Publishers should temper expectations for e-reader market

The e-reader market is heating up. So how come I don’t feel all warm and fuzzy?

Every day seems to bring a flurry of e-reader news. Sony last week announced it had signed up 19 new newspaper and magazine publishers for its Reader devices. PaidContent reported last night that Barnes & Noble is notifying some pre-buyers that their new Nooks may not arrive in time for Christmas. (Other devices are also getting pushed into next year.)

There will be plenty more e-reader buzz early next month at the Consumer Electronics Show in Las Vegas, where Plastic Logic plans to introduce its Que device and other portable readers are also expected to debut.

But what does the hype mean for newspaper and magazine publishers? Some observers are downplaying the impact of e-readers in the short term. Even the chairman of Taiwan’s AU Optronics – which has invested $30 million in a U.S. maker of electronic paper, a key element of next-generation e-readers – told the Financial Times it will be at least five years before e-readers become commonplace.

Exclusive content: blessing or curse? 

Publishers could benefit from a battle over content between major e-reader manufacturers – or be hurt by a divisive market. Sony’s latest roster of publishers includes a few that don’t currently offer their periodicals on Amazon’s Kindle. Sony and other new entrants will no doubt try to cut into Amazon’s current market leadership by offering better revenue-sharing deals in exchange for exclusivity.

While an exclusive distribution deal with a major device maker may seem appealing, publishers should think twice about limiting the reach of their content to a specific e-reader. Forcing users to choose a platform based on the available content will limit the market, not grow it.

Other elements of the e-reader market should give publishers pause as well. While the subscription model is straightforward – daily or monthly – the ad model remains undefined. Sony does not yet offer an ad platform for its Reader. The Hearst-backed Skiff is promising vague notions of “an innovative advertising system that will combine the impact and engagement of print with the dynamic capabilities of digital.”

The technology itself is still evolving, representing another potential point of incompatibility among readers until cross-platform standards come into focus.

For all the promise of the e-reader market, there is just as much uncertainty. For now, publishing professionals may get far more satisfaction out of buying an e-reader and downloading a good book than trying to craft a new revenue stream around this rapidly evolving space.