Bezos, the Washington Post and the future of news publishing
When Jeff Bezos acquired the Washington Post out of the blue in 2013, the media community was shocked. Three years later, it all makes sense.
An industry in free fall
Digital technology has transformed the business of news, with profound implications for publishing operating and business models.
The most dramatic impacts on operating models have been in production and distribution. Distribution have typically transformed from a single product to a proliferation of products, channels and formats:
- Products: Desktop, tablet, mobile and watch sites/aps
- Channels: On platform via owned products, off platform (e.g., email, Facebook) and third party off platform (e.g., snapchat, apple news)
- Formats: Video, interactive graphics, messaging, podcasts
This shift in distribution flows through to production. Examples include shifting from a process geared around the “daily miracle” of a newspaper to a 24/7 news cycle and the use of data & analytics to assess performance and make decisions.
On the business model, media companies created value for consumers by delivering news in the form of the paper, and for advertisers, by connecting them to consumers. While this holds true, digital transformation has altered competition and consumer behavior, eroding revenue.[1]
The internet gave advertisers more channels to reach consumers, including via technology companies with sophisticated ability to segment, target and demonstrate ROI relative to publishers.
Consumers too have more choices for obtaining news and spending discretionary time. This impacts consumer willingness to pay – if news is available from free websites, why pay for a newspaper or digital subscription? Consumer trends toward ad-blocking and mobile (with lower CPMs than desktop and less real estate for display advertising) add to the challenge.
Innovative new entrants saw opportunity, like Huffington Post with its user generated content and Buzzfeed, with socially content (e.g., listicles). Rather than invest in printing presses they could start a website, with less cost and many times the agility compared to incumbents. However, this advantage may not be sustainable. They also face the same pressures as traditional publishers (competition for ad revenue and consumer attention) without the advantage of brand heritage and audience trust.
Globally, no one has cracked the problem facing news publishing. Given the critical role of news media as a check on government and corporate power, this should matter to everyone.
What do Amazon and the Washington Post have in common?
Jeff Bezos, Amazon founder and CEO, purchased the Washington Post newspaper ‘out of the blue’ in 2013.[2] For Bezos, the Post was well situated to be a watchdog over the leaders of the world’s most powerful country and he could make a difference:
“I didn’t know anything about the newspaper business, but I did know something about the Internet…that, combined with the financial runway that I can provide, is the reason why I bought The Post.”[3]
Private ownership gives the Post the ability to invest, experiment and take a long-term view, huge advantages given there is no clear model for running a successful news publisher.[4]
Bezos at the Post
Bezos gives the Post significant advantages when it comes to talent, product and revenue strategy.
Bezos’s backing improves the Post’s ability to attract quality product and engineering talent.[5] Since 2013, the Post’s engineering team has nearly tripled and per Bezos, rivals ‘any team in Silicon Valley’.[6]
An owner that knows “something about the Internet” and helps draw better talent also helps the Post improve its digital products. Under Bezos the Post has improved the speed to load (mobile from 4 to 0.8 seconds),[7] design of is website and aps, improved recommendation engines, and started beta-testing headlines and content.[8] This has translated to a significant increase in unique audience and page views – October 2016 saw increases of 49% and 55% respectively year on year.[9] While the election is likely a contributor to these stellar results, the Post has broken its records month after month, even overtaking the New York Times for the first time ever in October 2015.[10]
The Post is also shifting its revenue strategy from large amounts of revenue from very few subscribers, to small amounts of revenue from many.[11] Bezos has ambitions to expand the Post beyond being a local daily newspaper, to a national or even global one.[12] An example of Bezos’s efforts to build scale is bundling aps with Amazon products, like Kindle and Prime.[13]
The Post has also looked to build an alternative revenue stream: Selling software to other publishers[14] with a target of $100m revenue.[15]
Why stop here?
Another opportunity for Bezos to leverage Amazon at the Post is data sharing. Matching Amazon’s data to the Post’s audience to create segments would create a compelling value proposition for advertisers.
Given the Post’s ambitions of global scale, the Post should broaden and deepen its partnerships with publishers around the world. Content sharing partnerships give the Post access to new readers and localized content.
