Amazon is seeking to launch a service that would give paying subscribers unlimited access to television shows and movies over the Internet, The Wall Street Journal said Wednesday. The newspaper, citing “people with knowledge of the proposal,” said the move is a bid by Amazon to take on movie service Netflix and grab a bigger slice of the online TV business. It said the Seattle-based company has proposed the Web-based subscription service to several major media companies including NBC Universal, Time Warner and Viacom among others. The Journal said Amazon would like to launch its new video service in time for the holiday season, “but it is unclear if any media company intends to participate.” It said the plan could could be delayed or shelved if not enough companies sign on. The service would be viewable on the Internet or through devices such as Web-connected TVs or Xbox 360 videogame consoles that play television shows and movies Amazon already sells on an individual basis, the newspaper said. Like Apple’s iTunes, Amazon currently offers TV shows for USD 1.99 per episode. The Journal said subscriptions could be bundled with the Amazon Prime service that gives offers free shipping on purchases. It said spokesmen for Amazon, NBC Universal, Time Warner and Viacom declined to comment on the proposed service
Microsoft on Monday said it has signed a deal with Amazon.com that lets each company tap into the other’s patented technology, including that for hot-selling Kindle electronic readers. Microsoft said that Amazon will be paying the software giant as part of the agreement, but declined to specify the amount. The agreement clears the way for Microsoft’s proprietary software and open-source programs used by Amazon.com to be woven together more tightly without concerns about patent violations. Each company gets access to the other’s patent portfolio under the terms of a deal covering a broad range of products and technology, Microsoft said. Microsoft said it has struck 600 such licensing deals since December 2003 with companies including Apple, Hewlett-Packard, LG Electronics, Novell, and Samsung Electronics.
With the new tablet device that is debuting next week, Apple Inc. Chief Executive Steve Jobs is betting he can reshape businesses like textbooks, newspapers and television much the way his iPod revamped the music industry—and expand Apple’s influence and revenue as a content middleman.
In developing the device, Apple focused on the role the gadget could play in homes and in classrooms, say people familiar with the situation. The company envisions that the tablet can be shared by multiple family members to read news and check email in homes, these people say. For classrooms, Apple has been exploring electronic-textbook technology, these people add. The people familiar with the matter say Apple has also been looking at how content from newspapers and magazines can be presented differently on the tablet. Other people briefed on the device say the tablet will come with a virtual keyboard.
Apple has recently been in discussions with book, magazine and newspaper publishers about how they can work together. The company has talked with New York Times Co., Condé Nast Publications Inc. and HarperCollins Publishers and its owner News Corp., which also owns The Wall Street Journal, over content for the tablet, say people familiar with the talks. New York Times Chairman Arthur Sulzberger declined to comment in an interview Wednesday on its involvement in the new device except to say, “stay tuned.”
Apple is also negotiating with television networks such as CBS Corp. and Walt Disney Co., which owns ABC, for a monthly TV subscription service, the Journal has reported. Apple is also working with videogame publisher Electronic Arts Inc. to show off the tablet’s game capabilities, according to one person familiar with the matter.
Apple’s strategy contrasts with how other technology companies are approaching media. Notably, Google Inc. offers content to consumers largely free on properties like its video-sharing site YouTube, making relatively little distinction between clips from users and that of professional media companies. Web sites like Twitter and Facebook also provide outlets for user-generated content.
Mr. Jobs has a longstanding strategy of devising new ways to access and pay for quality content, instead of reinventing the content. Apple’s iTunes Store, for instance, became the world’s largest music retailer partly by making it easy for people to buy music, most of it from major record labels, by the song instead of by the album. Its digital media receiver Apple TV was also designed so people can buy and rent movies and television shows.
Mr. Jobs is “supportive of the old guard and [he] looks to help them by giving them new forms of distribution,” says a person who has worked with the CEO. “What drives all of these changes is technology, and Apple has an ability to influence that.”
Apple’s divide with Google over how it views media content also drives the wedge deeper between the two companies. Apple’s iPhone, for example, currently closely integrates Google’s mapping and search technology, but a person familiar with the matter said Apple was in serious discussions with Microsoft Corp. to incorporate its Bing search engine into the iPhone as the default search and map technologies. Microsoft declined to comment.
Details of how Apple charges for the content on its tablet couldn’t be learned, but people familiar with the company’s thinking say Apple could change conventional payment structures. One person familiar with the matter said the company was discussing with the New York Times how it could charge for news through iTunes. It’s unclear how people will access content wirelessly off the tablet.
An Apple spokesman said the company “doesn’t comment on rumors and speculation.” Mr. Jobs didn’t respond to a request for comment. Mr. Jobs’s effort to repackage and resell more media content is not without obstacles. He has already faced resistance from television companies and cable network providers over Apple’s desire to license just their best content rather than all of it.
Many music executives complain that it has become a powerful gatekeeper between the labels and customers. What’s more, the iTunes Store’s music downloads haven’t grown fast enough to offset the decline in CD sales for music companies. On Monday, Apple sent out an invitation to a media event on Jan. 27 “to see our latest creation.” The tablet, which Apple currently plans to ship in March, will have about a 10- to 11-inch touch screen, people familiar with the situation say.
Apple’s tablet foray faces several obstacles. Analysts say demand will depend on its price, which some believe will be about $1,000. Apple must also convince consumers the product is worth buying in addition to an iPhone and a laptop computer. And Apple faces competition from cheaper netbooks and other devices such as Amazon.com Inc.’s Kindle e-book reader. The tablet’s success will depend “on how this product can fit into the user’s daily life… and whether you have enough content to make it important enough to use it,” said Henry Lu, senior vice president of Taiwanese computer company Micro-Star International Co., which failed at selling a tablet computer a few years ago.
