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Tuesday, June 13, 2006

E-newspapers just around the corner

By Kenneth Li
Mon Jun 12, 11:13 AM ET

NEW YORK (Reuters) - The newspapers of the future - cheap digital screens that can be rolled up and stuffed into a back pocket - have been just around the corner for the last three decades.

But as early as this year, the future may finally arrive. Some of the world's top newspapers publishers are planning to introduce a form of electronic newspaper that will allow users to download entire editions from the Web on to reflective digital screens said to be easier on the eyes than light-emitting laptop or cellphone displays.

Flexible versions of these readers nay be available as early as 2007.
The handheld readers couldn't come a moment too soon for the newspaper industry, which has struggled to maintain its readership and advertising from online rivals.

Publishers Hearst Corp. in the U.S., Pearson Plc.'s (PSON.L) Les Echos in Paris and Belgian financial paper De Tijd are planning a large-scale trials of the readers this year.
Earlier attempts by book publishers to sell digital readers failed due to high prices and a lack of downloadable books.

But a new generation of readers from Sony Corp. (6758.T) and iRex, a Philips Electronics (PHG.AS) spin-off, have impressed publishers with their sharp resolution and energy efficiency, galvanizing support for the idea again.

"This could be a real substitution for printed paper," Jochen Dieckow, head of the news media and research division of Ifra, a global newspaper association based in Germany, said.
It's easy to see why publishers are keen. Digital newspapers, so called e-newspapers, take advantage of two prevailing media trends -- the growth of online advertising and widespread use of portable devices like the iPod music player.

Nearly all papers run Web sites, but few readers relish pulling out laptops in transit or risk dropping one in the bathroom.

E-newspapers would cut production and delivery costs that account for some 75 percent of newspaper expenses.

Circulation in the $55 billion U.S. newspaper industry has slid steadily for nearly two decades as papers compete with Internet news for attention and advertising dollars.

Some publishers now see new devices as a way to help them snatch a bigger slice of online advertising and protect their franchise in reading away from home.

Ad spending on newspaper Web sites grew 32 percent in 2005 but only accounted for 4 percent of total ad spending in newspapers, according to the Newspaper Association of America.
Still, little is known about demand for an e-paper. "The number of consumers who are interested in reading on the go as opposed to listening to music on the go is probably smaller in the U.S. today," NPD Group analyst Ross Rubin said.

PRINT SCREENS

Sony and iRex's new devices employ screen technology by E Ink, which originated from the Massachusetts Institute of Technology's Media Lab. Investors include Hearst, Philips, McClatchy Co. (NYSE:MNI - news), Motorola Inc. (NYSE:MOT - news) and Intel Corp.
(Nasdaq:INTC - news).

The company produces energy-efficient ink sheets that contain tiny capsules showing either black or white depending on the electric current running through it.
Some of the latest devices apply E Ink's sheets to glass transistor boards, or back planes, which are rigid. But by 2007, companies such as U.K.-based Plastic Logic Ltd will manufacture screens on flexible plastic sheets, analysts say.

Separately, Xerox Corp. (NYSE:XRX - news) and Hewlett-Packard Co. (NYSE:HPQ - news) are developing methods to produce flexible back planes cheaply. Xerox, in particular, has created a working prototype of system that lets manufacturers create flexible transistor boards much like one would print a regular paper document.

Production costs are expected to be low enough soon for publishers to consider giving away such devices for free with an annual subscription. Data on subscribers could also help publishers better tailor ads.

Sony's reader will cost between $300 and $400. "If you can get one of these products to cost less than the cost of a year's subscription it could probably work," Kenneth Bronfin, president of Hearst Interactive Media, said.

He declined to name which other groups plan testing, but said Hearst's San Francisco Chronicle and Houston Chronicle will likely be among the first of its 12 daily papers to offer such devices to several hundred subscribers later this year.

In Europe, Ifra is discussing trials with 21 newspapers from 13 countries. The New York Times Co. (NYSE:NYT - news) is a member.

Sony is separately in discussions with some publishers to offer newspaper downloads in its e-bookstore due to launch this summer, although no decision has been made, said Lee Shirani, vice president of Sony's online content service, Sony Connect.

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