Continuing to experiment will be critical as the news publishing industry tries to find a way forward. Bezos’s ownership gives the Post unparalleled advantages in this. If the Post can prove out a sustainable operating and business model, it’s is good news for democracy.
(799 words)
[1] Amy Mitchell, Jesse Holcom, “State of the News Media 2015”, Pew Research Centre, April 29, 2015, http://www.journalism.org/files/2015/04/FINAL-STATE-OF-THE-NEWS-MEDIA1.pdf, accessed November 2016
[2] (Source for image) William Launder, Christopher S. Stewart and Joann S. Lublin, “Bezos Buys Washington Post for $250 Million”, Wall Street Journal, August 5, 2013, http://www.wsj.com/articles/SB10001424127887324653004578650390383666794, accessed November 2016; Paul Fahri, “Washington Post closes sale to Amazon founder Jeff Bezos,” The Washington Post, October 1, 2013, https://www.washingtonpost.com/business/economy/washington-post-closes-sale-to-amazon-founder-jeff-bezos/2013/10/01/fca3b16a-2acf-11e3-97a3-ff2758228523_story.html, accessed November 2016.
[3] Mike Isaac, “Amazon’s Jeff Bezos Explains Why He Bought The Washington Post”, The New York Times: Bits, December 2, 2014, http://bits.blogs.nytimes.com/2014/12/02/amazons-bezos-explains-why-he-bought-the-washington-post/, accessed November 2016.
[4] Dan Kennedy, “5 things publishers can learn from how Jeff Bezos is running The Washington Post”, Nieman Lab, June 8, 2016, http://www.niemanlab.org/2016/06/5-things-publishers-can-learn-from-how-jeff-bezos-is-running-the-washington-post/, November 2016.
[5] Eugene Kim, “How Amazon CEO Jeff Bezos reinvented The Washington Post, the 140-year-old newspaper he bought for $250 million”, Business Insider, May 14, 2016, http://www.businessinsider.com/how-the-washington-post-changed-after-jeff-bezos-acquisition-2016-5/, accessed November 2016.
[6] Ibid.
[7] Gabriel Sherman, ‘Good News at the Washington Post’, New York Magazine, June 28, 2016, http://nymag.com/daily/intelligencer/2016/06/washington-post-jeff-bezos-donald-trump.html, accessed November 2016; Lukas I. Alpert, Jack Marshall, ‘Bezos Takes Hands-On Role at Washington Post’, Wall Street Journal, December 20, 2015, http://www.wsj.com/articles/bezos-takes-hands-on-role-at-washington-post-1450658089, accessed November 2016.
[8] Dan Kennedy, “The Bezos Effect: How Amazon’s Founder Is Reinventing The Washington Post – and What Lessons It Might Hold for the Beleaguered Newspaper Business”, Harvard Kennedy School Shorenstein Centre on Media, Politics and Public Policy, June 8, 2016, http://shorensteincenter.org/bezos-effect-washington-post/, accessed November 2016.
[9] Washington Post PR Blog, November 14, 2016, https://www.washingtonpost.com/pr/wp/2016/11/14/the-washington-post-records-nearly-100-million-visitors-in-october-greatly-exceeding-previous-traffic-records/?tid=hybrid_collaborative_1_na, accessed November 2016
[10] Jordan Valinsky, “Washington Post tops New York Times online for first time ever”, Digiday, November 13, 2015, http://digiday.com/publishers/comscore-washington-post-tops-new-york-times-online-first-time-ever/, accessed November 2016.
[11] Dan Kennedy, “5 things publishers can learn from how Jeff Bezos is running The Washington Post”, Nieman Lab, June 8, 2016, http://www.niemanlab.org/2016/06/5-things-publishers-can-learn-from-how-jeff-bezos-is-running-the-washington-post/, accessed November 2016.
[12] Mike Isaac, “Amazon’s Jeff Bezos Explains Why He Bought The Washington Post”, The New York Times: Bits, December 2, 2014, http://bits.blogs.nytimes.com/2014/12/02/amazons-bezos-explains-why-he-bought-the-washington-post/, accessed November 2016.
