The Mainichi Newspapers, a Japan-based newspaper company, launched a fee-based news delivery service for electronic book (e-book) readers in Korea in June 2009.
The Mainichi Newspapers became the first Japanese newspaper company that started a fee-based news delivery service for e-book readers. It will deliver news to the "NUUT2," an e-book reader to be released in June 2009 by Neolux Co Ltd, a Korea-based e-book reader manufacturer.
I interviewed Woo-Jong Kang, president and CEO of Neolux, when he visited Japan.
Is the e-book reader market booming in Korea?
Kang: Samsung Electronics announced that it will launch its e-book reader in June 2009 in Korea. And I think Samsung's entry means that the e-book market is very promising.
We released our first product, "NUUT," in March 2008 in Korea and has tested it for about one and a half years. The Chosun Ilbo, a major newspaper company in Korea, has been delivering its news to the NUUT.
For the NUUT, we purchased e-book readers developed by Prime View International (PVI), an OEM manufacturer in Taiwan. On the other hand, we developed the NUUT2 in house and will reinforce the business by increasing the number of contents to be delivered.
In addition to The Mainichi Newspapers, 12 newspaper companies in Korea are providing their contents to the NUUT2. That means almost all of the newspaper companies in Korea are participated in the service.
The subscription fees for the service are free for the first one or two months. After that, they are, for example, half the fees for the paper editions. In the future, we will probably offer our product for free to those who subscribe to a paper-based newspaper for two years.
How about the number of contents?
Kang: Including contents other than newspapers, such as books, the number was 2,000 to 3,000 in 2008. It increased to 10,000 in 2009. And it will reach 20,000 at the end of 2009.
Why are newspaper companies actively participating in the electronic news delivery service?
Kang: This is not limited to Korea, but the business conditions of newspaper companies are harsh. In Korea, newspaper subscription fees are about $15 per month for paper editions. While many newspapers became free papers, I heard that printing a newspaper costs more than $15 per month.
It is becoming difficult to turn a profit with traditional paper-based newspapers because circulation and advertisements are falling off. So, newspaper companies seem to be placing their hopes on electronic news delivery.
How many units are you planning to sell?
Kang: We expect a market of 40,000 to 50,000 units in 2009 in Korea. The NUUT2 will not replace everything but has a potential of changing lifestyles. For example, there are many education-minded parents in Korea. Some of them pay more than $500 for cram schools. There must be a demand for digitizing paper-based educational materials.
The price of the NUUT2 is low. How do you turn a profit?
Kang: The NUUT2 (299,000 won, or about $236) is one of the most inexpensive e-book readers in the world. So, we cannot make a profit just by selling it. We are planning to turn out profit by offering fee-based services of converting the formats of contents and providing DRM (digital rights management) protection, for example.
What is the goal of your e-book business?
Kang: We are not planning to do business only in the Korean market. We want to make inroads into the global market including the Japanese market. Amazon.com's Kindle series cannot be easily sold in the markets expect for the US market because of its 3G communication capability. That's why we believe that we can obtain a share in the global e-book reader market.