consumers will be able to read Skiff content on their existing PCs as well as on devices made specifically for Skiff, Van Rensselaer said.

"They want to be able to 'drink' the content that they've purchased through a particular service in a convenient way," he said.

Other e-reader vendors have helped pave the way for Skiff's service, said Forrester Research analyst James McQuivey. Kindle books now can be read on PCs as well as on the iPhone, and Barnes & Noble is looking beyond its Nook e-reader to other platforms, including iPhone, BlackBerry and PCs. Consumers are now ready for this type of approach, he said.

"If this were a year ago, we might be hearing about a particular device," McQuivey said.

By keeping itself open to multiple devices, Skiff may also be betting on upcoming tablets that will offer a large touch screen that is ideal for reading, he said. Forrester expects next year to be a big one for tablet devices, even if Apple doesn't release one, as has been widely rumored.

What makes Skiff stand out is its focus on newspapers and magazines, McQuivey said. It's also what presents the biggest challenge. Most of the periodical content Skiff will be trying to sell is already available free on the Web, including on smartphones with browsing capability. Skiff has to figure out how to make it worth paying for.

"That's a nut that nobody's cracked very well," McQuivey said.

Copyright © 2009 IDG Communications, Inc.

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