Digital doctor Bezos takes on the ailing Post
Bezos, the billionaire founder of Amazon.Com, is uniquely equipped to bring unprecedented innovation and fresh energy to an industry whose managers run their businesses like the people of Cuba treat their 1953 Plymouths: tinkering with them just enough to keep them running.
While the people in Cuba unfortunately have no other options, the newspaper industry has been sputtering toward irrelevance for the better part of a decade because editors and publishers either don’t like or don’t get digital publishing. Perhaps, it’s a bit of both.
Either way, Bezos, who is paying $250 million of his own money to buy the newspaper from the heirs of the man who purchased it out bankruptcy in 1933, now has the opportunity to show publishers how to do digital. And it’s a safe bet he will grab it.
With a personal fortune topping $25 billion, Bezos has the demonstrated means, insight and patience to re-envision the business model of an industry that has lost more than half of its primary revenue stream since advertising sales peaked at $49.4 billion in 2005.
Bezos has his work cut out for him. The Post’s revenues have declined from $957.1 million in 2005 to $581.7 million in 2012. Its operating profits have plunged from $125.4 million in 2005 to a loss of $53.7 million in 2012. Daily circulation dropped from 706,135 in 2005 to 471,800 in 2012. Sunday circulation slid from 983,243 in 2005 to 687,200 in 2012.
Unlike the editors and publishers who are hopelessly hooked on the romance of thundering presses (and they are wonderful to behold), Bezos undoubtedly views the Post as an iconic but underutilized brand that can transcend the temporal and geographic limitations of print to become a bigger brand than it is today in the whole, wide digital world – specializing, presumably, in government, politics and other capital-centric content.
Though Bezos probably has no intention of silencing the presses any time soon, his success in building Amazon from a garage start-up to a $136 billion behemoth suggests that he is intellectually, emotionally and financially liberated from the obeisance to print that constrains the thinking of traditional newspaper executives.
As such, Bezos will be free to leverage his intuition, experience and contacts in the digital universe to launch new products, build new audiences and create new revenue opportunities on desktops, smartphones, laptops, smart TVs, Google Glass, iWatches and whatever comes next.
As a pioneer in personalizing product offerings based on consumer behavior and preferences, Bezos knows far more about data marketing and analytics than anyone else in the newspaper – or, for that matter, any other – business. He’s almost certain to discuss this with folks at the Post.
Bezos also possesses boldness and self-assurance that are rare among even many Internet entrepreneurs. Unlike the chief executives of most publicly held companies, Bezos has shown exceptional patience over the years in supporting initially unprofitable business initiatives that he deemed to be strategically necessary to his goal of building the preeminent eCommerce business.
With Amazon comfortably dominating digital commerce, Bezos set out to become a major force in media delivery by creating Kindle readers and the Amazon Prime entertainment-streaming service.
In using his own money to buy the Post, Bezos is shielding himself from the scrutiny (and potential wrath) of Amazon shareholders who might not be as patient about the time and expense of a Post turnaround as Bezos might be. But the shareholders nonetheless could reap benefits from the relationship.
While there is no way of knowing exactly what Bezos might do, the acquisition of the Post could be a major enhancement to Amazon's media-delivery business. For instance:
∷ Why couldn’t every Kindle in the future be shipped with a free trial subscription to the Washington Post?
∷ Why couldn’t all past and present Post videos be featured in a prominent position on the Amazon Prime welcome screen?
∷ Why couldn’t every page view on every Post digital platform include helpful product recommendations based on who you are, where you are, what you have read and what you have purchased? And remember: Amazon Prime subscribers get free, two-day shipping.
Those ideas are just for starters. But his track record in revolutionizing the fusty retailing industry suggests that Bezos, whose other avocation is space travel, will be going boldly where no publisher has gone before. The ride should be exhilarating.