Jeff Bezos is either super crazy or super genius. When the CEO of Amazon.com decides to personally buy the Washington Post, I’m betting on the latter especially once you start comparing retail and the newspaper industries. They both have similar operating principals – tight margins, strict inventory management, understanding who is making a purchase and why. Amazon wants you to buy merchandise; the Washington Post wants you to buy newspapers in print or digital form. However the newspaper industry is failing by not finding an effective way to survive in the online world where readers expect information for free. Jeff Bezos has an opportunity to change all of this. I bet Jeff Bezos can save the newspaper.
Fixing the financial house
Bezos will examine the books and start scrutinizing where the paper spends its money. He’ll run the paper on super thin margins and manage his net income to zero similar to how Amazon operates. If he can get into a similar position where he’s receiving payment in a day but paying off creditors on 90 days he’ll be able to generate a great cash flow for the Washington Post. Not huge amounts of profit, but he’ll have a fantastic cash operating position. In order to do this he’ll manage inventory aggressively and start monetizing the Post’s other assets.
Going after the Inventory
The days where there are stacks of leftover newspapers, unsold in machines and stores is over. If you can’t prove you’re moving product you’re not going to receive the paper. Why waste resources on inventory that no one is buying and ending up at the bottom of someone’s bird cage? If the Post provides credit or reimbursement for unsold papers, that’s insane in Jeff’s world – waste is going to go. He’ll definitely be studying the distribution map like a hawk. The most obvious ones are:
- Stores/Venues that are able to sell large volumes of the newspaper with little returns.
- Stores/Venues that are always returning unsold newspapers.
- Vending machines that are always empty or always have leftovers.
I wouldn’t be surprised if Bezo’s has some crazy scheme for print on demand service up his sleeve allowing him to instantly change the newspaper in an instant. If he wants to change the headlines due to some national or world event, print on demand would be incredible and also reduce waste. He could have the printed Washington Post everywhere and costing very little.
Re-Vamping Digital Distribution
You cannot have a man like Jeff Bezos at the helm and think he’s not going to amp up the digital side of the house. However unlike others in the past like Rupert Murdoch’s failed attempts at getting readers to pay for digital subscriptions the new man in charge of the Washington Post will take a different tact. The easy one will be tie-ins to Amazon Ads which are spooky scary these days, but I’m thinking he’s going to make it super easy; almost impulse like to buy a digital paper. Consider Kate Spade’s Saturday Window shops for example.
Imagine small little kiosks popping up all over Washington (bus stands for example) where you’re being teased about breaking news stories. All you have to do is tap your phone and boom, for a quarter you have access to the article forever with live updates (i.e. PDF or accessed electronically through your account). No one blinks at buying at app for 99 cents thanks to Apple; maybe no one would care spending 25 cents to get a news article. Extend this further for subscriptions; detect someone is purchasing multiple articles in any given month and suggest “hey, you know you can save money by just subscribing”. Maybe you buy 5 articles and suddenly you get the next day’s paper free or it’s tied in with a discount to a movie, restaurant or even an Amazon coupon. The last thing Jeff Bezos wants you thinking is that “hmm… I don’t know if it’s worth buying a subscription – I never read the complete paper…”. He’s going to condition you to think that paying for the news is ok.
The trick is making the purchasing decision easier and more impulsive than entering the URL into a web browser. Special / unique “Scoop” content might be offered and all it took tap with your phone and a quarter. That’s the price I can live with.
Every journalist and columnist is a product to be sold
For as long as I can remember, specific journalists and columnists were always being promoted within newspapers. Readers follow these stars regardless of the the actual paper they were writing for. I’ll give you an example: I follow Christie Blanchard who is currently writing for the National Post but previously she was with the Globe and Mail. Although I still read the Globe and Mail I’ll go out of my way and head over to the National Post site to read her column. A journalist ability to maintain a following is their key ability to move newspapers. Jeff Bezos knows this and will be making sure that everyone who is writing content is contributing to newspapers being sold. If there’s a journalist who isn’t writing for the post but is a huge draw, you can bet he’ll try to get them over to his team. He’ll likely start cross pollinating media in order to raise the profile of his star journalists and create new ones. You’ll start hearing them more on the radio, seeing them on TV – you’ll attach faces to their words which means. You’ll have an intimate connection with them. Once you have an intimate connection, you’ll follow them everywhere and take heed of what they like, dislike and write.
The Newspaper becomes a technology platform
This move will be the hardest, but considering what Jeff Bezos did with Amazon I find it hard to believe he won’t try it with the Washington Post. Who would have thought that the giant retailer could make the jump from selling goods and services to becoming one of the premier cloud services platform in the world? Twenty years ago you would believe it from Microsoft, IBM, Oracle, Cisco even Apple, but Amazon? Bezos managed to figure out that the technology infrastructure used to power the retailer is also a highly in demand in other markets – why couldn’t he do it for the newspaper industry? Some examples what he may be able to do:
- Make the Washington Post’s research more widely available. Allow them to branch out and maybe have the ability to subscribe to their data.
- Move research into a services organization so others can hire people specialized in getting facts and figures. There are hundred of smaller newspapers and news departments looking to get better data and information – maybe this is one area that Jeff Bezos and monetize.
- Make the digital infrastructure the Post scalable so other newspapers can purchase it.
- Start going after the Huffington Post. The best writers of the blogosphere could end up being promoted within Washington Post digital and print assets. That’s an attraction that’s hard the pass up.
The technology of creating a newspaper isn’t unique but in every city it’s being replicated a few dozen times with tabloids and dailies. Being able to consolidate, repurpose and reuse tech from one paper across the country would be an amazing sight to see. However Jeff Bezos may be playing a longer reaching game that we haven’t figured out the exact outcome. We know that in spite of getting news from Twitter, Facebook and other Social Media outlets that there is a risk of it being widely inaccurate. How many times have you read that your favorite celebrity died? There is a market for real authentic news – information that is accurate, well-researched and articulate is valuable. As we get more inundated with social media noise it’s getting more difficult to determine fact from fiction. I’m willing to wager that we’re all willing to pay something for reliable news on the Internet in the future and Jeff is betting on it too with the purchase of the Washington Post.