[13] Ibid.; Ken Doctor, “Newsonomics: The Washington Post offers an Arc in the storm”, Nieman Lab, October 1, 2015, http://www.niemanlab.org/2015/10/newsonomics-the-washington-post-offers-an-arc-in-the-storm/, accessed November 2016.
[14] Gabriel Sherman, ‘Good News at the Washington Post’, New York Magazine, June 28, 2016, http://nymag.com/daily/intelligencer/2016/06/washington-post-jeff-bezos-donald-trump.html, accessed November 2016.
[15] Ken Doctor, “Newsonomics: The Washington Post offers an Arc in the storm”, Nieman Lab, October 1, 2015, http://www.niemanlab.org/2015/10/newsonomics-the-washington-post-offers-an-arc-in-the-storm/, accessed November 2016.
I totally agree that the problem of cracking the issues facing news is a critical one. While researching the NYT, I had similar concerns about how news can adapt to the digital age. From a business perspective, I think Bezos’ leadership has been incredible – both for helping to recruit top talent and finding new revenue streams (ex: selling software to other publishers). However, I can’t help but think Bezos and the obsessions with data in publishing news is feeding a vicious cycle of sensationalism in news. Many practices in digital are in tension with the standards necessary for integrity in journalism. Unbiased, quality reporting is not only about building trust with the population but also about educating the masses and promoting intelligent discourse in society. It is arguable that the news’ obsession with the most attention grabbing headlines, most viral content, and ‘simple’ presentation are contributing to less critical thinking among people and normalization of apathy for serious issues facing the world. It will be interesting to see how creative news providers can be to elevate standards of integrity in journalism while still using technology to promote sales of their content.
This post reminds me of the Spotify case for our marketing class, in which the CD channel continued to decline in the early 2000’s and disappeared completely soon. I can see that the print channel revenue will continue to decrease as consumers shift to the digital channel. While the aforementioned initiatives by the Post and Amazon are in the right direction, I wonder if the overall size and growth of the digital channel revenue are large and fast enough to turn the tide around and translate into meaningful bottom line improvement for many companies in this rapidly changing industry. With increasing accessibility to news articles and flood of digital content, it will be interesting to see whether the company could expand and secure its readership through differentiated services. As Sairah mentioned, striking a delicate balance between integrity and sensationalism will be also important, and perhaps those players that succeed in achieving this balance would be able to appeal to more readers and increase customer retention ratio.
Thank you very much for a great article Jessie – I did not follow up what happened to the Washington Post after Bezos acquired so it was fascinating to see the progress they made in the past few years. I fully agree that there are many things the news publishing player can learn from other Internet giants like Amazon, and I’m optimistic about the evolution of the industry going forward. I’m also wondering what will be additional synergies the Post and Amazon can make. Traditionally, newspapers are a major advertisement channel for retailers – maybe Amazon and the Post can do the similar thing in a more sophisticated way – targeted advertisement based on the customer profile, or cross sell of books and other media in Kindle?
Great post! It is very true that widespread digitization is transforming the news media landscape; it will be critical going forward for publishers to find new ways to drive revenue, so Bezos’s experimentation at the Washington Post is exciting and, I think, important. This is also an interesting case from a pricing standpoint, as more and more publishers are asking consumers to pay for online content that was previously available for free. In general, digital content tends to be priced lower than printed content; but as the world becomes increasingly digital, will publishers and others be able to change that mindset and demand more for the digital content they produce? Is there a way to further this mindset shift by creating additional features to digital content that are not available in print?
Thank you for writing, Jessie! I agree that Amazon’s trove of rich consumer data would be interesting to mesh with visitors to the Washington Post. In terms of placing advertisements, Amazon’s unique knowledge of individual consumer buying habits would allow advertisers to display ads only on pages relevant to their target audience. I actually think Amazon could purchase additional media assets to be able to leverage its unique data set further. I don’t think it’s a synergy play, but more of a new market play in which Amazon, using years of historical consumer purchasing data, becomes a digital advertising platform that is uniquely qualified to place ads on high quality content websites.
Thanks for the article Jessie. I recently received an Amazon Fire Tablet and was pleasantly surprised to learn that I had free access to the Washington Post on my new device. If the Amazon ecosystem continues to grow, particularly within physical product divisions like Kindles or the Fire Tablets, Bezos will have the unique ability to push the Washington Post on consumers.
