France Telecom's E-Reader Experiment

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The biggest breakthrough in the Plastic Logic gadget is its "plastic electronics" technology, which lets it be extremely thin and lightweight—and the size of an 8.5 x 11-in sheet of paper. Plastic Logic takes advantage of display technology from a company in Cambridge, Mass., called E Ink, whose "electronic paper" is so thin and cheap that small screens using the technology were pasted onto the front cover of Esquire magazine's 75th anniversary issue in October. (The screen showed a short video loop saying "The 21st Century Begins Now.") Plastic Logic will target business professionals with its device and hope to begin distribution in the U.S. in the second quarter of 2009, with a later release in Europe. No price has been announced.

Analysts say they believe that European newspapers will embrace e-reader technology more rapidly than their American counterparts—in part because they're in better financial shape. "European publishers are very confident and have a more long-term viewpoint on business development," says Stig Nordqvist, the director of Germany's IFRA Digital Research, a firm that studies the publishing industry. Nordqvist also says European publishers have been less reluctant to adapt to Web-driven business model than have Americans, which is one reason U.S. newspapers are in so much financial trouble.

High Price of E-Readers

But while e-reader champions say they could do for print what MP3 players did for digital music, critics urge caution. The prices of e-readers, they note, still remain relatively high. It may require subsidized business models—such as France Telecom likely will offer with Read & Go—to ease consumer resistance.

What's more, in a classic chicken-or-egg dilemma, service providers don't want to strike deals with publishers and subsidize e-readers until they're assured of consumer demand, yet consumers won't sign up until the selection of news is broad and the readers are cheap.

And, of course, subscription-based models will always be challenged by the wealth of free news available on the Web. "Newspapers still think their brands are so powerful that people will pay for it, and that's just not the case," says Richard Shim, an analyst at market researcher IDC. Maybe not on the Web. But will the convenience of a wireless e-reader be enough to entice customers to pony up for news? Stay tuned.

Matt Mabe is a reporter in BusinessWeek's Paris bureau .