The credit for that headline goes to our own Bryan Caskey, who tweeted it to me yesterday (playing off of my earlier post wondering why Amazon would think I want to buy “geek” merchandise). How, indeed, would his own algorithms predict his future purchasing behavior based on his latest acquisition?
What, pray tell, is the founder of Amazon going to do with The Washington Post? Does he think he can make money where everyone else has failed? Does he seek influence? Or did he buy it as a hobby, sort of the way other people collect matchbooks or the like?
From his perspective, it doesn’t much matter, since he got it at such a bargain: $250 million. Less than 1 percent of his wealth. It’s about like me buying a single copy of the Post.
Let me elaborate on that figure.
Knight Ridder paid $300 million for The State and its smaller properties in 1986. As recently as 2006, when I speculated in a column about buy the paper myself, I was figuring it would still cost hundreds of millions — balancing the decline of the business against inflation. Mind you, this was just before the bottom dropped out of retail advertising.
Now, I just don’t know what it would cost. But I do know that, historically speaking, Bezos got the WashPost dirt cheap. Since the paper hasn’t changed hands before in modern times, we should look to the sale the other day of The Boston Globe by the NYT. Twenty years ago, New York bought The Globe for $1.1 billion. They sold it for $70 million. They ate a billion-dollar loss, and for all I know, consider themselves lucky.
So what is Bezos going to do with The Post? I don’t know. I wondered the same when Warren Buffett bought Media General. From what I’ve seen and heard, he hasn’t made any startling changes in the business operations.
But Bezos is more of an innovator. Is it possible that the guy who built a new kind of retail empire from the once-novel idea of selling books online has figured out, or will be able to figure out, the new business model for the news biz? I hope so. He’s got his work cut out for him. The collapse of newspapers’ business model is based on an economic trend that’s bigger than Amazon — and one of the secrets of Amazon’s success.
Newspapers — and local TV and radio stations — are the victims of a long-term trend in marketing (dating from direct mail in the early ’80s to the increasingly sophisticated targeting of the Internet) away from advertising in mass media to going after specific, individual customers. Advertisers became less interesting in reaching whole communities, choosing to be far more picky.
Since Amazon is the ultimate direct marketer to individuals, Bezos has to understand the phenomenon better than almost anyone. It will be very interesting to see how he applies his insights to The Post, if he chooses to do so…
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From The Post’s own story on the sale:
On the other hand, these two sales to wealthy individuals (nouveau riche as they may be, as the Post rather snootily suggests) mark a turn away from the trend of the last generation of the purchasing of local newspapers by large corporations. Which could be very positive.
Customers who bought the Washington Post also bought The Boston Globe and Newsweek…..
Makes me think of this this scene from Citizen Kane, especially at the end of the clip.
“You’re right, I did lose a million dollars last year. I expect to lose a million dollars this year. I expect to lose a million dollars *next* year. You know, Mr. Thatcher, at the rate of a million dollars a year, I’ll have to close this place in… 60 years.”
Bezos certainly figured out that people ARE willing to pay for the digital “content” they want — eBooks via Kindle. I’m choosing to be optimistic that he can make people want to support newsgathering / reporting.
I hope he can. And it will take someone with an inventive, creative approach — something no one has yet tried. Because nothing anyone has tried so far has worked.
Now, of course, everyone’s moving to a pay model, since the ads no longer support the newsgathering. It remains to be seen whether that will work.