In the academic arena, Apple could face hurdles wooing universities if the tablet doesn’t meet their needs or isn’t compatible with other computing devices that students are using. Amazon had been hoping to target the market with its 9.7-inch screen Kindle DX e-book reader, for example, but schools said the device wasn’t sufficiently interactive and lacked basics such as page numbers and color graphics.
One person familiar with the matter said Apple has put significant resources into designing and programming the device so that it is intuitive to share. This person said Apple has experimented with the ability to leave virtual sticky notes on the device and for the gadget to automatically recognize individuals via a built-in camera. It’s unclear whether these features will be included at launch.
Apple’s content-related efforts heated up in the fall. In October, Apple sent representatives to the Frankfurt Book Fair, the industry’s largest trade fair, according to one person familiar with the matter. At the same time, Apple pitched media companies on a “best of TV” subscription service to television networks under which customers would pay a monthly fee for on-demand access to programs from a bundle of participating TV networks, giving consumers another way to readily access TV content.
At a meeting in New York with one network in October, an Apple executive said the company was specifically looking to access four to six shows per channel, said one person familiar with the meeting. Apple has also been planning a revamp of its iTunes music service by creating a Web-based version of it that could launch as soon as June, say people familiar with the matter. Tentatively called iTunes.com, the service would allow customers to buy music without going through the specialized iTunes program on computers and iPhones.
People familiar with Apple’s plans say a central part of the new strategy is to populate as many Web sites as possible with ‘buy’ buttons, integrating iTunes transactions into activities like listening to Internet radio and surfing review Web sites. In November, Apple hired Tracy Augustine, a former executive at textbook publishers Cengage Learning Inc. and Pearson Education Inc., as the director of worldwide education. Ms. Augustine is responsible for “driving global strategy and revenue for the education online store for students,” according to her LinkedIn description. Ms. Augustine didn’t respond to a request for comment.
Apple Inc will host a special event on January 27 where it is widely expected to unveil its tablet computer, as the company looks to extend its hot hand into a brand new product category. The event next week is shaping up as Apple’s most eagerly anticipated product launch since the iPhone three years ago. The company has never acknowledged the existence of the tablet, but rumors and speculation have been building for months. Although few details about the tablet are known for certain, the device is said to resemble a large version of the iPhone, with a roughly 10-inch touchscreen. Analysts say such a device would try to bridge the gap between smartphones and laptops, allowing users to stream video, surf the Web and play games while on the go. Cost estimates on the tablet – which analysts expect to begin shipping in March or April – run upwards of USD 1,000. Tablet computers have never managed to catch on with consumers, and industry watchers say Apple will have to offer a compelling reason to buy such a device. If consumers do gravitate to the tablet, it could also propel Apple into the digital book market popularized by Amazon.com’s Kindle e-reader, analysts say.
As the market quickens for “e-books,” the schedule for their release is slowing down. Simon & Schuster announced Wednesday that the electronic editions for more than 30 works coming out in the first half of 2010 would not be available until four months after the hardcover. The affected books include novels by Don DeLillo and Mary Higgins Clark and a memoir by Karl Rove. HarperCollins spokeswoman Erin Crum said the publisher plans to withhold the digital version of five to 10 titles per month, starting next year. And Hachette Book Group USA will delay a “wide selection” of e-books in 2010, spokeswoman Sophie Cottrell said. Publishers and authors have worried that e-books might hurt sales for hardcovers; Amazon.com, Barnes & Noble.com and other online retailers commonly price top-selling e-releases at USD 9.99, which publishers say is too low and could cheapen the value of books overall. Simon & Schuster CEO Carolyn Reidy said Wednesday that the rise of e-books has led to a “cannibalizing” of new hardcover purchases. E-books do expand the market for older books, Reidy added. Readers buying a new fiction work are inspired to buy many of the same author’s previous books, or “backlist,” in digital format because of the ease of ordering. Previously, buyers might have gone to a retail outlet and bought just one backlist title, she said.
Amazon.com Inc. will add two features to the Kindle e-book reader to make the gadget more accessible to blind and vision-impaired users. Monday’s announcement comes a month after Syracuse University in Syracuse, N.Y., and the University of Wisconsin-Madison said they would not consider widely deploying the device as an alternative to paper textbooks until Amazon makes it easier for blind students to use. Both universities bought some Kindles to test this fall. The Kindle has a read-aloud feature that could be a boon to blind students and those with other disabilities including dyslexia, but turning it on requires navigating through screens of text menus. Amazon said Monday it is working on audible menus, which would let the Kindle speak menu options out loud. It’s also working on an extra-large font for people with impaired vision. The additions should reach the Kindle next summer, Amazon said
Publisher Hearst Corp. plans to launch next year a service called Skiff to sell digital versions of newspapers and magazines on electronic readers and other devices, in a system it believes will be more visually appealing to readers and more lucrative for media companies. Skiff would give publishers an alternative to Amazon.com Inc.’s Kindle store, which currently dominates the burgeoning field of digital reading. Through Skiff, Hearst said consumers will be able to buy digital publications that have better graphics and look more like their print counterparts, including the inclusion of advertising, than versions offered elsewhere. The service will include a digital storefront as well as a back-end system that publishers can use to render their publications for a range of electronic devices, including Apple Inc.’s iPhone and small laptops called netbooks. Skiff, which Hearst has been developing for more than two years as a separate company called First Paper LLC, also is developing its own e-reading device with a consumer-electronics firm