From Fortune‘s Hearst to launch a wireless e-reader:
Against a backdrop of plummeting ad revenue for newspapers and magazines, and rising costs for paper and delivery, Hearst Corp., is getting set to launch an electronic reader that it hopes can do for periodicals what Amazon’s Kindle is doing for books.
According to industry insiders, Hearst, which publishes magazines ranging from Cosmopolitan to Esquire and newspapers including the financially imperiled San Francisco Chronicle, has developed a wireless e-reader with a large-format screen suited to the reading and advertising requirements of newspapers and magazines. The device and underlying technology, which other publishers will be allowed to adapt, is likely to debut this year.
What could be the business model here for a content creation/media distribution company like Hearst?
What Hearst and its partners plan to do is sell the e-readers to publishers and to take a cut of the revenue derived from selling magazines and newspapers on these devices. The company will, however, leave it to the publishers to develop their own branding and payment models. “That’s something you will never see Amazon do,” someone familiar with the Hearst project said. “They aren’t going to give up control of the devices.”
By now, you might be thinking what does Hearst know about hardware?
The urge to cross over core competencies into unchartered territories is a disease that has often caused acute problems for many well-known companies. Microsoft, the diva of cross-dressers, has tried everything from cable programming to online publishing. Best Buy, Wal-Mart and Virgin thought they could be online music giants. Prada and Ferrari pretended they know how to design consumer electronics.
And now Hearst, a media publisher apparently with more money to burn than hardware chops to show for, is out to demonstrate what happens when a company can’t summarize its business model in 5,000 words. You thought ‘synergy’ was dead after it was brutally strangled by Sony after an intense, decade-long effort?