Are Newspapers Destined for Kindling?

Amid the recession and bailout, Amazon.com (Nasdaq: AMZN  ) has been a gravity-defying business -- with the stock returns to prove it. Shares of the e-tailer are up more than 50% since Jan. 1, versus a small loss for S&P 500.

Is there enough heft in those digital wings to lift the entire newspaper industry? CEO Jeff Bezos and his team may soon try. The New York Times reports that plans are under way to create a large-format, newspaper- and magazine-friendly version of Amazon's Kindle e-reader.

In my opinion, that's good news, since publishers have eschewed innovation for far too long. The new Kindle -- if one actually exists -- would arrive at a critical time. The Rocky Mountain News is no more, and New York Times (NYSE: NYT  ) has recently threatened to shut down The Boston Globe, press reports say.

Which newspaper network will be forced to cut next? Only Gannett (NYSE: GCI  ) , with USA Today, and News Corp. (NYSE: NWS  ) , with The Wall Street Journal, appear anywhere near stable. That's not saying much: Gannett recently cut its quarterly dividend by 90%.

Meanwhile, Hearst has transformed The Seattle Post-Intelligencer, a once-popular fishwrap, into an all-digital newsie. Hearst is also working on an e-reader of its own, to be built in cooperation with Plastic Logic.

Then there's Apple (Nasdaq: AAPL  ) , long-rumored to be working on a tablet Mac that would, among other things, have a built-in e-reader similar to what the Kindle offers. The likely differences? A glossy screen, stylish graphics, and -- if my guess is correct -- handwriting recognition a la the cultish Newton personal digital assistant.

Whoever gets the format right, one thing is certain: Newspapers need saving, and that means generating more revenue from their digital editions than they do now.

Goodbye, ink. Hello, Kindle.

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Fool contributor Tim Beyers had stock and positions in Apple at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy likes watching crackling kindling in the fireplace on a cold winter's night.


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