I even wonder if Bezos considers profitability of the Washington Post to be a key priority. Amazon has numerous resources at its disposal and could likely subsidize the Washington Post division, particularly if a strong news offering enhanced the overall value proposition of the Amazon Ecosystem. Without the need to focus on short-term revenue targets within the Washington Post division, Bezos and Amazon could transform the Washington Post into a true watchdog that could strive to achieve a higher level of journalistic integrity.
Interesting post – and as you mentioned – an investment very different from most of the products in Bezos’ portfolio. I wonder – does he have some unstated potential synergy between the WP and either Amazon or Blue Origin? Or is the value simply that he has access to phenomenal technologists and saw a ripe opportunity to employ them and have “an edge” on his competition? Whereas it seems Elon Musk’s companies all are linked into a grand strategic design, does Bezos just do what is interesting to him? Or is there a play that isn’t immediately obvious? Either way, thanks for writing!
I would be interested to know if data on users accessing the data from “the Washington Post” is meshed with the data on those same users accessing Amazon. If so, this provides Amazon a huge advantage over competitors because they can create a holistic view of a consumer. The more data that an e-commerce platform has about their consumers, the more capable they are to predict the consumers buying behaviors. They have the ability to better refine their algorithms. The Post also has provided more options for users to subscribe. There are about 5 different types of digital subscription. I think that this has also broadened their customer base because they are able to attract users at many different price points.
As Ellyn mentioned above, the amount of data that Amazon could potentially have is intense. But I wonder what the consumer response might be if they were found to be using data about news reading habits to help improve profit at Amazon.com. Some users may not care, especially if it improves their shopping and news experience. But I imagine there will be some negative perceptions of this and I think that Amazon should try to be subtle with this and avoid overt use of additional data that people may not have intended to share with Amazon.
Thanks for the article – I remember reading quite a bit about this in DC when the acquisition news came out. I do agree that overall it has been a great thing for the Post. Their app is great, and you can even get an electronic duplicate of the physical paper to “flip through” on your iPad. I do wonder, as others have, about the whether the lines between Amazon and WP will be crossed. I think it’s interesting that he bought WP to remain as a “watchdog,” and yet Bezos’ other businesses could present a potential conflict of interest (i.e. what should the WP do if their is a scandal at Amazon, similar to the scathing article the NY Times published). I’m not sure there is a great answer here, but I would say using WP data to move Amazon products would blur this line a little uncomfortably for some people.
Phenomenal piece Jessie. This is indeed a topic that worries me as more and more businesses continue to shift marketing expenditure to Facebook, Google or other platforms that provide better marketing metrics. The unintended effect affected consumers who were used to consume news from newspapers – we don’t want to pay subscriptions and thus are more susceptible to inaccurate journalism. There is one great piece from John Oliver (HBO-Last Week Tonight) that explains this topic in depth – I am also afraid that biased news outlets could continue to overtake actual journalism. An example of this threat already occurred in the recent U.S. presidential election: biased news influencing working class voters towards the left or right.
I hope that other influential figures in Silicon Valley realize that business leaders must work towards educating newer generations about the importance of unbiased media. Our generation needs to start paying for honest journalism. As you mentioned, we need good news for democracy.
Very interesting post! A similar pattern has emerged in Latin America. Wealthy businessman have bought newspapers and implemented dramatic cost cutting measures paired with innovative digital strategies. I wonder if the main driver behind these deals is that savvy business people see the opportunity to capture value or if the main motivation is to increase their influence by having a platform to promote their broader goals. It will be interesting to see if they manage to turn a profit in the next couple of years. I believe that the biggest issues will be to educate the customer on the importance of paying for good journalism and to provide readers with multimedia platforms that will cater to varied interests.
thanks for such an interesting article. Jeff Bezos is such an inspirational investor with nontraditional business strategies. He was able to disrupt whole retail business and I strongly believe his ownership will revolutinize news business too. Jeff has been in reading business since Amazon sold its first book 20 years ago. Hence, i was not surprised that he acquired a news company. I would leverage WP as an online reading platform competing against Facebook or Twitter. My only concern is whether WP’s brand equity is strong enough to target young, tech savy readers out there or not.