Monday, August 05, 2013

Digital doctor Bezos takes on the ailing Post

The purchase of the struggling Washington Post by Jeff Bezos may be the best news the news industry has had in a long time, because it finally puts a true digital native at the helm of a newspaper company. 

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. 

8 Comments:

Blogger Lyn Bunch said...

Alan, a great post on the move by Bezos to purchase the WaPo. Jeff has shown that he is a true innovator and this is just what newspapers need today. With the recent changes in ownership of papers this could be a viable model.

Papers are no longer local monopolies that can charge what they want with incredible margins. Bezos can liberate them and help them down a path that will preserve great local coverage of real news, not just content.

8:19 AM  
Blogger Wayne Trujillo said...

This is an excellent (and witty) column with a lot of good insights and indicators on how the Washington Post will operate and appear under Bezos’ leadership. I hope that innovations can save the best of traditional journalism (and the newspaper tradition, if not the printed page). I still feel that new media outlets, for the most part, don't provide the depth, range and detail of traditional journalism. If innovative economic and delivery models can save the best aspects of traditional newspapers, then we'll have the best of both worlds. By the way, I love the analogy of Cuba’s ’53 Plymouths.  Last week, I sent in a column to the Denver Business Journal for publication this Friday on the Cuban embargo that referenced the island’s vintage vehicles and ’57 Chevys. Those classic cars are an iconic reminder that, while they may not function as efficiently as today’s transportation, they have their allure and durability that will probably outlast most of today’s models. Maybe the same will be said of traditional journalism (and newspapers) someday.

10:21 AM  
Blogger William Hoelzel said...

Bezos can no doubt finally make real the long-dreamed of idea called "The Daily Me."

Bezos will know what stories we read, how much of each story we read, and what "serendipity" held our interest so he can give us more those kinds of stories.

He'll know how much of a story we want --- the long or short version -- because he'll know how much we're likely to read. Not too much, not too little.

And we'll rarely need to ask for an alert on a topic; Bezos will know what we like, and with predictive modeling, he'll deliver that kind of content before we ask. And if we don't read a story Bezos suggests, I bet he'll note that -- and not make that mistake again.

Bezos can make The Post's archives a marketing tool to connect readers to topics we care about, using stories published years ago. If I'm a psychology student, maybe Bezos will show me the news story that first reported Stanley Milgram's famous experiment, for example.

By knowing our book interests and our news interests, Bezos will possess real power to help us manage our reading "diet," so to speak.

The only downside is that his algorithms could threaten editorial judgment -- giving readers what they want to know, not what they need to know.

Sorry if I'm just restating the obvious . . . but here comes "The Daily Me."

6:44 PM  
Blogger RockportVOXPOP said...

Great post -- adroitly factual, insightful, and of industrial-strength! You nailed it, Newsosaur! News publishers, journalists, content creators of multiple templates should fasten their collective seatbelts; rocket ride, indeed! Take copious notes.

6:50 PM  
Blogger policywonk said...

I'm all for Bezos using his tech experience to help keep the Washington Post solvent and doing the job -- and maybe he'll be the one to finally find that new business model we need to help support good journalism. Great investigative and analytical reporting don't happen for free. But really, why couldn't we get some liberal or at least centrist moneybags to be the next media mogul?? Must they all be apologists for Shrub Bush and his ilk??!? Sigh ...

As for 'The Daily Me,' I'm already worried about people being insufficiently informed based on their own prejudices; that would just escalate matters. What happens when nobody wants to follow international news or (even national news) because they've stopped giving a damn about what happens outside their own neighborhoods? Niche news reading does NOT make for good citizenship -- or informed voters. How's Bezos going to get us past *that* problem?

7:55 PM  
Blogger Mary Kay said...

Patient capital and willingness to transform to a digital- first platform are welcomed additions for an iconic brand. As to personalization, the internet and cable have moved us towards more personalized news and made most of us less informed. Absent personalized nations, national news sources should not be personalized.

4:19 AM  
Blogger Unknown said...

A good column, but I'd hardly call anything "free" if you have to pay $80+ bucks for an annual Prime membership.
Jay

6:55 AM  
Blogger Jim Greer said...

There's some good thoughts here, but I think there will be very little tie-in between the Post and Amazon. Bezos invested in my startup, Kongregate (we've since been acquired by GameStop). He took great care to make that entirely a personal investment, there was never any contact with Amazon staff through him.

In our case he was a minority investor, and we were only 20 people when he invested. Still, I think the tight integrations painted here are not at all in the cards. If that's what he wanted to do, Amazon would have been the acquirer.

1:41 PM  

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