Amazon Founder Brings Skills in Data Gathering, Software, E-Commerce
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Jeff Bezos, Amazon CEO and now owner of the Washington Post
As owner of the Washington Post, Jeff Bezos will have an opportunity to transform how the money-losing newspaper generates revenue in an industry desperately in need of a makeover.
Although Mr. Bezos bought the paper in a personal capacity, many media-industry experts expressed optimism that the Amazon.com Inc. founder will be able to apply to the Post the same software development, data gathering and e-commerce chops—as well as his patient investment philosophy—that turned his company into a powerhouse.
"Building audience, personalizing the offering, and, certainly, monetization," those are the core competencies that Jeff Bezos and Amazon have developed, said Alan Mutter, a newspaper consultant. "The more you interact with an individual on her smartphone, the more you are able to gauge an individual's response, the more you learn about that individual, the better you can be about providing both content and advertising to that individual," he said.
Amazon is most famous for e-commerce, and experts say that is where Mr. Bezos may best serve the newspaper.
"The success of Amazon has been hugely disruptive to multiple industries, from books to retail to streaming video, and Bezos has been at the helm of that," said Clark Fredricksen, a vice president at eMarketer. "Bezos knows a thing or two about selling things online; that is a definite potential new outlet for the Post and the industry."
To truly capitalize on either the e-commerce or digital data-mining potential of the Post under Mr. Bezos, experts agreed, the paper will likely have to become more of a national platform. For years, the Post has felt a dissonance between its international fame as a Watergate-era icon and its largely local advertising base.
Mr. Bezos's intentions aren't clear. Since the announcement on Monday that he was buying the paper for $250 million, he has declined to give interviews, except to the Washington Post itself.
He told staffers that he doesn't plan to get involved in day-to-day operations. Some detractors have speculated the billionaire might have merely wanted a trophy media property or a mouthpiece, while others close to him theorize that he bought the paper as a public service. A spokesman declined to comment further on Mr. Bezos's investment.
The Post has already experimented with e-commerce and Amazon, beginning several years ago embedding Amazon links in its book review section that allowed the Post to take a small cut from books purchased through the links. But the revenue newspapers have drawn from e-commerce have so far not amounted to much.
Washington Post: A Storied History
"If you look at the amount of money we are making in e-commerce, I would say it's been something that we haven't really done very well, and it's not really in the history of what we've generally done," said Jim Brady, the former executive editor of washingtonpost.com and current editor in chief of Digital First Media. "Mixing commerce and journalism is always fraught with its own perils on the ethics side, so we probably didn't do as much as we could have."
Still, industry observers say Mr. Bezos may do well to look at European sites such as Axel Springer AG'sBild news site. There readers can buy iPhones, watches, soccer uniforms and pricey sports memorabilia books.
Many American papers have e-commerce arms. New York Times Co. sells memorabilia and travel packages and Wall Street Journal owner News Corp sells wine and other items. Tribune Co.'s Los Angeles Times operates a store offering branded T-shirts and notebooks out of its headquarters building.
So far, though, most publishers have concentrated on cutting costs and, more recently, trying to boost subscription revenues by raising prices for print editions and instituting "paywalls" that restrict how many articles nonsubscribers can read free. That has helped some increase digital subscription revenue.
One possibility is that Mr. Bezos could eliminate print publication or, as some newspaper owners have already done, reduce it. Last year, Advance Publications Inc., which owns the New Orleans Times-Picayune, the Cleveland Plain Dealer and other papers, began reducing daily publication in cities including New Orleans and Birmingham to three days a week—though the outcry in New Orleans was so loud that it reinstated a daily print product earlier this year. Nonetheless, the company has continued its march of scaling back publication and home delivery of its printed paper, while beefing up its websites, in an effort to cut costs and follow readers and advertisers to the Web.
Steve Newhouse, the chairman of Advance.net, said data indicate a boost in the papers' digital audiences. "We're too early in our transformation to really give any sense of whether the changes we've made will be successful in the long term," said
Another possibility is simpler: Mr. Bezos could invest in the paper, in the same way that he invested in Amazon for years before it turned a profit.
That is what former greeting-card executive Aaron Kushner and his partner did when they bought the Orange County Register last year. The pair have hired an additional 350 staffers, boosting the papers' employment to about 1,000—the reverse of what most other publishers have been doing.
The Register turned a profit last year and is on track to do the same this year, Mr. Kushner said. He sees parallels with Mr. Bezos and Amazon.
Amazon is "consistently criticized for investing too much in the next thing they are going to give their customers, and yet, every investment ends up yielding a return," Mr. Kushner said. "We are criticized for over investing in our community, but if you are not investing, fundamentally, you can't grow."
A version of this article appeared August 7, 2013, on page B1 in the U.S. edition of The Wall Street Journal, with the headline: For Bezos: A New Puzzle.
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